James Hansen has written an (apparently) open letter to Kevin Rudd, urging that all new coal fired power plants be halted – via Energy Bulletin, original at Australian Science Media Centre (pdf).

27 March 2008
The Hon Kevin Rudd, MP
Prime Minister of Australia
Australian Parliament
Canberra, Australian Capital Territory, 2600

Dear Prime Minister,

Your leadership is needed on a matter concerning coal-fired power plants and carbon dioxide emission rates in your country, a matter with ramifications for life on our planet, including all species. Prospects for today’s children, and especially the world’s poor, hinge upon our success in stabilizing climate.

For the sake of identification, I am a United States citizen, director of the NASA Goddard Institute for Space Studies and Adjunct Professor at the Columbia University Earth Institute. I am a member of our National Academy of Sciences, have testified before our Senate and House of Representatives on many occasions, have advised our Vice President and Cabinet members on climate change and its relation to energy requirements, and have received numerous awards including the World Wildlife Fund’s Duke of Edinburgh Conservation Medal from Prince Philip.

I write, however, as a private citizen, a resident of Kintnersville, Pennsylvania, USA. I was assisted in composing this letter by colleagues, including Australians, Americans, and Europeans, who commented upon a draft letter. Because of the urgency of the matter, I have not collected signatures, but your advisors will verify the authenticity of the science discussion.

[break]

I recognize that for years you have been a strong supporter of aggressive forward-looking actions to mitigate dangerous climate change. Also, since your election as Prime Minister of Australia, your government has been active in pressing the international community to take appropriate actions. We are now at a point that bold leadership is needed, leadership that could change the course of human history.

I have read and commend the Interim Report of Professor Ross Garnaut, submitted to your government. The conclusion that net carbon emissions must be cut to a fraction of current emissions must be stunning and sobering to policy-makers. Yet the science is unambiguous: if we burn most of the fossil fuels, releasing the CO2 to the air, we will assuredly destroy much of the fabric of life on the planet. Achievement of required near-zero net emissions by mid-century implies a track with substantial cuts of emissions by 2020. Aggressive near-term fostering of energy efficiency and climate friendly technologies is an imperative for mitigation of the looming climate crisis and optimization of the economic pathway to the eventual clean-energy world.

Global climate is near critical tipping points that could lead to loss of all summer sea ice in the Arctic with detrimental effects on wildlife, initiation of ice sheet disintegration in West Antarctica and Greenland with progressive, unstoppable global sea level rise, shifting of climatic zones with extermination of many animal and plant species, reduction of freshwater supplies for hundreds of millions of people, and a more intense hydrologic cycle with stronger droughts and forest fires, but also heavier rains and floods, and stronger storms driven by latent heat, including tropical storms, tornados and thunderstorms.

Feasible actions now could still point the world onto a course that minimizes climate change. Coal clearly emerges as central to the climate problem from the facts summarized in the attached Fossil Fuel Facts. [See note below] Coal caused fully half of the fossil fuel increase of carbon dioxide (CO2) in the air today, and on the long run coal has the potential to be an even greater source of CO2. Due to the dominant role of coal, solution to global warming must include phase-out of coal except for uses where the CO2 is captured and sequestered. Failing that, we cannot avoid large climate change, because a substantial fraction of the emitted CO2 will stay in the air more than 1000 years.

Yet there are plans for continuing mining of coal, export of coal, and construction of new coal-fired power plants around the world, including in Australia, plants that would have a lifetime of half a century or more. Your leadership in halting these plans could seed a transition that is needed to solve the global warming problem.

Choices among alternative energy sources – renewable energies, energy efficiency, nuclear power, fossil fuels with carbon capture – these are local matters. But decision to phase out coal use unless the CO2 is captured is a global imperative, if we are to preserve the wonders of nature, our coastlines, and our social and economic well being.

Although coal is the dominant issue, there are many important subsidiary ramifications, including the need for rapid transition from oil-fired energy utilities, industrial facilities and transport systems, to clean (solar, hydrogen, gas, wind, geothermal, hot rocks, tide) energy sources, as well as removal of barriers to increased energy efficiency.

If the West makes a firm commitment to this course, discussion with developing countries can be prompt. Given the potential of technology assistance, realization of adverse impacts of climate change, and leverage and increasing interdependence from global trade, success in cooperation of developed and developing worlds is feasible.

The western world has contributed most to fossil fuel CO2 in the air today, on a per capita basis. This is not an attempt to cast blame. It only recognizes the reality of the early industrial development in these countries, and points to a responsibility to lead in finding a solution to global warming.

A firm choice to halt building of coal-fired power plants that do not capture CO2 would be a major step toward solution of the global warming problem. Australia has strong interest in solving the climate problem. Citizens in the United States are stepping up to block one coal plant after another, and major changes can be anticipated after the upcoming national election.

If Australia halted construction of coal-fired power plants that do not capture and sequester the CO2, it could be a tipping point for the world. There is still time to find that tipping point, but just barely. I hope that you will give these considerations your attention in setting your national policies. You have the potential to influence the future of the planet.
Prime Minister Rudd, we cannot avert our eyes from the basic fossil fuel facts, or the consequences for life on our planet of ignoring these fossil fuel facts. If we continue to build coal-fired power plants without carbon capture, we will lock in future climate disasters associated with passing climate tipping points. We must solve the coal problem now.

For your information, I plan to send a similar letter to the Australian States Premiers.

