The Oil Drum - Discussions about Energy and Our Future

A New Geopolitical Jevons Paradox? A Look at Non-OECD Oil Demand

Sam Foucher — Thu, 12 Nov 2009 10:29:57 -0400

This is part 2 of my post on oil demand. This time I look at the Non-OECD demand and how it may impact global oil demand. Based on data from the 2009 BP Statistical Review, the OECD oil consumption in 2008 decreased by -3.2% while demand within emerging economies increased by +3.1%. The report also indicates that oil production from OECD countries has been declining since 1997 and is now below 23% of the world production.

Figure 1. Increase in consumption since Jan, 2001.

Non-OECD Demand

The Non-OECD consumption is well modeled by an exponential fit as shown on Figure 2. The equivalent growth rate is around 3.2% per year. One amazing observation is that there is no apparent slowdown in consumption growth due to high oil prices. This pattern is very different from what has been observed for the OECD. There are three main factors contributing to this growth:

Emerging economies (China, India) with strong population growth, high economic growth, low car ownership and very low oil consumption per capita.
Oil resources managed by governments (NOC).
Gasoline subsidies (especially in Middle-East oil producers such as Saudi Arabia) making those market unresponsive to prices signals.

Figure 2. Linear fit in the log-domain for the Non-OECD consumption (monthly, total petroleum products), volumes in million barrels per day (mbpd).
As a result, Non-OECD consumption grew from 40% of the world demand in 2004 to 45% in 2009.

Figure 3. OECD and Non-OECD shares of the world total liquids consumption (EIA data).

The Non-OECD group is a net exporter (see Figure 4), and to date production has grown at the same rate as consumption. In contrast, total production from the OECD countries peaked in 1997 and has been declining at an accelerating rate ever since (see Figure 5). The situation is somewhat similar to the Export Land Model. It is unlikely that growth in oil production from OECD countries can match consumption growth for very long (+3.2% / year), therefore their ability to export will diminish in the next few years.

Figure 4. Observed Non-OECD consumption in blue (monthly, total petroleum products) and exponential model projection in red (see Figure 1). The light green curve is the WEO 2009 forecast (primary oil demand, excluding biofuel demand). Production data from BP.

Figure 5. Observed OECD consumption in blue (monthly, total petroleum products). The light green curve is the WEO 2009 forecast (primary oil demand, excluding biofuel demand). Production data from BP.
Interestingly, the OECD is now producing less than 22.4% of world production, its lowest value since 1976.

Figure 6. OECD and Non-OECD shares of the world total liquids production (crude oil + NGL). Production data from BP.

How Low Can the OECD Consumption go?

Since to date the OECD has taken the brunt of the high oil prices, the question can be asked: how low can the OECD consumption go? One interesting perspective is to look at various per capita consumption levels combined with population growth forecasts. Presently, consumption for the OECD excluding the US is hovering around 12 barrels per capita per year. In the WEO 2009, the IEA is predicting by 2015 a further consumption decrease toward 10 barrels/capita/year for the OECD excluding the US and toward 20 b/c/year for the US.

Figure 7. OECD-US and US consumption and various forecasts curves assuming different per capita consumption levels. The green curves are the WEO 2009 forecasts (primary oil demand, excluding biofuel demand).

Where Oil Prices are Heading?

The following scenario is set forth to illustrate how an asymmetric demand destruction could occur between the OECD and the Non-OECD. I don't assume a peak oil scenario for now. Instead, I simply assume that the growth in production capacity within a high oil price environment observed between 2007 and 2009 will remain the same until 2020 (see Figure 7). This is equivalent to a net addition of 0.610 million barrels per day as shown on Figure 8 below.

Figure 8. Linear fit on the production capacity (total liquid production + OPEC spare capacity) from 2007 to 2010. EIA data.

This scenario is optimistic on the supply side and pessimistic on the demand side. It is based on the assumption that the conditions observed since 2002 continue to remain the same in the future, namely:

Long term structural changes in OECD demand are triggered mainly through economic recessions (i.e. high unemployment, etc.).
OECD countries go into periodic economic slowdown and recessions triggered by oil prices increasing beyond $150 a barrel.
The excess demand model and its relationship to oil prices are the one established in my previous post and corresponds to $20 per 1 mbpd of excess demand. The Non-OECD demand exceed that of follows the exponential model described above.
There are no long term structural changes in demand within the Non-OECD.
The world total liquid production growth is anemic, amounting to 0.610 million barrels per day per year of additional supply and is not influenced by oil prices.

The simulation result is shown on Figure 9. The simulation indicates periodic oil price superspikes will occur and will trigger periodic recessions within the OECD. The OECD consumption is reduced each time, then briefly recovers once oil prices go below $40. In this model, the Non-OECD demand exceeds that of the OECD around 2015.

Figure 9. Hypothetical scenario where the world supply growth remains weak but constant until 2020. Ligh gray areas indicate recession periods.

Figure 10. Corresponding consumption share.

Conclusions

In conclusion, I think there is no end in sight for high oil prices and in particular for high volatility even assuming a somewhat optimistic supply growth scenario. The Non-OECD consumption will continue to grow, partially shielded by gasoline subsidies and an increasing share of the world oil production. The void created by a rapid contraction of the OECD consumption will be filled by Non-OECD demand. In summary:

OECD oil consumption is very reactive to oil prices.
OECD oil production has peaked in 1997 and will be increasingly dependent on oil imports from Non-OECD countries.
Non-OECD oil consumption is quite unresponsive to oil prices.
Non-OECD consumption will likely be the main driver behind high oil prices, but the OECD will be the first to reduce consumption (and demand).
Are we witnessing a kind of geopolitical Jevons paradox? Structural changes in demand are very likely for the OECD, but the oil then made available will be absorbed by the relentless growth of Non-OECD.

Drumbeat: November 12, 2009

Leanan — Thu, 12 Nov 2009 09:49:49 -0400

U.S. Adviser to Kurds Stands to Reap Oil Profits

OSLO — Peter W. Galbraith, an influential former American ambassador, is a powerful voice on Iraq who helped shape the views of policy makers like Joseph R. Biden Jr. and John Kerry. In the summer of 2005, he was also an adviser to the Kurdish regional government as Iraq wrote its Constitution — tough and sensitive talks not least because of issues like how Iraq would divide its vast oil wealth.
Now Mr. Galbraith, 58, son of the renowned economist John Kenneth Galbraith, stands to earn perhaps a hundred million or more dollars as a result of his closeness to the Kurds, his relations with a Norwegian oil company and constitutional provisions he helped the Kurds extract.

IEA criticism is further blow to oil benchmark

The reign of the West Texas Intermediate as the world’s top oil benchmark “looks increasingly precarious”, the International Energy Agency said on Thursday, after Saudi Arabia dropped last month the yardstick as its reference for US sales.

The Whistleblower’s Case

Given the clear decline in new discoveries, it seems foolish to dismiss the whistleblower's claims out of hand. Especially when you consider the rising demand on flagging reserves resulting from improving economic conditions in China, India, and other developing countries. For less obvious support for the whistleblower’s case, I might also point to the invasion of Iraq, which makes absolutely no sense, other than in the context of an oil grab.
Does this suggest the imminent emergence of a dystopian world, a world where Mad Max would feel entirely at home? Hardly. If for no other reason than that the U.S. has an abundance of natural gas – and so do many other countries, once they begin applying the newest gas extraction technologies – and that natural gas can be efficiently converted to liquids.

How many Mexicans does it take to drill an oil well?

More than 140,000, and even then they’re not very good at it. For this, now acute, problem, blame the politicians.

Why Poland Upped Its Reliance on Gazprom

Poland wants to diversify its energy supply, but a recent deal with Gazprom only increases its dependence on the Russian gas giant. Folly—or smart move?

Gazprom Ups 2010 Investment to $28M

Gazprom will increase its investment program next year by 5 percent to 802 billion rubles ($27.94 billion), a source close to the company said on Thursday.

Electric cars need government support: Nissan-Renault CEO

Electric cars could help China and other countries reduce their dependency on oil but the government must provide incentive to make the shift, Nissan and Renault CEO Carlos Ghosn said Thursday.
Car makers need backing as they respond to the growing consensus among consumers that zero-emission vehicles are necessary to cope with the environmental crisis, Ghosn told an auto forum in Shanghai.

Oil heavyweight ponders fast changing landscape

The kingdom - home to the world's largest proven oil reserves - recently raised its production capacity to 12.5m barrels per day following a $100bn development programme.
That gives Saudi Arabia spare capacity of around 4m barrels, reaffirming its unrivalled position as the world's key swing producer.
Still, the global economic crisis has forced Aramco, to slash its upstream maintenance budget from around $7bn a year to between $4bn-$5bn.
The cut was "to respond to the fact that we are sitting on significant spare capacity and our production declined by more than 1.5m barrels", Mr Falih says.
As for new capacity development, "there is nothing in the plans today," he says.

Steve Andrews: Umbrage in the Gas Patch

Last week, two remarkable events at World Oil magazine raised the decibel level about shale gas. First, WO columnist Art Berman’s latest shale piece, intended for the November issue, was yanked prior to publication. Berman immediately resigned. Berman and WO editor Perry Fischer issued on-line statements, saying the column was axed due to pressure applied by one or two natural gas companies on the president of Gulf Publishing. Fischer, the magazine’s editor for 11 years, reports that he fought the column’s cancellation, then took two days off. “When I returned I was fired,” Fischer relates. “I wasn’t told why, but neither was I surprised.”
If you’re keeping score, this isn’t the first blood to be spilled over shale gas production, nor will it be the last.

Chris Martenson - "It's Really Bad" - Oil Supplies Intentionally Overstated

If this is true, and if it needs to be confirmed, it means that all models of stocks and bonds that rely on long-term cash flow models are wrong. It means that our primary assumption of petroleum fueled growth is wrong.
It means that we are several decades late in responding. It means that we do not have time to slowly modify our fleet to carbon-fiber electric cars or any other fantasy technology.
It means that we've squandered (and continue to squander) our most valuable resource of them all - time.

MMS: More Than 30% of Gulf Oil Production Still Shut-In

Offshore oil and gas operators in the Gulf of Mexico are reboarding platforms and rigs and restoring production following Tropical Storm Ida. The Minerals Management Service's Continuity of Operations Plan team is monitoring the operators’ activities. This team will be activated until operations return to normal.
Based on data from offshore operator reports submitted as of 11:30 a.m. CST today, personnel have been evacuated from a total of 17 production platforms, equivalent to 2.45% of the 694 manned platforms in the Gulf of Mexico. Production platforms are the structures located offshore from which oil and natural gas are produced. These structures remain in the same location throughout a project’s duration unlike drilling rigs which typically move from location to location.

Petrobras Workers Approve Possible Strike in Vote Ending Today

(Bloomberg) -- Petroleo Brasileiro SA workers voted in favor of a possible strike, a union spokeswoman said.
Workers in a unanimous vote approved giving the national oil-workers’ federation the power to call a strike should talks with the state-controlled oil producer fail, said the spokeswoman, who declined to be identified because of the group’s policy.

Cuba orders extreme measures to cut energy use

HAVANA (Reuters) - Cuba has ordered all state enterprises to adopt "extreme measures" to cut energy usage through the end of the year in hopes of avoiding the dreaded blackouts that plagued the country following the 1991 collapse of its then-top ally, the Soviet Union.
In documents seen by Reuters, government officials have been warned that the island is facing a "critical" energy shortage that requires the closing of non-essential factories and workshops and the shutting down of air conditioners and refrigerators not needed to preserve food and medicine.
Cuba has cut government spending and slashed imports after being hit hard by the global financial crisis and the cost of recovering from three hurricanes that struck last year.

Malawi: Fuel shortage deepens

Malawi continues to experience a paralyzing fuel shortage that authorities blame on technical problems at the Mozambique's Beira Port.

The Philippines: Palace to scrap oil price freeze order

MANILA - Giving into the clamor of the business community, Malacañang announced on Thursday it would lift the cap on oil prices in Luzon.
Justice Secretary Agnes Devanadera confirmed to ABS-CBN News that Malacañang is set to scrap the controversial Executive Order 839, which mandated oil companies to bring down fuel prices to the October 15 level in the aftermath of the recent typhoons.
But she denied that Malacañang was pressured by threats of an oil supply shortage.

Al Gore's Inconvenient Truth sequel stresses spiritual argument on climate

Al's Gore's much-anticipated sequel to An Inconvenent Truth is published today, with an admission that facts alone will not persuade Americans to act on global warming and that appealing to their spiritual side is the way forward.
In his latest book, Our Choice: A Plan to Solve the Climate Crisis, the man who won a Nobel prize in 2007 for his touring slideshow on disappearing polar ice and other consequences of climate change, concludes: "Simply laying out the facts won't work."

Food: Is Monsanto the answer or the problem?