I commend to you the following Australian climate, paleoclimate and Earth scientists to provide further elaboration of the science reported in my attached paper (Hansen et al., 2008):

Professor Barry Brook, Professor of climate change, University of Adelaide
Dr Andrew Glikson, Australian National University
Professor Janette Lindesay, Australian National University
Dr Graeme Pearman, Monash University
Dr Barrie Pittock, CSIRO
Dr Michael Raupach CSIRO
Professor Will Steffen, Australian National University

Sincerely,

James E. Hansen
Kintnersville, Pennsylvania
United States of America

James Hansen has written an (apparently) open letter to Kevin Rudd, urging that all new coal fired power plants be halted – via Energy Bulletin, original at Australian Science Media Centre (pdf).

27 March 2008
The Hon Kevin Rudd, MP
Prime Minister of Australia
Australian Parliament
Canberra, Australian Capital Territory, 2600

Dear Prime Minister,

Your leadership is needed on a matter concerning coal-fired power plants and carbon dioxide emission rates in your country, a matter with ramifications for life on our planet, including all species. Prospects for today’s children, and especially the world’s poor, hinge upon our success in stabilizing climate.

For the sake of identification, I am a United States citizen, director of the NASA Goddard Institute for Space Studies and Adjunct Professor at the Columbia University Earth Institute. I am a member of our National Academy of Sciences, have testified before our Senate and House of Representatives on many occasions, have advised our Vice President and Cabinet members on climate change and its relation to energy requirements, and have received numerous awards including the World Wildlife Fund’s Duke of Edinburgh Conservation Medal from Prince Philip.

I write, however, as a private citizen, a resident of Kintnersville, Pennsylvania, USA. I was assisted in composing this letter by colleagues, including Australians, Americans, and Europeans, who commented upon a draft letter. Because of the urgency of the matter, I have not collected signatures, but your advisors will verify the authenticity of the science discussion.

[break]

I recognize that for years you have been a strong supporter of aggressive forward-looking actions to mitigate dangerous climate change. Also, since your election as Prime Minister of Australia, your government has been active in pressing the international community to take appropriate actions. We are now at a point that bold leadership is needed, leadership that could change the course of human history.

I have read and commend the Interim Report of Professor Ross Garnaut, submitted to your government. The conclusion that net carbon emissions must be cut to a fraction of current emissions must be stunning and sobering to policy-makers. Yet the science is unambiguous: if we burn most of the fossil fuels, releasing the CO2 to the air, we will assuredly destroy much of the fabric of life on the planet. Achievement of required near-zero net emissions by mid-century implies a track with substantial cuts of emissions by 2020. Aggressive near-term fostering of energy efficiency and climate friendly technologies is an imperative for mitigation of the looming climate crisis and optimization of the economic pathway to the eventual clean-energy world.

Global climate is near critical tipping points that could lead to loss of all summer sea ice in the Arctic with detrimental effects on wildlife, initiation of ice sheet disintegration in West Antarctica and Greenland with progressive, unstoppable global sea level rise, shifting of climatic zones with extermination of many animal and plant species, reduction of freshwater supplies for hundreds of millions of people, and a more intense hydrologic cycle with stronger droughts and forest fires, but also heavier rains and floods, and stronger storms driven by latent heat, including tropical storms, tornados and thunderstorms.

Feasible actions now could still point the world onto a course that minimizes climate change. Coal clearly emerges as central to the climate problem from the facts summarized in the attached Fossil Fuel Facts. [See note below] Coal caused fully half of the fossil fuel increase of carbon dioxide (CO2) in the air today, and on the long run coal has the potential to be an even greater source of CO2. Due to the dominant role of coal, solution to global warming must include phase-out of coal except for uses where the CO2 is captured and sequestered. Failing that, we cannot avoid large climate change, because a substantial fraction of the emitted CO2 will stay in the air more than 1000 years.

Yet there are plans for continuing mining of coal, export of coal, and construction of new coal-fired power plants around the world, including in Australia, plants that would have a lifetime of half a century or more. Your leadership in halting these plans could seed a transition that is needed to solve the global warming problem.

Choices among alternative energy sources – renewable energies, energy efficiency, nuclear power, fossil fuels with carbon capture – these are local matters. But decision to phase out coal use unless the CO2 is captured is a global imperative, if we are to preserve the wonders of nature, our coastlines, and our social and economic well being.

Although coal is the dominant issue, there are many important subsidiary ramifications, including the need for rapid transition from oil-fired energy utilities, industrial facilities and transport systems, to clean (solar, hydrogen, gas, wind, geothermal, hot rocks, tide) energy sources, as well as removal of barriers to increased energy efficiency.

If the West makes a firm commitment to this course, discussion with developing countries can be prompt. Given the potential of technology assistance, realization of adverse impacts of climate change, and leverage and increasing interdependence from global trade, success in cooperation of developed and developing worlds is feasible.

The western world has contributed most to fossil fuel CO2 in the air today, on a per capita basis. This is not an attempt to cast blame. It only recognizes the reality of the early industrial development in these countries, and points to a responsibility to lead in finding a solution to global warming.

A firm choice to halt building of coal-fired power plants that do not capture CO2 would be a major step toward solution of the global warming problem. Australia has strong interest in solving the climate problem. Citizens in the United States are stepping up to block one coal plant after another, and major changes can be anticipated after the upcoming national election.

If Australia halted construction of coal-fired power plants that do not capture and sequester the CO2, it could be a tipping point for the world. There is still time to find that tipping point, but just barely. I hope that you will give these considerations your attention in setting your national policies. You have the potential to influence the future of the planet.
Prime Minister Rudd, we cannot avert our eyes from the basic fossil fuel facts, or the consequences for life on our planet of ignoring these fossil fuel facts. If we continue to build coal-fired power plants without carbon capture, we will lock in future climate disasters associated with passing climate tipping points. We must solve the coal problem now.

For your information, I plan to send a similar letter to the Australian States Premiers.

I commend to you the following Australian climate, paleoclimate and Earth scientists to provide further elaboration of the science reported in my attached paper (Hansen et al., 2008):

Professor Barry Brook, Professor of climate change, University of Adelaide
Dr Andrew Glikson, Australian National University
Professor Janette Lindesay, Australian National University
Dr Graeme Pearman, Monash University
Dr Barrie Pittock, CSIRO
Dr Michael Raupach CSIRO
Professor Will Steffen, Australian National University

Sincerely,

James E. Hansen
Kintnersville, Pennsylvania
United States of America

The number of elected representatives at State and Federal level who have mentioned peak oil in parliamentary speeches must be getting close to double figures!

Speech to Parliament
Ms Rachel Nolan MP – Member for Ipswich
13th March 2008

Ms NOLAN (Ipswich—ALP):

On Monday night in Ipswich two local engineers, Steve Posselt and Stuart McCarthy, in conjunction with the Ipswich Chamber of Commerce and Industry and Ipswich Green—an organisation of which I am a cofounder—ran an Ipswich leaders forum to outline to the community the serious challenge of sustainability.

Their timing could not have been better. Today the price of a barrel of West Texas crude oil passed through the $US110 mark. This is the highest price oil has ever reached, either in current or inflation adjusted terms.

[break]

The price surge is a result of a culmination of rising demand, flat production and falling inventories, but there is a simpler way of describing what is happening. It is called peak oil. Peak oil advocates have always argued that we would only recognise the peak of world oil supply when it was passed—that is, we would only see it for sure in the rear-vision mirror.

Well, the view in the rear-vision mirror is becoming increasingly clear. In November 2006 the world produced 85.5 million barrels or crude per day. No month since has surpassed that total. During 2007 world oil production declined to 84.6 million barrels per day. Around the world, nation by nation, oil production has peaked and declined.

The USA peaked at 9.6 million barrels per day in 1970 and now produces 5.1 million barrels per day. Venezuela peaked in 1970, the UK peaked in 1999, and Norway and Australia both peaked in 2000.

The Energy Watch Group in Germany recently analysed world data and suggest that we are past the world’s peak. They calculate that world supply will now decline by seven per cent per year, falling to 58 million barrels per day by 2020. There is no way known that production of biofuels such as ethanol can plug such an enormous and growing gap. Even putting aside the record grain prices we are already seeing as arable land is transferred from food to fuel production the simple fact is that there is not enough land on the planet to grow the liquid fuel volume which we require today.

Aldous Huxley once said that ‘human beings have an almost limitless capacity to take things for granted’. When it comes to oil and our use of it, that is certainly true. Lester Brown in his Plan B 3.0 set out the challenge thus—

The challenge for our generation is to build a new economy, one that is powered largely by renewable sources of energy, that has a highly diversified transport system and that reuses and recycles everything. And to do it with unprecedented speed.

The Ipswich leaders’ forum set out that challenge for our community. It is a serious challenge and one that we must all seriously pursue.

Download speech as a PDF from Rachel Nolan’s website.

Dedicated members of the TOD audience and public transport fans may be interested to hear the call for papers from UITP, the International Association of Public Transport, for a conference to be held in Vienna in June 2009. The theme for the 58th World Congress and Mobility & City Transport Exhibition is Public transport: making the right mobility choices.

[break]

As you would hope, UITP appear to be aware of the peak oil context. The text on their web page calling for papers sets the scene:

No city today can function efficiently without public transport. Indeed the development of public transport is a prerequisite for sustainable urban development. It is all the more critical in the light of some recent megatrends:

• Galloping urbanisation, congestion and the threat of traffic paralysis;
• Air quality concerns;
• Peak oil production and use;
• The pressing need to take action to mitigate permanent and damaging climate change;
• The need to maintain or improve the quality of urban life for citizens.

The stated aims of the Congress are to:

• Review the available options with their advantages and drawbacks;
• Review all parameters to take into account;
• Provide participants with a broad view of the issues and a framework for analysis, enabling them to take the best possible decisions for the short, medium and long term.

The deadline for submitting an abstract is 30 June 2008. You can get more details at the UITP Conference Web Page.

Sometimes it seems that events are moving so quickly that it is hard to justify preparing papers for a conference more than a year away. But a year goes by quickly whatever is happening. I prepared and presented a peak oil paper for the Australasian Transport Research Forum in Melbourne last year. The paper titled “Peak Oil: A Turning Point for Transport” referenced the Ghawar analysis presented here early last year and now allows me to cite my own peer reviewed peak oil paper, which certainly helps when communicating with Government agencies.

So what would you tell a public transport audience about the ‘right mobility choices’? Is there any point preparing papers for a conference in June 2009 or is TOD the only way? Perhaps by testing and developing the core of your proposals here for inclusion in a paper we can combine the best of both worlds.

This week European Energy Commissioner, Andris Piebalgs, moves the debate onto the key issue of bio-fuels. The comment I left on his blog pursued the theme of EroEI and energy efficiency. If you feel strongly about bio-fuels then PLEASE call by Andris Piebalg’s blog and leave him a polite, forceful, well documented message.

Andris Piebalgs drives a Saab 9-5 that runs on bio-ethanol. By my estimation, the energy efficiency of this vehicle is a meagre 5%. Andris no doubt believes he is doing the right thing and I believe he cares a great deal about European energy. And yet he is driving one of the least energy efficient vehicles ever produced – and he is a physicist. How on Earth have these totally bizarre circumstances come about?

[break]

So how have I determined the energy efficiency of a bio-fuel Saab to be 5%. The calculation is as follows:

I have assumed the ERoEI (energy return on energy invested) of tempearte latitude bio-ethanol is 1.2. Sources here and here. Hence the energy efficiency of fuel production is:

((eroei-1) / eroei) * 100 = 0.2 / 1.2 = 16.7%

Assuming the internal combustion engine efficiency is 30% (combined urban cycle) yields an over all efficiency of 0.3 * 0.167 = 5%.