ST. LOUIS (Reuters) - Norman Borlaug, the father of the Green Revolution of the 1960s and 1970s, had only months to live when he received a visit from an old friend, Rob Fraley, chief of technology for Monsanto Co.
Borlaug, who won the Nobel Peace Prize in 1970 for his work increasing food production in starving areas of the globe, welcomed Fraley to his Dallas home, where the two men sipped coffee and tea and discussed a subject dear to their hearts: the future of agriculture and the latest challenges of feeding the human race.

Is the world awash in oil? - Not if you ask the folks who pump it

To read the most recent WEO, released this week, you would think the planet is swimming in oil CL-FT. So fear not - the "peak oil" mob is wrong. The peakists argue that the world will soon reach maximum-possible oil production, and may have already, after which humanity will begin a slow but sure descent into bedlam and bankruptcy. That's because oil consumption and GDP growth are directly linked. Cut the first and the second can only follow.
The WEO authors don't buy into the peakist theory, never have and probably never will. The WEO expects oil production to reach about 105 million barrels a day by 2030, up from last year's 85 million. The production estimate is essentially unchanged from last year. So forget the pokey little hybrid - buy that V8-powered truck you've been dreaming about.
But the WEO team, led by chief economist Fatih Birol, is increasingly finding itself on the defensive. A small but growing number of scientists and oil executives think the WEO is out of touch with reality, that it is a creating false - and highly dangerous - sense of confidence.

Shale gas transforms energy picture

It may be hard to remember now, but it is less than five years since the Hirsch Report, prepared for the U.S. Department of Energy, warned that previous optimism about gas supplies "turns out to have been misplaced" and "supply difficulties are almost certain for at least the remainder of the decade."
"Gas production in the United States now appears to be in permanent decline," according to senior analysts cited in the report. Hirsch urged policymakers to learn lessons from "peak gas" and be ready to deal with the disruption caused by "peak oil."
Instead, dry gas production has soared from 18.5 trillion cubic feet (tcf) in 2005 to 20.4 tcf in 2008, and is on course to hit 21 tcf in 2009 (the highest since 1973-74).

Oil Demand Returns to Growth In Q4 - IEA

LONDON (Reuters) - The world will use more fuel in the fourth quarter of 2009, marking the first time global oil demand has risen since the second quarter of 2008, the International Energy Agency said on Thursday.
After a year-on-year contraction in demand for the first three quarters, its monthly report found fuel consumption was edging higher in the final three months of the year.

Higher oil seen threatening recovery

Rising oil prices could imperil a modest increase in crude demand and the recovery of the global economy, the International Energy Agency said Thursday as it raised its outlook for oil demand this year.
“The recent price spike, if further extended, risks derailing the recovery,” the IEA said. “Not only that, but oil demand itself would rebound much more slowly were the price rally sustained into 2010.”

Medvedev Demands End to ‘Humiliating’ Oil Dependence

(Bloomberg) -- President Dmitry Medvedev renewed his demand for economic modernization and an end to Russia’s “humiliating” dependence on commodities even as rising oil prices eased the steepest contraction on record.
“We shouldn’t look for the guilty only outside the country,” Medvedev said in his annual state-of-the-union address in the Kremlin today. “We haven’t freed ourselves from the primitive structure of the economy. It’s a question of our country’s survival in the modern world.”

Russia’s Economic Decline Eases on Commodities Demand

(Bloomberg) -- Russia’s economic decline eased last quarter from a record slump in the previous three months as oil, gas and metals prices rebounded and stimulus measures helped offset the impact of the global recession.
Output of the world’s biggest energy exporter shrank 8.9 percent in the third quarter from a year earlier, after contracting a record 10.9 percent in the previous period, the State Statistics Service said in a preliminary estimate on its Web site today. From the second quarter, output grew a non- seasonally adjusted 13.9 percent. The office didn’t give a breakdown of the figures.

'Norway players tighten purse strings'

Investment by Norway's oil and gas industry should fall to about Nkr118 billion ($21.11 billion) next year, down from this year's record spend of Nkr129 billion, the country's Oil Industry Association, the OLF, said today.
In September, Statistics Norway (SSB) estimated that investments on the Norwegian Continental Shelf would rise to Nkr145.4 billion next year, slightly up from its 2009 estimate of Nkr143.5 billion , and up from last year's Nkr123.9 billion spend.

Mexico's Pemex to invest $12.1 bln in new pipelines, upkeep

MONTERREY, Mexico (Reuters) - Mexico's state run oil company said it will invest $12.1 billion in new pipeline projects and maintenance of its existing facilities over the next 10 years in a bid to boost flagging output.
Over the next 5 years, Pemex will spend $5.5 billion to build new pipelines, pumps and storage facilities, Juan Jose Suarez, Pemex's chief executive, told a business forum in northern Mexico.

Kazakhstan boosts output by 7.8%

Kazakhstan, Central Asia's largest oil producer, raised oil and gas condensate output by 7.8% year-on-year in the January to October period to 63 million tonnes, its State Statistics Agency said today.

Repsol Profit Drops on Lower Prices, Refining Margins

(Bloomberg) -- Repsol YPF SA, Spain’s largest oil producer, said third-quarter profit fell 61 percent as oil and natural-gas prices declined and refining margins narrowed.

Fears raised about Brazil infrastructure

Analysts said the blackout shows Brazil's lack of investment in the power system at a time when Latin America's largest economy is booming and the country is preparing to host the 2014 World Cup and 2016 Olympics.
The Brazilian Olympic Committee would not comment on the power failure. But among guarantees made to the International Olympic Committee is that Rio, as the host city in 2016, will be isolated from the nation's power system - to avoid future problems. The city will have its own direct energy feed during the Games.

Brazil Agency Says Power Grid Vulnerable to Outages

(Bloomberg) -- Brazil’s integrated electricity grid leaves it vulnerable to the types of outages that occurred this week, when 40 percent of the country was plunged into darkness, according to a government energy research agency.
“Brazil has the largest integrated power grid in the world; it’s fantastic because it facilitates electricity transmission between regions, but the domino effect that happens when we have a problem is a major inconvenience,” said Mauricio Tolmasquim, president of Brazil’s Energy Research Agency.

D.O.E. Hires V.C. to Run Loan Programs

The Department of Energy tapped a venture capitalist to run its ts loan guarantee and green auto loan programs.
The D.O.E. said Wednesday that it had named Jonathan Silver, a former managing general partner at Washington D.C.-based Core Capital Partners, to head the loan programs, which Earth2Tech notes have doled out millions in loans and guarantees to venture-backed companies like Tesla Motors and Fisker Automotive.

On the road to electric vehicles, bumps remain

Nashville is one of a handful of cities in the U.S. targeted to become an early focal point for electric vehicles, as Nissan plans to start production of a battery-powered car in Smyrna by 2012 and a program is launched to build a network of recharging stations.
But getting to the point where electric vehicles are common will take time and work, said Joe Hoagland, TVA's vice president for environmental policy, science and technology.
"If everyone of us had a car or two in the garage that was charging every night, could that be handled?" Hoagland asked. "I'm not sure."

Switching to electric cars could actually speed climate change

The idea that a wholesale switch to electric cars would automatically reduce CO2 emissions and dependence on oil is one of a number of myths dispelled by a major new report conducted on behalf of the Environmental Transport Association (ETA).
The report found that whilst there were significant potential environmental benefits to be had from a switch to electric vehicles, these were wholly dependent on changes in the way electricity was generated, energy taxed and CO2 emissions regulated.

Plants Burning Garbage May Plug U.K. Power Supply Gap

(Bloomberg) -- U.K. trash collectors, fighting rising landfill taxes, plan to burn enough rubbish to fuel power stations with the capacity of two nuclear reactors.
The U.K. may be able to incinerate about 15 million metric tons of waste a year, producing between 2,000 and 3,500 megawatts of power and heat, according to Pennon Group Plc’s Viridor unit and Montagu Private Equity LLP’s Biffa Ltd., which are building energy-from-waste generators. The plants would be able to satisfy about 5 percent of peak electricity demand, or 4.5 million homes.

"Clean coal will work:" IEA boss

One of the world's top energy experts says that despite climate change, there is a strong future for the backbone of the Australian economy - coal.
Nobuo Tanaka, the executive director of the International Energy Agency (IEA), gave an upbeat assessment of the prospects for new technologies to make coal more climate-friendly.

The Hubbert Peak Theory of Rock, or, Why We’re All Out of Good Songs

The decline in U.S. oil production* is explained by the Hubbert Peak Theory, which states that “the amount of oil under the ground in any region is finite, therefore the rate of discovery which initially increases quickly must reach a maximum and decline.” Makes sense, right? The same theory can apply to anything of a finite quantity that is discovered and quickly exploited with maximum effort.
Including, it would seem, rock & roll. I know, the RS 500 list is not without its faults, but it does allow for some attempt at quantifying a highly subjective and controversial topic and for plotting the number of “greatest songs” over time. Notice that after the birth of rock & roll in the 1950’s, the production of “great songs” peaked in the 60’s, remained strong in the 70’s, but drastically fell in the subsequent decades. It would seem that, like oil, the supply of great musical ideas is finite. By the end of the 70’s, The Beatles, Led Zeppelin, Black Sabbath, the Motown greats, and other genre innovators quickly extracted the best their respective genres** had to offer, leaving little supply for future musicians.

Chris Saliba reviews Crude World: The Violent Twilight of Oil, by Peter Maass

The main thesis of the book is that oil creates volatility and havoc at all levels. For poor African nations like Nigeria and Equatorial Guinea, plundering US oil concerns are happy to work with dictators and strongmen. The money that should go to the impoverished people of these countries is funnelled back to corrupt leaders who lead the sort of lavish lifestyles that would make Marie Antoinette blush.
Other countries, like Ecuador, find their environment despoiled by marauding oil companies. The unhappy histories of the Middle East are well known. War in Iraq and Kuwait, US meddling in Iran. Saudi Arabia is an unusual case all of its own. Its massive oil endowment has created a lopsided economy, completely captive to the vicissitudes of the global oil market. (90 per cent of the country's exports are oil, bringing in 75 per cent of the country’s revenues.)

We need to go cold turkey to kick our addiction to oil

Forget "green growth". Judging by the hard numbers, only two economic factors produce reliably good environmental outcomes: high energy prices and recession. During the era of soaring oil prices, which peaked at just over $140 a barrel in June 2008, people began to do all the things greens have been badgering them about for years: driving less and cutting back on flights, for example.

Stephen Schork: More Upside in Oil

Crigger: There's a lot of discussion lately on this idea of peak oil, and how that affects supply and demand for oil. What are your thoughts?
Schork: I don't believe in it at all.

Another classic CNBC quote: “Dollar back to normal pre-crisis levels”

Do these pump monkeys have short memories? Why was oil at $147 in 2008?? It is simply because the dollar broke below 72 and looked like it had no support and people PILED into every ANTI-dollar trade. Sorry peak oil folks, this is what I strongly believe. Why is oil over $80 now even though we have ran out of places to store it in the U.S. and demand is next to nothing? Because the dollar is at 75 and people are piling into the SAME ANTI-DOLLAR trades.

The Global Oil Scam: 50 Times Bigger than Madoff

$2.5 Trillion - That’s the size of the global oil scam.
It’s a number so large that, to put it in perspective, we will now begin measuring the damage done to the global economy in "Madoff Units" ($50Bn rip-offs). That’s right - $2.5Tn is 50 TIMES the amount of money that Bernie Madoff scammed from investors in his lifetime, yet it is also LESS than the MONTHLY EXCESS price the global population is being manipulated into paying for a barrel of oil.

Crude Oil Is ‘Coiled’ to Spring to $85: Technical Analysis

(Bloomberg) -- Crude oil is “coiled” to spring to $85 a barrel before the end of the year, according to a technical analysis by Auerbach Grayson, a brokerage in New York.
The range that crude oil has traded in has narrowed since futures broke though resistance at $76.50 a barrel on Oct. 15 and reached a one-year high of $82 on Oct. 21, according to Richard Ross, an analyst at Auerbach Grayson. This pattern is setting up the market to rise, he said.
“A coil has formed since Oct. 15 as the range has got narrower and narrower,” Ross said in a telephone interview. “We’re seeing the lows get higher and the highs get lower.”

OPEC Supply May Rise From Nine-Month High, IEA Says

(Bloomberg) -- OPEC crude oil production rose in October to the highest level since January and the group may increase it further at a meeting next month in Angola if oil prices keep rising, the International Energy Agency said.
Production from 11 members excluding Iraq rose by 150,000 barrels a day from September, to 26.48 million barrels a day, as Gulf members allowed more oil to flow to Asia. Compliance with output cutbacks agreed late last year by the Organization of Petroleum Exporting Countries slipped to 61 percent in October, from 64 percent in September, the Paris-based IEA estimated in its monthly report today.

BLM now collecting higher drilling application fee

CHEYENNE, Wyo. (AP) -- A huge increase in the application fee for oil and gas companies to drill on federal land is unfair and won't speed up review of drilling permits, industry officials said Wednesday.
The $6,500-per-well fee was part of the Interior Department appropriations bill passed by Congress and signed into law by President Obama on Oct. 30. The new fee amounts to a 62 percent increase over the previous $4,000 fee.

The threat of nuclear meltdown: The government says nuclear power is safe, but others say an airplane hit or frontal assault would be big trouble

"The protection level at nuclear power reactors is not anywhere near that required," said Frank von Hippel, a nuclear physicist, Princeton professor, and former assistant director for national security in the White House Office of Science and Technology. "The utilities are unwilling to spend the money and the Nuclear Regulatory Commission, which is basically under the thumb of the utilities, is not willing to make them."

Bad weather blamed in blackout for 60M in Brazil

RIO DE JANEIRO – Heavy rain and strong wind caused blackouts that left nearly a third of Brazilians — 60 million people — in the dark, officials said Wednesday as they scrambled to restore confidence in the country's infrastructure before soccer's 2014 World Cup and the 2016 Olympics.
The weather made transformers on a vital high-voltage transmission line short-circuit, Brazil's energy minister said. Two other transmission lines also went down as part of an automatic safety mechanism.

PSE&G cleared for additional NJ solar projects

NEWARK, N.J. – New Jersey's largest utility has received permission from state regulators to finance another 51 megawatts of solar power — enough energy for more than 45,000 homes.
The Garden State is second only to California, with 100 megawatts of installed solar generating capacity.

Study seeks steady supply for Mich. ethanol plant

KINROSS TOWNSHIP, Mich. – Researchers from Michigan State and Michigan Technological universities are seeking to ensure a steady and sustainable supply of material for the state's first wood-based ethanol plant.

Wis. agency: Utility project jeopardizes lizard

MADISON, Wis. – Wisconsin environmental experts say the rebuilding of an electrical transmission line in Waushara County could cause some lizards on the state's endangered species list to be killed.
The Department of Natural Resources says a permit it would issue to American Transmission Co. for the work would allow the "incidental taking" of the slender glass lizard. But the agency says any losses would not put its overall population at risk.

Peru slum goes cutting edge as 'fog catcher'

LIMA (AFP) – Many of Peru's grittiest slums can only dream of access to water. But thanks to a German NGO, simple technology and hard work, some humble homes are the first to use plastic netting to harvest water from the fog cloaking the night sky.

Climate sceptics are wrong - episode 4,356

So, oil is back above $80 again and officially the International Energy Agency (IEA) is warning that deep cuts in emissions are needed not just to tackle climate change but to avoid a doubling of energy bills by 2030, while unofficially a whistleblower at the agency thinks we are already in the "peak oil zone" and only behind the scenes lobbying stops government's admitting as much.
There are many reasons why climate change scepticism and a refusal to accept the need for urgent reductions in greenhouse gas emissions is a sure fire indicator of a mind deep in the throes of intellectual atrophy - the inability to discern between one off data points and long term trends, the support for theories that have been comprehensively debunked, the unedifying victim mentality - but now we can add peak oil to the list.

China seeks 'fair' climate deal

SINGAPORE (AFP) – China said Thursday it would seek a "fair and reasonable" result at world climate talks next month but insisted rich nations must bear most of the burden for tackling global warming.

Bangla PM says failure not acceptable in Copenhagen

"We cannot accept the failure of the Copenhagen summit," Hasina told the conference.
"The most vulnerable countries and the least developed countries are worried that their legitimate demands are being sidelined by the disagreements in climate change negotiations between the developed and developing countries."
She urged rich nations to help climate-hit, poor nations such as Bangladesh in the same way they bailed out economies damaged by the global recession.

Climate Summit May Bring ‘Political Declaration,’ Further Talks

(Bloomberg) -- The United Nations climate summit next month may bring a “strong political declaration” followed by another round of technical negotiations to forge a new global treaty, Poland said.
The UN will host almost 200 countries in Copenhagen on Dec. 7 to Dec. 18, seeking an accord on greenhouse-gas emission reductions that would succeed the Kyoto Protocol after it expires at the end of 2012. Two years of talks have stalled as developing countries call on richer nations to cut output first.

Major Asian cities face climate disaster: WWF

SINGAPORE (AFP) – Low-lying and impoverished Asian coastal cities such as Dhaka, Manila and Jakarta are vulnerable to "brutal" damage from climate change without global action, environmental group WWF warned Thursday.
Energy consumption and greenhouse gas emissions must be curtailed in "mega-cities" where global warming will affect everything from national security to health and water availability, the influential campaign group said.

Take a deep breath

Nate Hagens — Wed, 11 Nov 2009 19:27:46 -0400

The following is a brief guest commentary by an anonymous TheOilDrum reader on coping with general limits to growth anxiety.

If you have your own Campfire topics generally related to resource depletion, please email them to the editors.

I am an old man and have known a great many troubles, but most of them never happened. – Mark Twain

These past few weeks have gotten a little crazy, have they not? The IEA article in the Guardian is a sure step towards Peak Oil becoming an accepted reality for everyone in the world. I know I felt a mini panic attack when I began reading it, because for the first time I thought "man, TS is going to HTF REALLY soon!". The Fort Hood shooting was horrific, but to think that there have been 2 OTHER shootings in the same week is really worrying.

I was a bit of a worrier before becoming Peak Oil aware. I was one of those people that would sometimes get the reaction of “dude, you think WAY too much” when I would begin ranting about the state of the world. When I found out about Peak Oil, it was like God himself gave me the right to say to everyone “I told you so”.

These days I find it ironic that I find I’m worrying less than I ever used to because I’ve accepted that things could go very, very bad and most of it is out of my control. Still, there are some nights when think of what could happen. WW3, food riots, martial law and die-off’s are the worst things I associate with Peak Oil.

But I find ways to cope. My 2 main outlets are outdoor running/cycling and a little poetry/philosophy. I run as hard as I can, for as long as I can, and feel much better upon returning back to Doom.

A piece of poetry that holds a special place in my heart is Max Ehrmanns Desiderata.

Desiderata

Go placidly amid the noise and haste,
and remember what peace there may be in silence.
As far as possible without surrender
be on good terms with all persons.
Speak your truth quietly and clearly;
and listen to others,
even the dull and the ignorant;
they too have their story.

Avoid loud and aggressive persons,
they are vexations to the spirit.
If you compare yourself with others,
you may become vain and bitter;
for always there will be greater and lesser persons than yourself.
Enjoy your achievements as well as your plans.

Keep interested in your own career, however humble;
it is a real possession in the changing fortunes of time.
Exercise caution in your business affairs;
for the world is full of trickery.
But let this not blind you to what virtue there is;
many persons strive for high ideals;
and everywhere life is full of heroism.

Be yourself.
Especially, do not feign affection.
Neither be cynical about love;
for in the face of all aridity and disenchantment
it is as perennial as the grass.

Take kindly the counsel of the years,
gracefully surrendering the things of youth.
Nurture strength of spirit to shield you in sudden misfortune.
But do not distress yourself with dark imaginings.
Many fears are born of fatigue and loneliness.
Beyond a wholesome discipline,
be gentle with yourself.

You are a child of the universe,
no less than the trees and the stars;
you have a right to be here.
And whether or not it is clear to you,
no doubt the universe is unfolding as it should.

Therefore be at peace with God,
whatever you conceive Him to be,
and whatever your labors and aspirations,
in the noisy confusion of life keep peace with your soul.

With all its sham, drudgery, and broken dreams,
it is still a beautiful world.
Be cheerful.
Strive to be happy.

Max Ehrmann, Desiderata, Copyright 1952.

Campfire Questions

1)How do you cope with anxiety in general?

2)How are you preparing mentally for when TSHTF? Is this more important than having a year’s supply of freeze dried food in the basement?

3)What is one song/poem/story that can offer a moment of peace in this crazy world to you?

Peak Demand or Peak Consumption? A Look at OECD Oil Demand

Sam Foucher — Wed, 11 Nov 2009 10:19:07 -0400

Standard economic principles have demonstrated that price is a function of supply and demand. The same is true for the recent oil prices fluctuations we have witnessed over the last few years, namely the equilibrium between supply and demand. However, the following conundrum has not been resolved: are oil prices high due to greater demand or too little supply? This ambiguity allows for vastly divergent interpretations of the same data and depending on the agenda you are trying to push, will easily support either.

Lately, the concept of "Peak demand" has been suggested in a multitude of recent articles that unfortunately do not qualify their analysis of the status quo. Some suggest that we are willing to and capable of moving away from oil. Are we?

A few years ago, some analysts lectured us about the effect of oil prices on the creation of new oil supply. Now that this argument has clearly failed, they have decided over night that we don't need oil anymore. In this debate, it is important to distinguish between demand (what you want or need) and consumption (what you get based on your ability to buy). Following this logic, consumption is "satisfied demand". Conversly, we can define the "unsatisfied demand" or "excess demand" that has been suppressed. Below the fold, I'll show that the key driver behind the price increase since 2002 has been excess demand combined with unresponsive supply.

OECD Demand

In this analysis, I follow an approach similar to the one proposed by Ye et al. (pdf) using a model defining a desired inventory level. The consumption trend observed between 1990 and 2001, when the market was well supplied, can be easily and accurately modeled by a linear trend taking into account monthly fluctuations:

The fit result is shown as the magenta line illustrated on Figure 1 below. The above model will define normal demand levels assuming low oil prices. The OECD consumption has strongly reacted to higher oil prices and is now almost 10 mbpd the level expected by my nominal demand model.

Figure 2. Observed OECD consumption and nominal demand model (monthly, total petroleum products), volumes in million barrels per day (mbpd). data from the EIA.

Looking at the residuals C_t-D_t, the fall in consumption from the desired level is even more telling:

Figure 3. Difference between the nominal demand models and the observed consumption (monthly, total petroleum products), volumes in million barrels per day (mbpd). Data from the EIA.

I make the following assumptions:

because oil prices were so low during the 1992-2001 period (i.e. virtually no excess demand), I will call "nominal demand model" the linear model defined above.
The difference between nominal demand and observed consumption is an estimate of the excess demand: ED_t=D_t-C_t

Plotting the excess demand against oil prices clearly shows why prices rose until the financial collapse last year. Before 2002, prices and excess demand were contained within a tight cluster around 20$/barrel - evidence that the market was well supplied and at equilibrium. The red line shows that prices increased by $20 per 1 million barrels per day of excess demand between 2004 and 2008.

Figure 4. OECD Excess demand versus oil prices (WTI).

One could argue that the nominal demand model defined above is not stationary and has been affected by structural changes in demand. Unfortunately, the only way structural changes in demand could be estimated is if the oil prices of tomorrow would go back to $20 a barrel for a few years within a pro-growth and healthy business environment. Only then could a new nominal demand model be estimated; those conditions won't be satisfied anytime soon.

Peak demand would suggest that the demand model would change over time, but then the level of unsatisfied demand would go down, bringing down prices with it. Actually, the severe recession we are currently in since the fall of 2008 has destroyed demand as a result of high unemployment rates and reduced credit availability. Looking at the price model on Figure 3, a return to the $70-80 range is equivalent of a demand destruction of around 3 mbpd for all of the OECD.

What about Spare Capacity?

Spare capacity, mainly provided by OPEC, is the amount of oil that can be made available within 30 days and sustained for at least 90 days (EIA definition). Looking at the available spare capacity and the excess demand estimate, it is obvious that OPEC spare capacity has become deficient since 2002, and that the surge in excess demand coincides with the increase in oil prices as shown on Figure 5.

Figure 5. Oil prices (right axis) and estimated excess demand along with EIA estimate for OPEC spare capacity (left axis).

So What is Causing High Oil Prices?

As an interesting exercise, I looked at the causation between oil prices and demand/supply indicators. Causal search algorithms systematically investigate patterns of conditional dependence and apply the Causal Markov Condition to reconstruct the graph of the data generating process (A good overview is available here). I define the following quantities:

P: Monthly oil prices
S: Monthly oil supply
C: OPEC spare capacity (EIA)
D: Excess demand

I used the remarkable TETRAD IV software (family of software for causal modeling originating with Peter Spirtes, Clark Glymour, and Richard Scheines at CarnegieMellon University) available online. I split the dataset in two periods: 1998-2002 period when prices where relatively low and 2003-2008.

1998-2002 period:

Figure 6. Graphical causal model for the period 1998-2002

Spare capacity is dependent on prices and excess demand. Prices and excess demand are independent unconditionally; but are dependent conditional on spare capacity. In short, OPEC spare capacity was playing a buffer role in order to absorb excess demand.

2003-2008 period:

Figure 7. Graphical causal model for the period 2003-2008
Prices is dependent on supply and excess demand. Supply and excess demand are independent unconditionally; but are dependent conditional on prices. Spare capacity is independent of all the other variables at 5% significance.