“And how have these bizarre circumstances come about?” – the answer to that I believe lies in an obsession with CO₂ emissions that has lost sight of energy efficiency.

First of all, when biofuels replace fossil fuels, greenhouse emissions are almost always lower. Biofuels are produced from plants that absorb the CO₂ they generate when they are burnt. This has to take into account the fertiliser used to produce the crops, the energy needed to convert them into liquid fuels and so on. On this basis, biofuels produced in Europe from rape seed, wheat and sugar beet, typically reduce emissions by 20-50% compared to the oil they replace. Biofuels from sugar cane, waste vegetable oil and second generation biofuels can save 75% or more. Under our proposal, all biofuels used for the EU target will have to save, at least, 35%.

I have to say that in this statement the claims made about CO₂ conservation seem accurate – proving that the principals involved are understood by the EU Commission. It is just that the energy cost / energy efficiency has not been taken into account.

Variations in ERoEI with CO₂ conserved assuming the energy input to bio fuel production is from fossil fuel.

Andris goes on to say:

And this is why biofuels are so important. Today, there are only three ways to reduce greenhouse emissions: the shift from polluting modes to more energy efficient ones (i.e. rail, short sea shipping, collective transport); the promotion of less consuming cars, by establishing CO₂/km targets; and biofuels.

I’m sorry this is just not true. The middle of the three options is of course the most sensible – to concentrate upon energy efficient vehicles. But what about:

1. Electric cars running on renewable or nuclear electricity. This is the future of vehicular transportation – so why are the European Commission not sinking billions into this?

2. Pneumatic cars (which I know very little about) but which are reported to be a viable option.

3. Reducing the speed limits across Europe which will save fuel (the number one priority!) reduce pollution and save lives.

Andris, I would like to emphasise how much we appreciate the opportunity to present these arguments on your blog. In your first blog entry you said you were here to listen. I sincerely hope that is the case and that following the period of listening and analysis that there is a period of action.

The WSJ has a decent article describing the current financial crisis and pulling no punches:

Debt Reckoning: U.S. Receives a Margin Call

The U.S. is at the receiving end of a massive margin call: Across the economy, wary lenders are demanding that borrowers put up more collateral or sell assets to reduce debts.

The unfolding financial crisis — one that began with bad bets on securities backed by subprime mortgages, then sparked a tightening of credit between big banks — appears to be broadening further. For years, the U.S. economy has been borrowing from cash-rich lenders from Asia to the Middle East. American firms and households have enjoyed readily available credit at easy terms, even for risky bets. No longer.

[break]

The diagnosis is no longer, as still a few weeks ago, of a “softening” of the economy, with troubles limited only to arcane financial markets:

Bob Eisenbeis, a former executive vice president of the Federal Reserve Bank of Atlanta, says the problem is more than an inability to find ready buyers for assets. “It is time to step back and recognize that the current situation isn’t a liquidity issue and hasn’t been for some time now,” said Mr. Eisenbeis, the chief monetary economist for Cumberland Advisers. “Rather, there is uncertainty about the underlying quality of assets — which is a solvency issue, driven by a breakdown in highly leveraged positions.”

A crisis of liqudity means that you have assets, but cannot sell them in time to pay the debts you have. A crisis of solvency means that the assets you have are worth less than what you owe. It is often hard to tell which is which (is your asset illiquid because it takes time to sell, or because it is worth less than you are expecting to get for it?). A liquidity crisis can turn into a solvency crisis, if people are forced to liquidate assets in emergency fashion, and thus to drop prices to raise cash as quickly as possible – thereby creating market prices for these assets that are lower than before, and putting others that hold similar assets in the situation where their assets are suddenly worth less.

But we had an underlying solvency crisis from the start, given the unrealistic lending that had taken place – such as the “ninja” loans (no income, no jobs or assets) that were provided in the heat of the mania and which could only ever be repaid if house prices kept on going up. Asset prices were propped up only by the fact that people were able to borrow unreasonable amounts of money to bid for them, and were able to borrow such amounts only because they were seen to be acquiring valuable assets – ie the whole thing was a grand illusion, sustained by a collective loss of common sense, helped with massive dollops of self-interested propaganda by the financial, construction, real estate and media industries.

Now it’s the same thing, in reverse. People cannot borrow, thus cannot bid for assets, whose prices fall down as they need to be sold – and those deep in debt need to sell (ar dump the assets to banks that then need to sell). As prices go down, all loans based on collateral dry out – and more generally banks are getting stingy as they struggle with all those doubtful assets on their hands, so lending dries out. This is what’s called “deleveraging” in the case of the hedge funds, and it’s as painful for financial assets as it is for real estate.

Kenneth Rogoff, a Harvard University economist, says the current difficulty has many mothers — the housing bubble, the subprime problem and the fact that the value of U.S. imports has long outstripped the value of exports. The current account deficit — the broadest measure of the trade deficit — burgeoned, and the U.S. needed to borrow ever larger amounts of cash from abroad to fund it.

For years, Mr. Rogoff and like-minded economists harped that the U.S. current account deficit was unsustainable. But despite the belief that it would necessarily reverse, it kept growing through the first part of this decade, going from 3.6% of gross domestic product at the end of 1999 to a record 6.8% at the end of 2005. Lately, the deficit has seen a slight narrowing, but the combination of credit crisis and the economic downturn may have proved the catalyst for a faster, and potentially more dangerous, adjustment.

As in the first paragraph of the article, this is the closest this article, which correctly describes the current winding down, comes to the underlying cause, but it’s simple: the country was living on foreign credit.