Conclusions

Lower consumption does not mean lower demand, nor does it mean the increase in alternate sources of energy. If it did, it would be akin to saying that an alcoholic is sober implies he has effectively dealt with his addiction. It may be that he is sober because he has simply exhausted all of his options for obtaining additional alcohol. Also, I think it is important to differentiate between the following two causes of demand destruction:

Recession induced demand destruction (e.g. business going bankrupt, rising unemployment, etc.), or
Long-term structural changes in demand (e.g. increase in the average car mileage, increase efficiency, etc.)

In my opinion, the latter cause of demand destruction is the approach to take and can be implemented through adequate government policies (e.g. higher CAFE standards). When people are unemployed, energy efficiency is the last of their concerns. If we do not proactively implement demand side policies and instead wait for high prices to take their toll, social unrest and higher government deficits are likely to make things more challenging, or even completely unmanageable. Anemic supply growth, only a preamble to peak supply, was enough to create our present troubles. Wait until supply growth is negative!

We have enough data from the OECD to draw the following conclusions:

Sluggish supply growth is the main driver behind the 2002-2008 oil price increase. OPEC spare capacity has become irrelevant or at least unresponsive.
Nominal demand is between 3 and 5 million barrels per day above production capacity.
Prices are increasing by $20 for every million barrels per day of excess demand.
OECD consumption is very elastic to oil prices.
Non recession induced peak demand is not supported by the data.
The financial collapse and the current economic recession has at least reduced demand by 3 million barrels per day for the OECD.

In my next post, I will look at the non OECD demand.

Drumbeat: November 11, 2009

Leanan — Wed, 11 Nov 2009 10:04:33 -0400

Your Neighbor's Saving Energy; Why Aren't You?

We all know carpooling is good for the Earth. So highway departments build high-occupancy vehicle lanes and companies offer prime parking spaces for employees who share rides.
But carpooling is unlikely to save the environment. It's too hard.
So say scientists who have studied how people confront environmental and energy challenges. Carpooling, they say, has low "plasticity" -- that is, people are unwilling to do it -- so its "reasonably achievable emissions reductions" are low, as well.
Unfortunately, that is not how U.S. policymakers see it.
"We tend to fund efforts that appear to have, on the surface, the greatest potential emissions reductions," said Mike Vandenbergh, director of Vanderbilt University's Climate Change Research Network. "A real value is in looking not just at potential emissions reductions, but also at plasticity. Because otherwise, you'll be frustrated."

Matthew Simmons: “Global crude oil peaked in 2005”

Matthew Simmons, Chairman of “Simmons & Company International”, is the world’s largest private energy investment banker. Moreover, he is a leading expert on the crucial topic of Peak Oil. In the following interview, Mr. Simmons talks about the on-going recession, explains why we might have reached an end of growth and gives his reading of last year’s oil price spike.

Malthus and Brunel stalk energy outlook

LONDON (Reuters) - The alarmism and defeatism pervading previous editions of the International Energy Agency's (IEA) World Energy Outlook (WEO) have been partly replaced this year with an optimistic emphasis on new sources and technologies.
If previous editions owed their inspiration to Thomas Malthus ("we're all doomed"), this year's is an implied tribute to the great Victorian engineer Isambard Kingdom Brunel ("yes, we can").

IEA Whistleblower Claims Agency Has Downplayed Looming Oil Shortage

But seriously, almost everyone not hiding in a cave recognizes that our cars and homes won't run on fossil fuel energy sources forever. That's why we created PopSci's realist roadmap to 2050 for energy. It's also why the U.S. Department of Energy's new mad science lab has begun spraying funding in all directions for breakthrough technologies that could boost energy efficiency and improve renewable sources.

Kjell Aleklett: Comments on Guardian article: “Key oil figures were distorted by US pressure, says whistleblower”

I am not surprised that some within the International Energy Agency (IEA have leaked this news. Rather, it is astonishing that this has not become known earlier. (See the article in the Guardian: Key oil figures were distorted by US pressure, says whistleblower.)
The article ”The Peak and Decline of World Oil and Gas Production” was published as long ago as 2003 in the scientific journal Minerals and Energy – Raw Materials Report by Kjell Aleklett and Colin C. Campbell (Volume 18, Number 1, 2003 , pp. 5-20[16].) It was the first “peer reviewed” article to discuss Peak Oil.

Richard Heinberg: Just Tell Us The Truth

In the past few years these lone voices of warning have garnered the backing of a million-voice chorus: investment banks, oil analytics firms, and investigative journalists have joined the geologists in pointing out that oil production limits are within sight, and in calling for more transparency in official data reporting and forecasting.
But the International Energy Agency has stubbornly refused to come clean. And this is important: while financial analysts and investors are free to draw their own conclusions about Peak Oil (and a great many of them have seen the writing on the wall—hence recent run-ups in oil futures prices), national and local governments must rely on officially sanctioned fuel supply and price projections for all their planning. Energy policy, transport planning, agriculture policy, economic forecasting, and much more depend upon the august pronouncements of the Paris-based IEA.

Can we handle the truth?

If oil traders knew the truth about declining energy availability, the per-barrel price of oil would be $300 within a week. If stock traders knew the truth, we'd see capitulation of the markets shortly thereafter. If Americans knew the truth, they just might come to grips with reality, rally together, put their collective shoulders to the wheel, and start building a better world than the ominicidal culture of make believe to which we've all become accustomed.
But we'll never know, because the cabal of morally bankrupt bankers and politicians running this country -- and also the industrialized world -- will keep playing the shell game as long as they are allowed by the impotent media. Or, more likely, until the reality of oil priced in excess of $200 per barrel interferes with their imperial ambitions.

A double-front oil attack

The concern that oil may have hit its ”peak”, leading to higher prices, stares India on one front. On the other, the government insists on tightly regulating oil prices.

New Neighbors, New Economy

Russia is disappearing. So is Japan. Europe is next to go.
It's not the rising waters of global warming that threaten these parts of the world. The problem is more basic. The Russians and Japanese, as well as large numbers of Europeans, are not having enough children to replace themselves. The birth rates across a large swath of Eurasia are considerably below the replacement rate of 2.1 babies.

Court battle to slow roll out of Mexico oil reform

MEXICO CITY (Reuters) - A legal challenge to a Mexican oil reform law passed last year means international oil firms will have to wait longer for new contracts aimed at luring them back into the country.

Hancock's ideas need refinement

And while some are sounding the warning bell that oil demand south of the border has peaked, Greg Stringham, vice-president of the Canadian Association of Petroleum Producers, points out that even if one assumes a flat demand scenario, heavy oil demand is going to rise because of the drop in light oil supply.
In case Hancock hasn't noticed, it's a tough time for the refining business. The way things sit today --because the difference between the price of a heavy barrel and a light barrel is so thin--refining margins are thin to non-existent. In some cases, the refined barrels are selling for less than what the cost of the inputs are.

The Philippines: Vegetable traders feel effects of oil price freeze

After farmers and tricycle drivers, the vegetable trade sector became the latest industry to be affected by the price freeze, according to a QTV Balitanghali report.
A television report said that in Quezon province, where some gas stations claimed to have already run out of fuel supplies, vegetable vendors fear losing revenues because they could not transport their products to Metro Manila.

Take over oil industry, senators urge Arroyo

MANILA, Philippines — Warning of food riots and a stagnating economy should a fuel shortage occur because oil firms were not importing new stocks, three senior senators on Tuesday urged President Gloria Macapagal-Arroyo to take over the oil industry.
Senate President Juan Ponce Enrile, Senate Minority Leader Aquilino Pimentel Jr. and Sen. Miriam Defensor-Santiago also asked the government to import petroleum products to protect the people.

No propane shortage for harvest, suppliers say

WAVERLY --- Corn dryers are burning large amounts of fuel to keep harvest moving, but liquid propane distributors say farmers shouldn't worry about shortages.
Farmers are buying twice as much LP as usual to dry one of the wettest and biggest corn crops in history. Energy companies are fielding calls from producers concerned about LP availability, which could delay and already slow harvest.

Saudi Arabia Pursues New Oil Trade Opportunities: Implications for the US

Saudi Arabia has generally had falling oil production since its all-time peak in 1980 of 9.9 million barrels per day (mbpd). Present Saudi production is probably around 9 mbpd. The big question: Is declining Saudi production because the desert kingdom is running out of oil, or a voluntary action to reserve oil for potential higher prices in the future?
Saudi exports make up a total of 7 mbpd – about 9% of world crude oil consumption (around 75 mbpd).
Some oil experts (like Matt Simmons) believe that Saudi Arabia is now beyond peak oil production, or very soon will be. The low quality crude oil (sour and heavy) coming out of Saudi Arabia would also suggest that its oil fields are approaching exhaustion.

Oil cos racing back to Gulf; rough seas slow LOOP

HOUSTON (Reuters) - Oil companies were flying workers back to offshore platforms in the Gulf of Mexico on Wednesday, but rough seas threatened to stretch return into Thursday.
"Seas are down from what they were at the storm's passage, said Jim Shugart, executive vice president at ERA Helicopters. "But they're still pretty rough out there because winds were high. Today's better. We should be through by end of the day."

The parallel worlds of OPEC quotas and actual production

In the world of OPEC, the word production can mean different things. There is official production, whereby OPEC sets quotas for individual members under an overall volume, and there is actual production, which can bear little resemblance to official levels.
And there is a further complication. OPEC, although it has given out the overall target number for the current output agreement, has not published the individual quotas under that target. Which means that people like my colleagues and myself have had to work out those quotas by ourselves, sometimes with a bit of help from delegates or ministers who may confirm figures or indicate that our calculations are close to the mark.

WSJ: Exxon Lured By Gas Potential

Exxon Mobil Corp. has joined a growing list of major energy companies looking to exploit an emerging source of natural gas once seen mainly as the bane of coal miners.
The world's largest publicly traded company by market capitalization has acquired about two million acres of coalbed-methane resources in Germany, its first foray into the exploration of gas trapped in coal seams in Europe.

Energise your money and investments

If you saw the final episode of economist David McWilliams' most recent television series, Addicted to Money, you know that while he was making the series he experienced a Damascene moment: he realised that not only was the late, great, global economic boom the consequence of the availability of a century and a half of cheap energy oil but that everyone's assumptions about the future are predicated on how soon we can replace this increasingly costly resource.

The Choice Ahead: Entrenched Fossil Fuel Dependence Or Climate Change Management

According to Nobel Laureate Joseph Stiglitz and Harvard economist Linda Bilmes, the Iraq War cost three trillion dollars. While much of the money used to conduct the war was borrowed (most notably from Chinese institutions), ultimately American taxpayers will be responsible for many years to come for footing the bill, including the high interest payments on the funds loaned. This is because the federal budget, especially between the military and big business bailout costs, far exceeded the annual and shrinking amount taken in by taxes.
Was it worth it? The answer partly depends on whether one works for or has holdings in one of the oil companies that made out well in the aftermath.

Experts worry over peak soil

The possibility of “peak soil” was raised by Professor John Crawford, of the University of Sydney’s Institute of Sustainable Solutions, who said Europe was losing soil at the rate of 17 tonnes a hectare, and in China soil was being lost at 57 times the rate at which it could be replaced.

Nuclear Power: The answer to the UK’s energy woes?

France is a case in point. It derives nearly 80% of its electricity from 59 nuclear plants and is the world’s biggest electricity exporter. It has the cheapest power rates in Europe, and has the lowest carbon footprint per person.
However, the significance of radioactive wastes and contamination threats should not be underestimated if we really want to promote sustainable development that considers the intergenerational impact and legacy of such technologies. In this vein, it might be argued that the significant funds for these large infrastructure projects would, in fact, be better targeted at scale-up and capacity building for renewable technologies such as wind, solar, tidal and others, which don’t generate such controversial by-products. For now, the pressure is on in the UK to streamline the planning process to enable the speedy construction required to bridge the expected energy gap.

Jeff Rubin: What do we do for the next recession?

Correctly diagnosing the nature of a disease is usually an essential first step to finding its cure. Similarly, knowing what caused this recession seems pretty pivotal to figuring out how to avoid falling into the next one.
Subprime mortgages may have blown up Wall Street, but it was triple-digit oil prices that blew up the world economy. This distinction is not just academic — it has huge implications for what steps governments should have taken and, maybe even more importantly, what steps they shouldn’t have taken.

This economist (Jeff Rubin) loves his Audi

“If we're going to go massively into debt, I'd rather we invest in our future not our past. But our future is public transit. Our problem is if 50 million North Americans took the exit lane over the next decade, there isn't a bus to get on.
“During World War Two, Detroit reinvented itself and stopped producing cars and started making tanks and bombers. If they could do that over World War Two, why couldn't today's unemployed auto workers be re-employed making buses, subway cars, and light rapid transit vehicles instead of SUVs?"