But I get the feeling that this is part of an attempt (likely to get louder as things get worse) to blame the “foreign” bit rather than the “credit” bit.

I hope I’m wrong, but as we begin to see loud calls for bailouts (unfair, as they reward the bankers that created the problem in the first place, but, you see, the alternative is worse), the availability of a ready-made outsider scapegoat is likely to be irresistible.

And yet, the fact remains that the problem is not who provided the credit, but the fact that it was provided in such large amounts.

Because that sea of debt had one real purpose: hide the fact that income for most are stagnating.

I never tire of posting this graph of the “W economy”, because it summarises in a nutshell what happened: growth happened, but was not shared widely. Thanks to wage stagnation, made possible by the threats of outsourcing and offshorisation, and by consistent policies over the last 30 years to deregulate and liberalise markets, starting with labor markets), the fruits of growth have to a large extent been captured by a very few – but this has been hidden because consumption was propped up by readily available debt and the apparently growing virtual wealth of homeowners.

The problem is that, while a lot of that growth was illusory (and is now unravelling), the wealth re-allocation that took place thanks to it was very real, and, in particular, the mechanisms ensuring that an ever grower share of the pie get into a few privileged hands are still in place, and will bite even more harshly as the pie shrinks.

In short:

The middle classes got a shrinking share of a growing pie, apparently staying somewhat ahead.

Now, they are about to get a shrinking share of a shrinking pie.

The current economic consensus – that of “labor market reform”, of “unsustainable liabilities of Medicare”, of “protectionism is the ultimate danger” -is that of those that think that economic prosperity is correctly summarised by the value of the Dow Jones Index. That consensus has not really worried about income inequality, and has seen increased leverage as a sign of ever more efficient financial markets rather than of a bubble. That consensus is part of the problem, not part of the solution.

And you see that all the currently proposed remedies are focusing on ways to make the pie be (or rather, look) bigger than it can – more money injections, more cheap debt, more support for the financial sector.

They are the problem, not the solution.

Too much debt and not enough income was the problem.

And the solution is simple: stop debt (this is happening on its own anyway). and boost income.

How do you do that when there isn’t enough money around?

By creating real activity rather than the highly-leveraged money-shuffling ‘arbitraging’ kind.

And, as it were, there is a sector that is “real” and has an urgent need for action: infrastructure, and in particular energy-related infrastructure.

A plan that focuses on a few simple things:

• massive public support for energy efficiency refurbishment of existing homes;
• a massive, New Deal rural-electrifaction-scale plan to build renewable energy assets and the corresponding grid infrastructure;
• a similarly massive plan to develop smart public transportation, both locally and intercity;

Spending the money currently wasted in Iraq on these 3 things alone would provide a real boost to the economy in the sectors that actually need it, would reduce oil&gas consumption and carbon emissions, and be an actual investment for future generations, as opposed to the current drain on the future that’s been engineered via debt used on mindless consumption of junk.

Add in plans to boost the minimum wage (especially in the relevant sectors) and tax imports of carbon-rich goods, and you’d have a pretty damn good economic – and geopolitical programme.

The problem is the most of America’s population has been living, by design, above its means. It is kept dependent, fearful and distracted while problems are pushed into the future and, coincidentally, a happy few profit handsomely. This was not sustainable and, indeed, it is crashing down around us. The good news is that the solution to this financial crisis will also go in the right direction to solve the even bigger problems of global climate change and resource depletion. And hopefully, economic hardship will prove to be a bigger motivator for action than anything else.

Eliot Spitzer’s historic fall from grace was a blow to many progressives who believed that he would reform New York’s dysfunctional state government, but his replacement may be equally transformative, but from a Peak Oil perspective.

David Paterson will be the nation’s first legally blind Governor and only the fourth African American governor (New York’s first)since Reconstruction ended. As I wrote back in 2006, Lieutenant Governor David Paterson is not only peak oil aware, but willing to make public speeches about it and fairly eloquent on explaining peak oil to ordinary folks.
[break]
He also has a 20+ year history with the state legislature, holding the minority leader post for the Democrats in the State Senate. News coverage has brought to light the high level of respect he gets from both Republicans and Democrats, many noting his soft touch and collegiality as very different from Spitzer’s “I’m an effing Steamroller” approach to getting his way.

It’s not clear yet what his adminstration’s priorities will, but he has a good record on environmental and alternative energy issues. But if tackling oil dependence is high on his agenda, it is possible that he will be able to find the right bargain to strike with legislature and assemble a working majority on key issues.

I can’t find a current version of the speeches he gave during campaign that used to be on the campaign website, but here’s what I captured at the time from a campaign speech that summarized his views:

Eliot Spitzer, my friend, and I, outside of our goals, have a little polite competition. We try to find the most obtuse quotations to work into government policy, and I still haven’t been able to match Eliot’s presumption, which I think is very, very applicable to energy policy, in the words of Yogi Berra: If you don’t know where you’re going, you’ll wind up someplace else.

Tell me if this verse sounds familiar: “And then one day, while he was shooting for some food, up from the ground there came a bubbling crude.” Those light-hearted lyrics from the CBS 60s comedy series, “The Beverly Hillbillies,” in my opinion poignantly portray the mass availability of oil and gas in American society, in the society at that time.

But the situation comedy that allowed a poor mountaineer to become a Hollywood millionaire may have obfuscated the work of a Shell Oil geologist who was offering a different interpretation at the same time.

In 1956, Dr. King Hubert offered a prediction that United States’ oil production would, in effect, plateau somewhere between 1970 and 1971. This was the culmination of research where the first drilling for oil in this country came in 1859. By 1870, we had a network of oil pipes, starting the first network of delivering of oil as a fuel alternative at that particular time, and the curve went up steadily and steadily until, alarmingly, October of 1970 when we were producing 9.5 million barrels of oil per day. That’s the highest we ever achieved.