Oil Hoarded By Traders Offshore Hits 10-Year High

Lloyd's List reports that "there are now 129 tankers deployed for temporary storage by traders and investment banks".
These oil hoarders continue to buy lower-priced oil now with the intention to sell it in the future at the currently higher oil prices in the futures market. (ie. trading the oil price contango)

U.S. giant has partnership in $5 billion China project

Exxon Mobil Corp. and partners were expected to announce early today the completion of a $5 billion refining and chemical complex in China's Fujian province, a sprawling project that arrives as U.S. refineries and chemical plants are closing.
The complex in the city of Quanzhou, which Exxon Mobil developed with Saudi Aramco, China's Sinopec and the Fujian government, will expand production of transportation fuels like diesel and widely used building block chemicals, demand for both of which is projected to grow rapidly in China in coming years.

China to maintain crude oil imports from Iran

FUZHOU, CHINA: Top Asian refiner Sinopec Corp expects crude oil imports from Iran to stay at 400,000 barrels per day (bpd) or slightly more next year, the company’s president said yesterday, a level unchanged from this year’s contract amount.

Phil Flynn: Sitiing Idle After Ida

After surging yesterday on the weak dollar and now tropical storm Ida, I think we can focus on all the bearish stuff that did not seem to matter. You know stuff like gas gluts and supply surpluses. As Ida hits the coast the market realizes that there is plenty of oil, products and spare production capacity to easily weather this tropical storm. More oil is on the way as the Saudis and OPEC send signals that more oil production is likely at the December OPEC meeting and news that China is raising the domestic cost of gasoline which could put a dent in China’s domestic oil demand.
Reuters News reported that Saudi Arabia, the world's top oil exporter, has increased December supplies to large companies, and one Asian customer is expected to receive full contract volume. Bloomberg News reported that OPEC is increasing output at the fastest pace in two years, adding to near-record inventories.

Will the lights go out on South Africa's World Cup?

An ugly race row has left South Africa's national power company leaderless and is threatening to turn the lights out in the country only nine months before it is due to host the World Cup.

Venezuela: Government alleges excessive demand to hide energy crisis

Instead of implementing new measures allowing electric utilities to provide "a reliable and high-quality service," the government has issued "compulsive and inconsistent decrees to hide its incompetence," said Miguel Lara, former general manager of the Office of Interconnected Systems Operation (Opsis).
In his view, Minister of Energy and Petroleum Rafael Ramírez, "in an attempt at concealing the true origin of the problem, has said that in recent years Venezuela has recorded an unprecedented growth in power demand."

Goodbye to globalization: In an Age of Catastrophe, resurrecting the globalized economy is a huge mistake

Now is the time to question globalization, to ponder the consequences of allowing the market to run rampant. Is it not possible that we need not more globalization but less, not linking but de-linking, the better to lessen the likelihood of more financial and economic crises — and to deal with the latest and greatest of capitalism's horrors, the ecological footprint of long distance trade?
Perhaps we should read and heed the great and wise economist John Maynard Keynes on how the message of the Great Depression of the 1930s was that there should be less international finance and less international trade. Or study today's writers, the American ecologist Bill McKibben and his book, Deep Economics, and the American scholar of food, Michael Pollan, on the compelling case for local production, respectful of community and nature.

Good food nation: Researchers think America's obesity epidemic can be reversed via 'foodsheds'

A map of northeastern cities depicts their proposed “foodsheds,” the areas that naturally supply metropolitan areas with their food. Image: Urban Design Lab at the Earth Institute, Columbia University

Now, in another report finished this October after meetings with food-industry leaders, the MIT and Columbia researchers propose a solution: America should increase its regional food consumption. Each metropolitan area, the researchers say, should obtain most of its nutrition from its own “foodshed,” a term akin to “watershed” meaning the area that naturally supplies its kitchens. Moreover, in a novel suggestion, the MIT and Columbia team says these local efforts should form a larger “Integrated Regional Foodshed” system, intended to lower the price and caloric content of food by lowering distances food must travel, from the farm to the dinner table.

How Green Are Your Nukes?

The role that nuclear power might play in addressing the problem of man-made global warming is fiercely disputed among environmentalists. Two new books by big names in the movement stake out the boundaries of that debate. On the pro-nuclear side stands Whole Earth Discipline: An Ecopragmatist Manifesto, by Stewart Brand. And parked in the (more or less) anti-nuclear corner is Our Choice: A Plan to Solve the Climate Crisis, by Al Gore.

Nuclear alone won’t keep the power flowing

Britain faces two urgent energy problems. First, we have simply not invested enough in infrastructure to meet future demand for heat and power. There is a yawning capacity gap that, in the next decade, will force prices up for consumers and industry. The second problem is how to mitigate climate change by cutting carbon emissions. The two problems will need more than £200 billion to fix in the next decade.

'Solar panels could solve energy crisis'

IF every south-facing building in the UK fitted solar panels, the country would have all the electricity it needs, an expert has claimed.

The future of oil: New market dynamics created by climate change, geological and geopolitical pressures will transform our hydrocarbon economies

The race for the world's remaining oil reserves could get very nasty. Recently, Nigerian militants announced their determination to oppose the efforts of a major Chinese energy group to secure six billion barrels of crude reserves, comparing the potential new investors to "locusts". The Movement for the Emancipation of the Niger Delta told journalists that the record of Chinese companies in other African nations suggested "an entry into the oil industry in Nigeria will be a disaster for the oil-bearing communities".
Whatever the facts, the end of the first decade of the twenty-first century is likely to be seen by future historians as the beginning of the final chapter of a unique, unrepeatable period in human development. Even oil companies now see the Age of Oil in irreversible decline – even if that decline spans decades. International oil companies (IOCs) increasingly accept that they must transform themselves completely – or expire – by mid-century.

The perils of forecasting

A Lex note yesterday, for those who missed it, looks at the WEO and praises the International Energy Agency’s data. But it adds:
Like many forecasts, though, it makes the mistake of extrapolating recent trends too freely. For example, the IEA expects global oil production to rise from last year’s 85m barrels to 105m by 2030 while acknowledging that about two-thirds of this will come from fields yet to be found or developed. But at what cost?
It adds:
Living with $300 crude is no more outlandish than suggesting a decade ago that $80 would be the new normal.
Energy markets, it says, have so many moving parts that long term forecasts are a mug’s game.

Econbrowser: Will rising oil prices derail the recovery?

Last April I described new research on the role of oil prices in the recent recession. Here's an update on what's happened since then.

Era of cheap oil 'is over' (video)

The International Energy Agency has warned that increasing demand from developing countries will drive fuel prices up in the coming years.
The agency's 2009 World Energy Outlook suggests the economic crisis has cut requirements in the short term, but that the trend will not continue.

IEA: Has the Titanic Sighted the Iceberg?

Nothing of what the IEA is saying now is new; other organizations have raised warnings for years. But that’s exactly the problem. The IEA, as the whistleblowers suggest, is often a barometer for the feelings of its member countries.

International Energy Association: Forced to Eat Their Optimistic Data on Future Oil Supply?

Let’s go back a few months and find some of the early signals, however, indicating this story was likely overdue. In August, a journalist at a separate British newspaper, The Independent, had conducted a long interview with the IEA’s chief Fatih Birol. In that interview, Dr. Birol made a number of very clear statements about the rather dire prospects for any future growth in world oil supply. This was unsurprising, in some respects, because the IEA had already asserted, in World Energy Outlook 2008, that existing oil fields were declining by at least 4.00% if not 6.00% per annum, and that to actually lift global oil production would require not billions, but trillions, of investment.
But something odd happened in the weeks that followed this interview. First, Dr. Birol was interviewed by another journalist, this time David Strahan. In this subsequent interview, Birol claimed he’d either been misunderstood, or misquoted, by the Independent’s journalist–Steve Connor–who had reported that Birol was calling for “peak oil in about ten years.”

IEA: Washington made us fudge oil data

The subject of declining reserves was given real momentum by M. King Hubbert , who correctly predicted a decline in US oil output in the 1970s, even as Texas companies were denying his research.
King's methodology has predicted a similar fate for world oil production. Hubbert's former colleague Kenneth Deffeyes and oil analyst Matthew Simmons say production from existing major sources may already have peaked.
Naturally enough, the implications of such a theory are enorrmous, but there's also a significant constituency that dismisses entirely the peak oil theory - a constituency that has traditionally included the International Energy Agency, the oil industry, OPEC and Washington.

Oil up to near $80 as the dollar weakens

Oil prices rose to near $80 a barrel Wednesday as the effects of a weaker dollar trumped a report pointing to a rise in U.S. oil inventories.

Oil Market Is ‘Very Comfortable,’ Al-Attiyah Says

(Bloomberg) -- The global crude oil market is “very comfortable” and it is unlikely that OPEC would increase production quotas significantly, Abdullah bin Hamad al-Attiyah, Qatar’s energy minister, told reporters today in Singapore.

OPEC: Pricey crude could erode 2010 demand

CAIRO — OPEC says demand for crude oil will slip in the industrialized nations next year if oil prices climb and are sustained above their current level.
The warning today came as the Organization of the Petroleum Exporting Countries, supplier of about 35 percent of the world's crude, revised its 2010 global crude demand up to 85.07 million barrels per day — 75,000 barrels per day higher than its assessment last month.

Gazprom Has ‘Everything’ in Place to Avoid European Gas Cuts

(Bloomberg) -- OAO Gazprom, the world’s biggest natural-gas producer, expects to maintain contracted supplies to Europe this winter, avoiding a repeat of a dispute with Ukraine that disrupted shipments in January.

Russia Warns of Gas Crisis If Ukraine Misses Payment

(Bloomberg) -- Russia warned it may halt gas exports through Ukraine if the bailout-dependent former Soviet state can’t keep up payments in what is becoming an annual dispute between the two countries.
“There will be a great danger of another crisis” should Ukraine miss a single monthly payment to energy producer OAO Gazprom, Dmitry Peskov, the spokesman for Prime Minister Vladimir Putin, told reporters late yesterday.

Blackouts Plague Energy-Rich Venezuela

CARACAS, Venezuela — This country may be an energy colossus, with the largest conventional oil reserves outside the Middle East and one of the world’s mightiest hydroelectric systems, but that has not prevented it from enduring serious electricity and water shortages that seem only to be getting worse.
President Hugo Chávez has been facing a public outcry in recent weeks over power failures that, after six nationwide blackouts in the last two years, are cutting electricity for hours each day in rural areas and in industrial cities like Valencia and Ciudad Guayana. Now, water rationing has been introduced here in the capital.

Brazil Restores Power After Outage Hits 12 States

(Bloomberg) -- Power was restored in Brazil after an outage at a dam providing 20 percent of the country’s energy thrust about half of the nation’s 190 million people into darkness for at least two hours.
The 14,000-megawatt Itaipu Binacional hydroelectric dam said operations were back to normal at 6 a.m. local time after transmission failed, causing the world’s largest dam by output to forcibly shut down for the first time since it went online in 1983. The government is investigating the incident.

Saudi Oil Pricing Paradigm Shift: WTI Index Out, ASCI Index In

US Gulf oil output, currently at about 1.2mn b/d, is expected to climb to 1.4mn b/d next year and 1.9mn b/d in 2013 boosting spot market trading volumes. This decision by Aramco in part demonstrates the emerging importance of the US Gulf as the new center for price discovery.
Meanwhile, the abandonment of WTI, a longtime standard since the 1980’s, for a five-month-old Argus index by Saudi Arabia is a big deal in the crude pricing assessment world. The move not only highlights some specific problems of WTI, but also signifies ongoing shifts in the global energy landscape, as emerging countries take an increasingly prominent role in the oil trade.

Aramco to shut Ras Tanura crude unit

State-run oil exporter Saudi Aramco is expected to shut the crude distillation unit at its Ras Tanura refinery in mid-December for planned maintenance, industry sources said on Wednesday.
The 325,000 barrels per day (bpd) crude processing unit was expected to be offline between 30 to 50 days, industry sources said.

Iraq Invites Bids From Drilling-Equipment Suppliers by Nov. 22

(Bloomberg) -- Iraq, holder of the world’s third- largest oil reserves, is seeking bids from providers of drilling equipment as the Persian Gulf producer seeks to increase crude output from fields and new wells.

Pakistan's energy sector and the great game

HARRIS: Whether or not you believe in Peak Oil, Pakistan will present attractive exploration opportunities, as you can see here with 125 delegates at this meeting. That means there's interest.
QADRI: But multinationals are not the only ones interested in Pakistan's energy sector. With its ever-growing population, Pakistan has struggled to match energy supplies with demand. Those difficulties turned violent in August when angry mobs in Karachi and the Punjab protested against the long daily power cuts that have brought modern life to a standstill here. I asked Asim Hussain what the Pakistan government was doing about this problem.

Energy-use activist focuses on the individual

Pat Murphy says we should super-insulate our houses and travel in shared vans to survive peak oil and climate change.
Murphy, executive director of Ohio-based Community Solution, believes it's more important to focus on houses, private cars and food -- rather than factories and jet planes -- because individual consumption accounts for two-thirds of energy use.