Currently, we’re producing about 5.1 million barrels of oil per day. We will go under half of the oil production of 1970, 37 years later, sometime in the middle of next year. Now this is staggering because, in addition to that, the United States Department of Energy – and I don’t know how they got this past Phillip Kooning, Bobby – offered a paper describing the mitigation of oil peak downside, meaning that, after the production of oil slips below half of the peak production, at that point the energy return on energy investment becomes negative.

In other words, it takes as much energy to bring the oil out of the ground as it would to realize energy benefits from the oil that’s actually drilled. So the reality is that in the flourishing 50s, we were getting 30 barrels of oil out of the ground for every barrel invested, and we are now somewhere between five and 10 barrels of oil for every barrel we invest.

So the question is: when is the oil going to run out? The answer is: nobody knows.
There were alarmists in the 70s after the fuel shortage crisis that said that we’d run out of oil in the 80s. There are bloggers on the Internet who say we’re going to run out of oil in the next 10 years. No one really knows. Discoveries in the Yucatan Peninsula, the Gulf of Mexico, and in Credo, Alaska, have certainly extended that period of time.

But then the drilling that took place in the Caspian Sea in 1998 that was supposed to yield 400 billion barrels of oil is now being estimated at 40 billion barrels of oil. So it goes back and forth, how long the oil supplies are going to last.

But what’s more important than that would best be represented by this example: The human body has 21 quarts of blood contained in it. We don’t die at the moment we offer our last drop of blood. What’s more important is when our first drop of blood is spilled, and that’s what Shakespeare taught us in the “Merchant of Venice.” The problem is that if a person loses 20 to 25% of his own blood, it severely impairs the systems of the body, and death will not be long.
This is the problem we are going to have if there is any cutoff of our oil supplies in the immediate future.

Remember the 1970s oil shortage only involved a 5% lessened amount of oil than we actually have now, than we actually had at that particular time. What we’ve got to start concentrating on, as a society, are alternatives to what has been the lifeblood of our economy.

The Spitzer administration’s policy on energy can be summed up in four words: conserve today, renew tomorrow.
We have got to stop throwing good energy after bad. We will use conservation for immediate results, and we’ll hope that we can find alternative sources of energy for long-term and future positive results. These are not new ideas. They’re not dramatic. They don’t even cost that much, but they are effective.

And the most effective and immediate way to establish some kind of impact on our environment is through conservation. Conservation doesn’t mean privatization. It doesn’t mean austerity. It just means doing more with less, not just doing with less.

We’re asking New York businesses to raise profits by reducing their utility costs, not by reducing their businesses. We’re asking the families in New York to lower their utility bills, not to lower their expectation of a lifestyle. Conservation is good business sense, because if it saves energy; it saves money. Because energy is the new currency.

We want to make sure that the community action agencies, the not-for-profits and the weatherization organizations, get the proper funding that they will need. So we will use conservation in the short-term. We will implement it to get immediate results, but we want to pursue renewable energy sources as a long-term solution to New York’s energy uses.

This is the long-term solution that can liberate America from its dependency on foreign oil importation. And we certainly think that this is an avenue that we can go on now because it will decrease greenhouse gas effects, create high-skilled, high-paying jobs around the state. It can stimulate in-state investment and generate huge tax revenues.

There is an ancillary benefit to bringing renewable energy, and it is that every dollar invested in renewable energy can create 40% more jobs than the conventional sources and more widely-used sources of gas and oil.

And this typifies Eliot Spitzer’s view of dealing with crisis: he believes that crisis creates opportunity, and opportunity is enhanced by more jobs and economic development for this state.

Paterson is expected to lay out his priorities as governor later this week and then be formally sworn into office on Monday, March 17th at noon.

A few days ago, someone here posted a link to a story about skyrocketing farmland prices in the Midwest. It really made me angry to think about the inflationary chain reaction and the vicious chain of events our politicians have set into motion with these ethanol mandates. It made me even angrier to think that the few who benefit from these policies defend their right to siphon money from the rest of us and into their pockets. (I will be the first to say that surging energy prices are a big component of surging inflation, but with the ethanol mandates we are throwing jet fuel on an already raging fire).

This all started out innocently enough. Oil prices were climbing. Our energy production was shifting to an ever greater extent to countries that are hostile to the U.S.

So, Step 1 in the chain is to propose a solution:

1. The government should subsidize ethanol production to encourage production of home-grown fuels, which will enhance energy security and create jobs in the Midwest.

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However, subsidies didn’t work as expected. It was still too expensive to produce ethanol. People continued to choose gasoline over more expensive ethanol. We had to move to Step 2.

2. The government should mandate ethanol usage.

When the mandate was added to the equation, things change. Now, the fuel doesn’t have to be economically priced. It is going into the fuel supply regardless of the price. This mandate generates an immediate market for ethanol, and kicks off a massive expansion of ethanol capacity.

But it isn’t long before we notice that too many people are building ethanol plants. This is causing a glut of ethanol, and putting downward pressure on the price of ethanol. On the other side, it is raising the price of corn. This lowers the margins for ethanol producers, and some producers start to go bankrupt. Projects are delayed or cancelled. The solution? Proceed to Step 3, which is entirely predictable:

3. We need to increase the mandate for ethanol usage.

Unfortunately this leads to more of the problems that arose from the original mandate. Corn prices go even higher. Land prices continue to climb. Land is shifted to corn production, forcing commodity prices up in other areas. Very few segments of the population are experiencing true benefits. The arms race continues, and we find ethanol producers will once again call for higher mandates. It is an entirely predictable consequence of the current policies we have in place.