GM board approves plug-in Cadillac hybrid: sources

DETROIT (Reuters) - The board of General Motors Co has approved a plan to produce a plug-in hybrid for the luxury Cadillac brand that will adapt technology developed for the upcoming Chevrolet Volt, according to people briefed on the decision.

6 most fuel-efficient cars

These vehicles top their class in fuel economy while offering strong performance, too.

Thin-film share of solar market to double: report

LOS ANGELES (Reuters) - Solar panels that use thin-film technology in place of traditional silicon-based materials will more than double their share of the solar panel market by 2013, according to a report issued on Tuesday by industry research firm iSuppli.
Thin-film panels, such as those made by First Solar Inc, the largest U.S. solar power company, are cheaper to make per watt of electricity than are standard panels.

The Price of a Pipeline: Rena Effendi's Powerful Photos of Lives Destroyed By the Oil Industry

Boosters of the Nabucco pipeline project tout the economic and political clout it will bring to Turkey. But where there are winners, there are also often losers -- as Rena Effendi's powerful photojournalism makes poignantly clear.
Recently exhibited at the 11th International Istanbul Biennial and published in a book this year, Effendi's photographic series "Pipedreams: A Chronicle of Lives Along the Pipeline" focuses on the people affected by a similar project in the region: the Baku-Tbilisi-Ceyhan (BTC) pipeline, which stretches 1,700 kilometers from the photographer's home country of Azerbaijan to a Turkish port on the Mediterranean.

Al Gore crusades against global warming

San Rafael -- Al Gore and his crusade against global warming landed in the Bay Area this week with a call to arms and a message for those who still think the former vice president is tilting at windmills.

Senate Working on ‘Framework’ for Climate Talks, Lieberman Says

(Bloomberg) -- A bipartisan “framework” to combat climate change may be reached in the U.S. Senate before global meetings in Copenhagen next month to craft a new treaty on global warming, Senator Joe Lieberman said.
Lieberman, a Connecticut independent, said he’s working with Senator John Kerry, a Massachusetts Democrat, and Senator Lindsey Graham, a South Carolina Republican, to “move the Senate as far as we can before Copenhagen.”

Cost of extra year's climate inaction $500 billion: IEA

LONDON (Reuters) - The world will have to spend an extra $500 billion to cut carbon emissions for each year it delays implementing a major assault on global warming, the International Energy Agency said on Tuesday.

Storm could follow calm in EU carbon market

LONDON (Reuters) - The European carbon market is bracing itself for a storm as another wave of selling by industrial companies is anticipated at the end of December or early January.
"Concerns over industrial surplus are so huge that all financial institutions are nervous," an emissions trader said.

Sceptics anger Arctic scientists

Tomso, Norway - As the world climate summit closes in, scientists monitoring the impact of global warming in the far north have grown frustrated by public apathy and disbelief about the extent of the problem.

Ice loss offsets global warming: study

Global warming has been blamed for the alarming loss of ice shelves in Antarctica, but a new study says newly-exposed areas of sea are now soaking up some of the carbon gas that causes the problem.

Terrestrial ecosystems and oceans can absorb much more CO2 than expected

A new study by researchers from the Bristol University, UK, has suggested that terrestrial ecosystems and the oceans have a much greater capacity to absorb CO2 (carbon dioxide) than had been previously expected.
The results run contrary to a significant body of recent research which expects that the capacity of terrestrial ecosystems and the oceans to absorb CO2 should start to diminish as CO2 emissions increase, letting greenhouse gas levels skyrocket.
Dr Wolfgang Knorr at the University of Bristol found that in fact the trend in the airborne fraction since 1850 has only been 0.7 - 1.4 percent per decade, which is essentially zero.

What Would Failure at Copenhagen Mean for Climate Change?

This is the consequence of failure at Copenhagen: A marked shift in scientific effort from solving global warming to adapting to its consequences, a hodge-podge of uncoordinated local efforts to trim emissions - none of which deliver the necessary cuts - and an altered climate.
Climate experts, scientists and negotiators say that, absent international agreement, the children and grandchildren of those living today will negotiate a world where planetary geo-engineering is a part of daily life, sea-walls defend coastal cities, the world's poor are hammered by drought, floods and famine and our planet is heading toward conditions unseen for the last 100 million years.
The December talks are, in other words, the last, best chance to change course before chaos descends.

The Future of Nuclear Energy: Facts and Fiction - Part IV: Energy from Breeder Reactors and from Fusion?

Francois Cellier — Tue, 10 Nov 2009 10:51:28 -0400

This is the fourth part of a four-part guest post by Dr. Michael Dittmar. Dr. Dittmar is a researcher with the Institute of Particle Physics of ETH Zurich, and he also works at CERN in Geneva.

The accumulated knowledge and the prospects for commercial energy production from fission breeder and fusion reactors are analyzed in this report.

The publicly available data from past experimental breeder reactors indicate that a large number of unsolved technological problems exist and that the amount of "created" fissile material, either from the U238 → Pu239 or from the Th232 → U233 cycle, is still far below the breeder requirements and optimistic theoretical expectations. Thus huge efforts, including many basic research questions with an uncertain outcome, are needed before a large commercial breeder prototype can be designed. Even if such efforts are undertaken by the technologically most advanced countries, it will take several decades before such a prototype can be constructed. We conclude therefore, that ideas about near-future commercial fission breeder reactors are nothing but wishful thinking.

We further postulate that, no matter how far into the future we may look, nuclear fusion as an energy source is even less probable than large-scale breeder reactors, for the accumulated knowledge on this subject is already sufficient to say that commercial fusion power will never become a reality.

(Links to 1^st, 2^nd, and 3^rd parts)

1. Introduction

Over one hundred years ago, physicists began to understand that a huge amount of energy could be obtained from mastering nuclear fusion and fission energies. For example, the production of only 1 kg of helium from hydrogen "liberates" a thermal energy of about 200 million kWh. In the sun, this fusion reaction transforms about 600 million tons of hydrogen into helium every second, thus liberating 4 × 10²⁶ Joules per second.

The understanding of nuclear physics and its technological applications proceeded with breathtaking speed. It took only seven years from the discovery of the neutron in 1931 to the observation of the neutron induced fission of uranium at the end of 1938. This was followed, on the 2^nd of December 1942, by a sustained nuclear chain reaction with a power of 0.5 Watt (and up to 200 Watt at a later time) by E. Fermi and his team in a laboratory located below the Chicago University football stadium [1]. The next steps in using nuclear energy were the explosions of the Hiroshima and Nagasaki fission bombs, on the 6^th and 9^th of August 1945, resulting in more than 100,000 deaths and the beginning of the nuclear arms race. Only a few years after the first fission bombs exploded, the USA and the Soviet Union had constructed hydrogen fusion bombs. These bombs were up to 1000 times more powerful than the Hiroshima fission bomb.

Also the peaceful application of nuclear fission energy advanced very quickly: by 1954, the thermal energy from a controlled fission chain reaction could be used to produce commercial electric energy [2]. During the next 30-40 years, a large number of commercial nuclear power plants were constructed in most industrialized countries.

The rapid scientific and technical success in bringing this form of power into the production of commercial energy was impressive. Many nuclear pioneers expected that nuclear fission and fusion would provide their grandchildren with cheap, clean, and essentially unlimited energy. In fact, these successes led most of us to a euphoric and blind belief in continuous scientific and technological progress.

In contrast to such dreams, nuclear fission energy nowadays is not cheap, and even the most optimistic nuclear fusion believers do not expect the first commercial fusion reactor prototype until after 2050. One observes further that nuclear fission energy has been stagnating for about ten years and that its relative share in the worldwide electric energy production has decreased from about 18% during the nineties to only 13.8% currently [3].

Furthermore, the average age of the existing nuclear power plants, the limitations of primary and secondary uranium resources as well as the problems related to nuclear proliferation and nuclear waste all lead to doubts about the prospects of the standard water moderated nuclear fission reactors. In fact, it seems clear at this point that as fossil-fuel energy production declines, sufficient energy to ensure the survival of our highly industrialized civilization cannot come from a rapid growth of nuclear fission energy of this sort.

The problem with the limited amount of economically producible uranium resources can theoretically be addressed with the mastering of the technology of nuclear fission breeder reactors. It is claimed that this technology could increase the amount of fissile material from uranium by a factor of 60-100 and much more if the thorium breeder cycle can be realized [4]. It is believed that breeder technology will enable us to bridge the time gap before nuclear fusion energy, which would become the "final solution" to all energy worries, can be mastered [5].

In this fourth and final part of the Future of Nuclear Energy report, we discuss the experience with past and current breeder reactors in Section 3. We analyze how the remaining problems will be addressed with the worldwide Generation IV breeder reactor program and with thorium based breeder reactors (Section 4). The remaining obstacles towards a controlled and sustained nuclear fusion reaction chain are presented in Section 5. In order to simplify the discussion, we start in Section 2 with some facts and basic physics principles of nuclear fission and fusion energies.

2. Energy from nuclear fission and fusion, some facts and physics

As we have discussed in detail in parts I-III of this report [6], the publicly available data on long term worldwide natural uranium supply are in conflict with even a moderate annual 1% growth rate for conventional water moderated reactors.

Consequently, believers in a bright future of nuclear energy should concentrate their efforts on either (i) the realization of nuclear fuel breeder technology based on the uranium cycle, U238 to PU239, and/or the thorium cycle, TH232 to U233, or (ii) the mastering of commercial nuclear fusion reaction. In this section, an overview of the existing and planned nuclear reactor types and the experience with fast breeder reactors (FBR) is given (2.1). This is followed by a basic summary of the most important principles relevant to the use of nuclear fission and fusion energies (2.2 to 2.4).

2.1. Some facts concerning existing and planned nuclear reactor types

The worldwide nuclear fission reactors produced 2601 TWhe during the year 2008, or roughly 14% of the worldwide electric energy.

For the year 2009, one finds that commercial nuclear energy production will come from 436 nuclear fission reactors with a combined nominal electric power of 370,260 GWe [7].

Table 1: The evolution of different reactor types and their corresponding electric power ratings from the IAEA/PRIS data base (October 2009) [7]. Another five reactors are listed in the "Long Term Shutdown" category, four of which are PHWR's and the fifth is the 0.25 GWe Monju sodium cooled FBR reactor in Japan.

The PRIS data base of the International Atomic Energy Administration (IAEA) shows that the dominant reactor type today including reactors that are currently under construction is the water moderated fission reactor type. The abbreviation PWR (PHWR) stands for pressurized (heavy) water reactor whereas BWR denotes the boiling water reactor. As can be seen from Table 1, these reactors provide over 94% of the nuclear fission power worldwide. The remaining 6% of the nuclear fission power comes from graphite moderated and water or gas cooled older and smaller reactors. It seems that the PWR type has won the competition for the existing reactors and for the next generation of reactors by a large margin.

One observes that only two FBR's are declared operational. A third FBR has been in a "long term shutdown phase" since 1995. The two operational FBR's contribute together 0.2% of the world nuclear power. This tiny contribution from FBR's today is even smaller than it used to be. In the list of 122 decommissioned reactors, one finds 6 FBR's with a combined power of 1.6 GWe, or 4.3%. In the list of 53 reactors (October 2009) currently under construction, one finds only two relatively small FBR's.

These numbers indicate not only that FBR's play a negligible role today and during the next 10 years, but also that their operation experience is far from being an economical and technological success story. Some more details on the worldwide experience with various types of commercial FBR and thorium fuel breeder reactors and their operation are listed below:

The best operation experience comes from the Russian BN-600 FBR reactor with a rated power of 0.56 GWe. This reactor has been operated commercially for 28 years and is scheduled to close in 2010 [8]. Its average energy availability is given as 73.79%. In a document from the IAEA fast reactor data base [9], one finds that this reactor would be better called a "Fast Reactor," as it was designed to use more fuel than it could produce. A new BN-800 reactor with 0.8 GWe is currently under construction in Russia, and its scheduled start is now given as 2014. Like its smaller "brother," it is designed to consume Pu239 rather than breed surplus fissile material.
The other "operating" FBR is the Phenix reactor in France. Phenix originally started operation with a power of 0.233 GWe in 1974. Since 1997, it is rated with 0.13 GWe only, and an energy availability factor of 60.23% is given for 2008. According to the WNA (World Nuclear Association) data base, it ceased power production in March 2009 and will continue being operated as a research reactor until October 2009 [10]. The larger Super Phenix reactor, with a power rating of 1.2 GWe, achieved a maximal energy availability of 32.6% only. This very low performance, in comparison to PWR's, was achieved during the last operational year (1996) after a very short lifetime of only 10 years.
The Monju reactor in Japan was closed after a serious sodium leak in 1995. For many years now, the reactor is scheduled to "restart the subsequent year." Perhaps this time, it will really restart during the first few months of 2010 [11].
A next generation FBR reactor is currently under construction in India. According to the current plans, it will start producing electric energy during the year 2011 [12].
The KNK II reactor in Germany is listed in the IAEA data base [9] with a tiny capacity of 0.017 GWe. During its operational lifetime, 1978 to 1991, it achieved an average energy availability factor of 23.65%. A larger FBR, the SNR-300, with a rated power of 0.3 GWe was completed in 1985, but for various reasons never started. A large 1.5 GWe FBR, the SNR-2, never completed even the design phase.
A limited experience with a thorium admixture in the nuclear fuel in commercial prototype reactors exists as well. A WNA document mentions two THTR's (Thorium High Temperature Reactors) [13]: one with 0.3 GWe in Germany, which operated commercially between 1986 and 1989; the second was the Fort St. Vrain reactor with a power rating of 0.33 GWe in the USA. It is listed as the only commercial thorium-fuelled nuclear plant, following closely the German design. It was operated between 1976-1989.
The WNA document mentions further that the experimental Shippingport reactor in the USA, with a power rating of 0.06 GWe, has successfully demonstrated the concept of a Light Water Breeder Reactor (LWBR) using thorium. The Shippingport reactor began commercial electricity production in December 1957. In 1965, the Atomic Energy Commission started designing the uranium-233 / thorium core for the reactor. The reactor was operated as a LWBR between August 1977 and October 1982.

Several countries have so far managed to construct GWe water moderated slow neutron reactors, mostly of the PWR type. These reactors were operated safely and efficiently for many years, using U235 fuel enriched to 3-4%.

In contrast, large breeder reactors, based on a large amount of initial fissile material and the transformation of U238 and Th232 for breeding new reactor fuel, have so far not even successfully passed a prototype phase.

2.2. Energy from nuclear fission and fusion, some basics

Atoms consist of a nucleus, made of protons and neutrons, and electrons. The size and the chemical properties of atoms are defined by the number of electrons surrounding the nucleus. The combined mass of the protons and neutrons, each 2000 times heavier than the electrons, defines roughly the mass of the atoms. As the nucleus is 100,000 times smaller than the atom, it follows that its mass density is huge in comparison with that of the atom. The same chemical characteristics can be expected for atoms with a fixed number of protons and with different numbers of neutrons, and the energy in chemical reactions is of the order of 1 eV (1.6 × 10^-19 Joule). As the nuclear properties of an atom depend on the number of neutrons, the name isotope has been introduced to separate the chemically identical atoms according to their numbers of neutrons.

Without going into details, it is known today that the energy source of the sun and other stars is nuclear fusion. This fusion starts from the large number of hydrogen atoms present in the sun. The fusion reaction in stars is possible because of the enormous gravitational pressure that overcomes the electric repulsive force between positively charged protons. Fusion is the source of all heavier elements that were formed in super-novae explosions of super large early stars and shortly after the big bang. For our subsequent discussions on nuclear fusion, it is important to note that a relatively low fusion power density of about 0.3 Watt/m³, is found in the sun [14]. In contrast, the power density envisaged for a hypothetical fusion reactor must be at least one million times larger.

The nucleus is bound by the very strong nuclear force, which acts against the repulsive electrostatic force of the protons. Measurements have shown that the mass of the various atoms is almost 1% smaller than the mass of the individual protons and neutrons combined. Following Einstein's famous E = mc² formula, this mass defect corresponds to a huge amount of energy, about 8 MeV (8 million eV) per nucleon. This energy is liberated when one manages to fusion different nucleons together. Starting from the different hydrogen isotopes, e.g. one proton, deuterium (one proton plus one neutron), and tritium (one proton plus two neutrons), a binding energy of up to a few MeV is found. Further fusion of these hydrogen isotopes into the helium nucleus liberates another roughly 20 MeV.

Neutrons and protons in heavy atoms, such as uranium, are less strongly bound than in lighter atoms, such as iron, and energy can be released in the fission of such heavy atoms. For example, 1 MeV per nucleon, or 200 MeV in total, will be liberated in the fission processes of U233, U235, and U238, each containing 92 protons and 141, 143, and 146 neutrons, respectively. The energy liberated per fission reaction is at least 100 million times larger than in a chemical reaction.

It is therefore not surprising that this has created an enormous interest in subatomic physics and its application for ultimate weapons and/or for the commercial use of energy.

2.2.1. Civilian and military use of nuclear energy, some remarks

The focus of this report is the commercial use of nuclear energy. As the evolution of nuclear energy has always been strongly coupled with the military sector, we feel that a few remarks about the dangers of nuclear weapons and the ambiguity of the commercial use of nuclear energy are needed. First of all, governments wishing to have nuclear weapons were not faced with unsolvable problems related to the development of fission bombs based on Pu239 and U235. This is especially true if nuclear physics and engineering knowhow had been built up under the umbrella of peaceful and commercial use of nuclear fission energy.

Furthermore, it is interesting to notice that advocates of nuclear fission energy like to explain why the dangers from nuclear weapons are far less alarming than believed. This is usually followed by the statement that their praised future nuclear energy technology will avoid proliferation problems. A similar appeasement in their argumentation is found with respect to safety and radiation issues. The existing nuclear power plants are claimed to be very safe, and risks are small compared to many other dangers of modern life. Yet, when their favorite future nuclear energy system is being introduced, it is always pointed out that it further reduces the remaining risks by a large factor.

For example it is often argued that U233 produced in a future Th232 breeding cycle will be useless for nuclear weapons. This argument is certainly flawed as countries who want to have nuclear weapon capability will most likely choose the simpler way to make a bomb using Pu239 or U235. Yet, those who know how to breed and separate hundreds of kg's of U233 can easily replace Th232 with U238 and produce a few tens of kg's of Pu239, sufficient to construct a few nuclear bombs.

Those not yet convinced of the mutual support of peaceful and military applications of nuclear energy technology should rethink their positions with respect to the Nuclear Proliferation Treaty, the NPT, and to the so-called "evil" government of Iran.

A careful reading of the treaty [15] reveals that Iran, at least so far, is in agreement with the NPT obligations. However one finds that NPT member countries should not exchange nuclear knowledge with nuclear weapon countries outside the treaty. It is also worth remembering that the official nuclear weapon states, Russia, USA, UK, France, and China, have declared in the treaty their intention to eliminate nuclear weapons as quickly as possible. Almost forty years after these countries signed the NPT, they still have more than 20,000 nuclear warheads.

The nuclear arms race at the end of the second world war and during the subsequent cold war is well documented in many reports, books, and movies, and we refer to the extensive literature largely available now on the internet. Especially for those who are not yet convinced about the dangers of nuclear weapons, we would like to recommend the short you-tube video on the largest explosion ever, the 60 Megaton hydrogen bomb in Siberia in 1961 [16] and to Stanley Kubric's masterpiece movie "Dr. Strangelove, or how I learned to stop worrying and love the bomb" from 1964 [17]. This film, even though almost 50 years old, presents many still relevant ideas related to the 20,000 remaining nuclear warheads.

2.3. Liberating the energy from nuclear fission and fusion

As we have seen in the previous section, a large amount of energy per reaction can be liberated from the fusion of light elements and from the fission of heavy elements like uranium. However at least two additional conditions must be satisfied before such a process can be considered for energy production.

In order to obtain a useful amount of energy from nuclear reactions, a continuous and controllable fission or fusion must be achieved for a large number of atoms. For example 10²⁰ U235 atoms, i.e., 0.05 gr, the amount of U235 found in 6 gr of natural uranium, need to be split every second in a 1 GWe nuclear fission reactor.
Enough raw material must be continuously available to sustain this chain reaction.

Only three relevant isotopes satisfy these conditions for the nuclear fission process. These are the two uranium isotopes U235 and U233 and the plutonium isotope Pu239. The energy liberated in the fission process is carried dominantly (about 80%) by the two daughter atoms. This energy is relatively easily transferred to a liquid or gas, and the heat can be used to operate a generator.

The chain reaction is possible as each neutron induced fission reaction produces on average between 2-3 neutrons. As one neutron is needed to initiate another fission reaction, 1-2 excess neutrons minus some inevitable losses are in principle available to increase the reactor power or perhaps to start a nuclear fuel breeding process. The introduction of neutron absorbers allows to control the reactivity of the nuclear reaction and thus to increase or decrease the reactor power.

As we have seen in Section 2.1, most of the large scale nuclear power plants of today are of the PWR (pressurized water reactor) type. They use dominantly U235 as primary reactor fuel. In these reactors, the prompt fission neutrons, with kinetic energies of 1 MeV, are slowed down (moderated) by elastic collisions with the hydrogen nuclei in the water molecules to subeV kinetic energies. The nuclear fission probability with such slow neutrons is increased by a factor of up to several hundred. As a consequence, a large reactor can be efficiently operated and controlled with a relatively low initial enrichment of U235, and large scale power production with moderated neutrons has been mastered by many countries. The combined running experience of such large scale reactors, currently more than 13,000 years, has resulted in stable electric energy production combined with small or negligible risks during regular operation up to an electric power output of more than 1 GWe.

In contrast, the neutron escape rate in smaller reactors and in unmoderated fast reactors is much higher. Therefore, a chain reaction in FBR's with comparable reactor power is more difficult to control, and a larger amount of initial fissile material with a higher density is needed. One consequence is that the required technology to make such highly enriched nuclear fuel will always be faced with the problem of its dual use for bomb making.

The use of the excess neutrons for the transformation of the U238 and Th232 isotopes into fissile Pu239 and U233 looks very promissing, as the amount of fissile material could be increased theoretically by a factor of more than one hundred. The breeding reactions considered would use the excess neutrons according the two reactions:

Some advantages and disadvantages for the U238 → Pu239 and the Th232 → U233 breeding cycles and some practical problems are listed in Table 2. Some of these problems and their proposed solutions will be discussed in detail in Sections 3 and 4 of this report. So far only little or no experience exists with large scale GWe breeder prototypes.

Table 2: A qualitative comparison of the fissile breeding cycles with U238 and Th232. The breeding gain is defined as the ratio of (C-D)/F, where C, D, and F are the numbers of fissile atoms created, destroyed, and fissioned. In order to be called a breeder, more fissile material must be created than fissioned, and the breeding gain must be larger than zero. The “(?)” indicates guestimates, as good information has so far not been found by the author.

We now turn to the fusion process. Nuclear fusion can happen, once the short range nuclear force between nucleons becomes larger than the electrostatic repulsive force between two positively charged nuclei. This can happen if the protons involved either have large kinetic energies or if the protons are compressed by super large gravitational fields as observed in stars. Very high kinetic energies correspond to nucleus temperatures of several tens to hundred million degrees. Such high kinetic energies can be obtained for example in accelerators but only for small numbers. Larger amounts of fusion reactions can be obtained in special magnetic field arrangements.

It follows from first principles that the sometimes discussed "cold fusion" reaction is in contradiction with well established knowledge of subatomic physics. As the repulsive force increases with the number of protons involved, the conditions to achieve fusion with atoms heavier than hydrogen and its isotopes become more and more difficult. It follows that fusion reactions based for example on the "proton-boron" reaction and many others are only possible using accelerators. Ideas to use accelerators for continuous fusion reactions with commercially interesting GW power prove to be wishful thinking once the required amount of 10²¹ fusion reactions per second is considered. The very low efficiency for transforming electric energy into kinetic energy of proton beams poses another fundamental problem for such exotic ideas.

The probability of a fusion reaction depends on the product of the plasma temperature and the fusion reaction cross-section. The deuterium-tritium fusion is a factor of 100 to 1000 easier to achieve than the next two fusion reactions of deuterium and He³₂ and deuterium-deuterium, respectively. As it is already extremely difficult to achieve even the lowest interesting plasma temperatures on the required large scale, it follows that the only possible fusion reaction under reactor conditions is the deuterium-tritium fusion into helium (He⁴₂).

An additional advantage of this reaction is the fact that the produced additional neutron carries 14 MeV of the liberated energy of almost 18 MeV per fusion reaction out of the plasma zone. Thus in theory, it can be imagined that the 4 MeV carried by the helium nucleus are used to keep the plasma temperature high enough, and that the neutron energy is transferred somehow to another cooling medium. This medium is imagined to transfer the heat to a generator.

Unfortunately tritium is unstable; its half life is only 12.3 years; and it does not exist in sizable amounts on our planet. It must therefore be produced in a breeding process. A possible chain reaction could follow the scheme:

In comparison to the breeding and energy extraction in fission reactions, at least three additional fundamental problems can be identified for the fusion process:

A sustained super high temperature, at least 10 million degrees, is required in order to have fusion reactions happening at an interesting rate. Such high temperatures can be achieved in some special magnetic field arrangements or in a tiny volume with very intense laser or particle beams. Unfortunately, no material is known that can survive the intense neutron flux under sustained reactor conditions and the sometimes occurring plasma eruptions.
It is difficult to transfer the energy from the 14 MeV neutron to a gas or a liquid without neutron losses.
The considered breeding reaction requires essentially that 100% of the produced neutrons must be used to make tritium. As this is even theoretically impossible, some additional nuclear reactions are proposed where heavier nucleons act as neutron multipliers. However so far, even the most optimistic and idealized theoretical calculations have failed to produce neutrons in sufficient numbers.