Who Benefits

The primary beneficiaries are commercial corn (and other commodity) farmers who purchased their land prior to the mandates. They are truly experiencing a windfall from these policies, and thus will fight the hardest to continue down this ill-advised road. A lot of millionaires have been made in Iowa as farmland prices quadrupled.

Secondary beneficiaries are lobbyists who defend the practice, those who are willing to write papers (commissioned by the National Corn Growers Association) that shift the blame, and pandering politicians with constituents that benefit from the current policies.

Who Doesn’t

The ethanol producer isn’t even consistently benefiting (unless they are also corn farmers). Ethanol producers are starting to realize that the energy business is often low margin (and cyclical), and not as lucrative as they once thought. When an overbuilding cycle occurs, prices crash. When prices crash, the call for more mandates is raised by ethanol producers who are facing financial trouble. Wash, rinse, repeat. After all, we must bail those out who make poor financial decisions. This is national security, for God’s sake! If we don’t bail them out with more mandates, the terrorists win. More mandates are certainly needed to rectify this.

The cattle rancher (like my Dad) and pig and poultry farmers get hurt from higher feed prices that cut into already razor-thin (or negative) margins. For our corn farming friends who love to defend these mandates, I would really appreciate it if you would explain to me why it’s OK for you to pull money out of my Dad’s pocket and put it into yours. I know your argument is that you deserve to make a good living. Well, so does he (don’t we all!), but your profits are at his expense. But hey, you are getting yours, so you will defend the practice. Just don’t expect me to keep quiet about the impacts.

The person trying to buy farmland is hurt by land prices that have exploded as a result of the mandates (unless they inherit family land).

The environment suffers as the mandated corn production means more herbicide, pesticide, and fertilizer usage, some of which ends up in our waterways.

The person who eats is hurt because higher commodity prices ripple through their food budgets, already stretched because of increasing energy costs.

Money for Everyone – and It’s Good for the Environment

So what’s the solution to this mess that has been made? I think it is simple, really. We all need to become either corn lobbyists or corn farmers. That way we all profit and we can afford to pay the financial consequences of spiralling inflation resulting from these mandates. (I suppose we will need to be subsidized for our farm purchase, since farms have gotten pretty expensive).

Now some may suggest that this would negatively impact the environment. I have a solution for this. We can simply commission a study to show that there is in fact no negative impact on the environment. Problem solved. I suppose I also need to commission a study that shows that aquifers are actually depleting because people are drinking a lot more water than they used to.

For those who support the mandates, why don’t we create more wealth by mandating that everyone buy a new computer or a new Ford every 3 or 4 years? Wouldn’t that create jobs? Heck, maybe we can make everyone wealthy and create jobs for all with more mandates. Unless of course, there is a downside to these mandates that I am missing….

In his second blog entry, Andris Piebalgs moves the focus to European energy security. A few choice excerpts for those who want to have a more spontaneous debate:

Europe is currently importing half of their energy needs, and according to most of the studies, our dependency may grow to 70%. We are running out of fossil fuels and our energy needs grow. This makes Europe terribly vulnerable. As Commissioner responsible for security of supply I often wondered, where are we going to get all that energy from? (my emphasis)

The EU is already a leader in renewable energy sources and we have taken a commitment to go further with a mandatory target of 20% of our final consumption by 2020……

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Ambitious indeed, but I would like Europe to go far beyond this target and there are many reasons for that: climate change, competitiveness, development of new technologies, new companies, new jobs you name it. And if this was not enough, we simply have to think that every wind mill, every solar panel, every litre of biofuel makes the EU simply more independent.

And on the recent spat between Russia and Ukraine on gas supplies (discussed by Jerome here):

A first agreement was reached on the phone by Gazprom and Naftogaz Ukrainy chairmen, and normal deliveries of gas have been resumed. I must say that the fact that supplies to Europe remained unaltered during the bilateral conflict between Russia and Ukraine plays in favour of their reputation as reliable supply and transit country. But I am still concerned. What would it happen if the bilateral crisis had become worse? Will this happen again? What about if a key supply infrastructure is destroyed by an accident or a terrorist attack? What would be the consequences for Europe of geopolitical instability in key energy regions like the Gulf?

I have to say I am warming to Mr Piebalgs appreciation of the precarious state of European energy security and the proposed expansion of renewables targets will receive my full support – with one glaring exception.

One omission from the whole strategy is energy efficiency. This I believe must lie at the heart of everything we do.

This is a guest post by Garry Glazebrook, who is an urban transport consultant and urban planning lecturer at the University of Technology, Sydney. The Sustainable Futures Fund is described in the Australian context, but with our population of 21 million and a local currency approaching 1:1 with the US dollar, the figures suggested here could be considered comparable with those required in a moderate size state in the USA.

Readers of TOD are well aware of the oil supply threat and its implications for society. Recent reports such as “Crude Oil – The Supply Outlook” by Energy Watch Group suggest global oil production could fall 50% by 2030, while research by Jeff Rubin at CIBC suggests OECD countries will experience an 8% fall in supply by 2012 due to delays in Megaprojects, declining production from existing fields and strong oil demand growth in OPEC, Russia and China.

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Similarly, more and more people are aware of the potential for dramatic climate change, though few are perhaps fully across the critical nature of our current circumstance. In Australia, Professor Ross Garnaut’s interim report has frightened some State Premiers, with quotes such as these:

“Only urgent, large, and effective global policy change leaves any hope of holding atmospheric concentrations (CO2e) at the 450 ppm or even the 550ppm levels” (p19) or “The review does not consider ‘business as usual’ a likely outcome” (p24).

However the Climate Code Red report by David Sprat and Philip Sutton makes for even scarier reading. Drawing on 250 references, many of them recent scientific papers, the authors call for recognition of a “sustainability emergency”, noting that global average temperatures have already risen 0.8 degrees C above per-industrial levels, that there is a further 0.6 degrees ‘locked in’ from past emissions, and that melting of the sea ice in the Arctic (which could happen in the next few years) would add 0.3 degrees due to albedo feedback. This would take us perilously close to the 2 degree “safe” limit assumed by many European Governments, but which scientists like James Hansen believe is already above the threshold for dangerous climate change.

How these two major threats develop and interact is the 64 million dollar question, but it is already clear that a dramatic change of course from current “business as usual” is required. Either governments foresee what will happen and act urgently, or we face a series of rolling recessions from the rising oil prices and the impact of significant carbon pricing. 2010 is perhaps shaping as a crunch year, with a new US government settling into its second year and the economy struggling out of a sub-prime mortgage-induced recession. In addition, we are approaching a demographic turning point, when large numbers of baby boomers begin to retire, and start drawing on savings rather than contributing to them.

How to avoid this coming crunch?

My suggestion is to move immediately to declare a “Climate and Fuel Emergency”; to institute carbon taxing on coal, oil and gas at point of production or import, as a prelude to carbon trading, and to establish a “Sustainable Futures Fund”.

This Sustainable Futures Fund would receive the revenue from the carbon taxes (later carbon trading) and allocate it to three key areas:

• Rapid deployment of renewable energy generation and support for new renewable energy technologies
• Rapid development of mass transit; networks of “greenways” for bicycles and small electric vehicles, and other sustainable transit initiatives
• Introduction of transitional assistance, targeted at those most at risk from the sudden shift in priorities.

Assistance would include electricity and gas subsidies for low income families, petrol subsidies for low income outer suburban and non-metropolitan families, and regional and industry adjustment assistance – for example for the Hunter Valley, Central Queensland and the Latrobe alley which are all tied to the coal industry, or to the current car manufacturing sector. Such assistance would be aimed at strengthening the capacity of the regions and firms to develop new industries or products which will contribute to rather than detract from sustainability.

Currently Australia produces some 320 million tones pa of CO2 from electricity generation and transport. A carbon tax of A$40/tonne CO2 would equate to around $120 per tonne of coal or 30c per litre of petrol. These price signals would drive expansion of existing renewable energy options such as wind and solar and accelerate the move to walking, cycling and public transport which has emerged in the last two years in Australia. For example, rail patronage grew 3.7% in Sydney last year, 20% in Melbourne in the last two years, and a staggering 41% in Perth following the opening of the new line to Mandurah last year and purchase of additional rollingstock.

The Sustainable Futures Fund would generate some $13 billion in year one. This would allow electricity / gas subsidies of $1000 on average for four million families, and a petrol subsidy of $1000 for a further 4 million families. These subsidies would be wound down gradually over ten years to give people time to insulate their homes, install solar power, buy smaller vehicles and alter their travel behaviour. It would also enable an initial $2.3 billion to be invested in renewable energy, sustainable transport and transitional industry and regional assistance.

By year four, the peak spending year, annual spending on these investments would total $8.8 billion. This is designed to allow time to gear up major programs, and to avoid adding to current inflationary pressures or labour shortages caused by the current resources boom. It can be expected that the resources boom will be levelling off or declining in 4-5 years as Chinese and Indian growth rates slow, in part from the impact of peak oil and climate change mitigation efforts, and efforts to accelerate investment in renewable energy, rail and public transport will therefore provide counter-cyclical expenditure at that time.

Over time the renewable energy fund revenues would gradually wind down as CO2 emissions taper out, as fossil fuel consumption should eventually be largely eliminated (unless carbon capture and storage can be proved effective on a wide scale). A profile of expenditure for the Sustainable Futures Fund is shown, with transitional family subsidies largely wound down within 10 years, although regional and industry assistance programs would continue up to 20 years.

A program of planned retirement of older coal fired power stations would be introduced. By 2030, virtually all our existing coal fired plants will be 45 – 50 years old in any event. The existing car fleet would also be almost entirely retired by 2030 – policies would be needed to phase out production or import of current generation cars within 7 years. Our electric rail systems could be converted to 100% greenpower within the next two years as large scale wind plants (as just proposed near Broken Hill) and solar (like the concentrated solar PV plant announced by Senator Wong on 25th February) rapidly gear up.

What could this achieve over the 20 year life of the fund?

• $27.5 billion assistance to accelerate renewable energy, plus a further $2.5 billion in R&D. In this context, the rise in general electricity prices and the fall in costs for renewable energies from scale economies should allow this assistance to be phased out within about twelve years.
• $15.6 billion to upgrade our main interstate rail freight system, enabling a significant shift of long distance to rail, which is three times more energy efficient than road freight. This will also reduce congestion and maintenance costs on major highways
• $31.7 billion to significantly revamp our urban public transport systems. This would allow such projects as electrification and expansion of Adelaide’s rail system, major new mass transit systems for growing areas such as the Gold and Sunshine Coasts, Perth and Western Sydney, expansion of bus priority and cross regional bus services, and bringing Sydney’s rail system into the 21st century.
• $7.4 billion to create a comprehensive network of “greenways”, “greenlinks” and “green lanes” to allow safe, energy-efficient and healthy personal mobility in our cities and towns, using bicycles, electric bicycles, electric scooters and electric gophers. These will be needed even in the absence of climate change and peak oil to cater for the mobility needs of our rapidly ageing society.
• $13.7 billion of regional and industry assistance to assist transition to a more sustainable future.

Without such a comprehensive approach, it is highly likely Australia will fail to make the necessary transition away from oil and fossil fuels in time to avoid massive social and economic damage.