In short, the accumulated knowledge today indicates that the proposed fusion reaction is unsustainable and cannot lead to a sustainable power production. This statement will be corroborated with more details in Section 5.

2.4. Dangers related to radioactive material

We will conclude this section with some issues related to radioactive elements produced and liberated in the use of nuclear energy and the related dangers from ionizing radiation. First of all, there are three types of radioactive decays, producing α, β, and γ radiation. In addition, cosmic rays and various particles produced in high energy physics experiments should also be considered as a potential radiation hazard.

The damage to cells is related to the ionizing potential or the energy deposit per volume originating from a source. The hazard is usually split into high and low radiation dose effects. Very high radiation dose and the corresponding energy deposit result in fast cell death. If large and concentrated enough, the result can be the destruction of vital organs and death. It is important to know that the careless use of radiation during the early days of nuclear physics and its applications have resulted in relatively high cancer rates among the participating scientists and engineers [18].

The more tricky and less well understood damage comes from small dose and long-term effects to the cell DNA. While some self-repair mechanism to broken DNA exists, it is also known that a single unlucky hit by a cosmic ray can transform the normal DNA into a cancer developing DNA, resulting in the death of the host many years later. It follows that the importance of small radiation doses for the development of a particular cancer type and in comparison to many other causes like smoking and asbestos is difficult to quantify. As a result, the associated cancer risks from small radiation doses will continue to fuel the emotional debate about nuclear energy for a long time.

Despite these uncertainties, today the precautionary principle is used in many countries, and very strict rules for people working in a radiation environment are applied. These rules are often summarized under the name ALARA (as low as reasonably achievable). The goal to reduce any radiation exposure to essentially negligible levels is one of the most important occupations of a radiation safety group. As a result of these efforts, assuming that expensive protection measures are taken, the health risks from radioactive contamination under "normal operation conditions" are often much smaller than risks associated with working hazards in many other industrial domains. However, time pressure and profit optimization will always be in competition with ever more strengthened safety regulations.

It is also evident that it is essentially impossible to guarantee "normal operation" of the nuclear industry with its accumulating waste over periods of hundreds of years. A solution to these problems is, as with other similar long-term problems of our industrial growth-based societies, left for future generations.

3. Experience with real breeder reactors

Breeder reactors are based on the idea that only one neutron, out of the 2.5 neutrons on average from the fission of U235 and U233 (and 2.9 neutrons from Pu239), is required to keep the chain reaction going. It can thus be imagined, even if some neutron losses are allowed, that the additional neutrons can be used to make more nuclear fuel from U238 or Th232 than fissioned. Accordingly, a reactor is defined as a breeder reactor if more fissile material is produced than consumed.

The number of free neutrons per fission reaction is η = (σ_f/σ_a) × v, where σ_f is the neutron induced fission cross-section, and σ_a the neutron absorption (the sum of the neutron capture and fission) cross-section, and v is the average number of prompt fission neutrons [19]. The fission to capture ratio and thus η depend on the neutron energy and the different possible isotopes. As one neutron is required to sustain the chain reaction, breeding is only possible if η is larger than 2. This condition is found for Pu239, U235, and U233 fission, where η for prompt fast fission neutrons is 2.7, 2.3, and 2.45, respectively. For thermal (moderated) neutrons, U233 has the highest η value of 2.3, followed by 2.11 for Pu239, and 2.07 for U235.

Some Pu239 fuel production happens also in standard PWR reactors. Depending on the reactor and fuel design characteristics as well as the amount of remaining fissile fuel in the reactor, up to 30% and more of the produced energy comes from the secondary Pu239 fission.

Two theoretical breeder options exist:

The use of thermal neutrons and Th232 as input breeding material.
The use of fast prompt neutrons dominantly from Pu239 fission, thus the name fast reactor, with U238 as the breeding material.

The use of the Th232 → U233 cycle seems, at least on a first glance, more attractive. The reaction can occur in the high fission cross-section domain using moderated neutrons. The fission process with moderated neutrons is well understood, relatively easy to control, and already in use with the standard nuclear water moderated reactors. It seems that in principle one only needs sufficient amounts of U233 mixed with Th232 in order to keep such a reactor operating. Some of the remaining technical obstacles will be discussed in Section 4.4.

For the U238 → Pu239 breeder cycle, one has to operate the fission process, either starting with U235 or Pu239, in the low fission cross-section domain. As a consequence, such reactors have to be operated with highly enriched U235 (HEU) or Pu239 fuels. Thus, one is not only confronted with special safety conditions for a large amount of bomb making material, but also with a huge amount of ﬁssile material that could under certain conditions reach the critical mass resulting in an uncontrolled chain reaction followed by a nuclear meltdown. Furthermore, the cooling of the active reactor zone has to be done with a low neutron absorption cross-section and a high thermal conducting material like liquid sodium. Unfortunately, sodium is chemically very active and can easily burn in contact with oxygen.

3.1. The Shippingport LWBR thorium reactor

The experience with the thorium breeder cycle comes mainly from research at the US Shippingport reactor, rated with a net power of 0.06 GWe. This reactor operated during the 60s, 70s, and 80s. In 1965, the Atomic Energy Commission started designing the uranium-233 / thorium core for the reactor. The reactor was operated as a LWBR between August 1977 and October 1982.

According to the documentation, the reactor was started with a highly enriched 98% U233 inventory of 501 kg and a total of 42,260 kg of Th232 [20]. No details are given about the origin of the 501 kg of U233. However, one can assume that it came from a standard U235 fission reactor, where excess neutrons can be used to transform Th232 (or U238) blankets into U233 (or Pu239).

The reactor had a maximum thermal power of 0.2366 MW (therm) and was operated for 29,047 effective full hours, or about 66% of the time. After five years of operation, a very detailed analysis of the fuel elements was performed. It was found that the total U233 inventory had increased to 507.5 kg, a factor of 1.013. While it is impressive that the reactor could be operated and fueled with Th232 over a period of 5 years, the U233 gain was only about 6 kg of fissile material.

Assuming that such a reactor is supposed to eventually produce the U233 starting fuel for another reactor, it will take a long time before the second package of initial reactor core has been produced. Significant technological breakthroughs are required before this chain can be called feasible on a large scale.

The documents do not say much about the contamination of the 507.5 kg of U233 with fission products and its usefulness for further studies after this five year experiment. The fact that no subsequent reactor experiment has been performed might provide a partial answer to this question.

Furthermore, it is interesting to note that the initial concentration of fissile material in a reactor with only 0.237 GW (therm) energy was very large. It can be estimated that this amount, placed in a standard PWR, could have produced at least 5 times more electric energy than it had during the actual experiment.

In contrast to the experiments performed at the Shippingport reactor, where the initial core was already U233, a realistic Th232 reactor cycle must be started with an initial U235 or Pu239 core. Consequently, the experience gained with the Shippingport reactor experiment cannot be considered as a proof that the envisaged system can function. It follows that many more tests are needed, before a functioning large-scale prototype Th232 breeder reactor can be constructed.

3.2. Experience with fast reactors

For the purpose of this report, concerning the future of nuclear energy, we are mainly interested in the situation with the most important aspect, the question of the fuel breeding option. Unfortunately very little information is provided for the experimental breeding achievements, and most reports present the theoretical design breeding ratios. For example the breeding ratio for the FBR Phenix reactor in France is given in many textbooks as 1.14 [21]. This number corresponds however to the theoretical design, and it seems that a detailed experimental analysis, like the one done for the Th232 to U233 cycle and the Shippingport reactor, is either secret or has not been performed.

Despite the missing experimental data of achieved breeding gains, the IAEA document [22] about the FBR core characteristics provides useful information about the design of such reactors. In this document, a large number of FBR reactors, separated into (1) experimental fast reactors, (2) demonstration of prototype fast reactors, and (3) reactors of commercial size, are presented.

The breeding gain, defined as the ratio of (C-D)/F, where C, D, and F are the number of fissile atoms created, destroyed, and fissioned, and other characteristics of different fast reactors are summarized in Table 3.

Table 3: Some design values for the three groups of fast reactors, experimental, demonstration or prototype, and commercial size [22]. Reactors marked with a "*" are currently under construction. The design numbers can be compared with the ones of existing large commercial 1 GWe PWR reactors, assuming an average charge of 500 tons of natural equivalent, given in the last line. The "**" and "***" stand for a mixture of different plutonium isotopes dominated by Pu239 and the amount within the initial core, respectively.

It is very unfortunate that experimental breeding gains are not given in the IAEA fast reactor data base. In absence of any detailed publication, one can assume that the required detailed and very expensive isotope analysis of the reactor fuel has not been performed or published. The theoretical hopes for fuel breeding are thus not backed up with hard experimental data. Nevertheless, already the theoretical breeding gains of the different FBR's are revealing. Ten out of the twelve small experimental reactors were operated in a configuration not for breeding. The other two experimental reactors, listed in Table 3, are the Joyo in Japan and the Fermi in the USA. The Joyo reactor was not designed for the production of electric energy. The Fermi reactor operated for a few years and had a partial core meltdown in 1966. This reactor was the first and only effort in the USA to operate a larger scale breeder reactor and was terminated in 1972.

Another twelve demonstration or prototype reactors are listed in the IAEA report. Among them are the Monju reactor in Japan, the "Russian/Soviet" BN-600, and the Phenix reactor in France.

Only the BN-600 reactor is currently operational and is often considered as the prime example of a successfully operating FBR reactor. However, the IAEA document reveals that this reactor was designed with a negative breeding gain of -0.15.

In comparison, the Phenix and Monju reactors are presented with theoretical breeding gains of 0.16 and 0.2, respectively. It is interesting to note that the potentially better constructed next generation PFBR reactor in India, currently expected to start in 2011, is given with a much smaller theoretical breeding gain of only 0.05.

The third FBR group in the IAEA document describes commercial size reactors. Eleven out of the listed thirteen large FBR projects have been abandoned before any construction plans have been presented, or exist currently only in the design phase. Only one reactor, the Super Phenix reactor in France, has produced some electric energy. During its short operation time, it was operated with a very low efficiency and cannot be considered as a successful breeder prototype. A new commercial size fast reactor is under construction in Russia. The BN-800 is currently scheduled to become operational during the year 2014. It is however quantified with a negative breeding gain of -0.02.

A further confirmation that the BN-800 reactor is not a breeder comes from a WNA document [23], where the reactor is described as:

"It has improved features including fuel flexibility - U+Pu nitride, MOX, or metal, and with breeding ratio up to 1.3. However, during the plutonium disposition campaign it will be operated with a breeding ratio of less than one."

A possible interpretation of this statement could be that plutonium stocks are already a delicate problem and that Russia wants to get rid of them.

In summary, the IAEA data base for fast reactors does not present any evidence that a positive breeding gain has been obtained with past and present FBR reactors. On the contrary, the presented data indicate at best that a more efficient nuclear fuel use than in standard PWR reactors can be achieved during normal running conditions. However, once the short and inefficient running times of FBR's, in comparison with large scale PWR's, are taken into account, even this better fuel use has not been demonstrated. In fact, the required initial fuel load in FBR's contains at least twice as much natural uranium equivalent and with a fissile material enrichment that is roughly 5 times larger than that in a comparable PWR. A fair comparison of the fuel efficiency should include the efficiency to recycle fissile material from used nuclear fuel in both reactor types.

Three more areas of concern for a future breeder program should be added:

Fast reactors are known for their worrying safety record. For example, it might be true that serious incidents, like the one that happened with the Chernobyl graphite moderated reactor, cannot happen with modern PWR's. However, only very few nuclear experts would agree to such a statement for sodium cooled FBR's.
FBR’s are known for their huge construction costs relative to PWR's, and it might be tempting to compare some of the past FBR's to a monetary "black hole." An equivalent of 3.5 billion Euros has been invested in the construction of the SNR-300 in Germany. Because of safety concerns related to sodium leaks and other problems, this small FBR has never started operation. This amount of money corresponds to the price tag for a five times more powerful modern PWR reactor.
A third problem is related to the FBR requirements to have a large inventory of high purity fissile material. The amount of fissile material listed in Table 3 should be compared to the few tens of kgs required for a Pu239 bomb. This problem makes even small experimental FBR reactors highly sensitive to the proliferation problem.

4. Future breeder reactors

As our short overview in Section 2 has already demonstrated, neither sodium cooled FBR reactors based on U238 → Pu239 nor the Th232 → U233 cycle are fashionable commercial reactor types.

As a consequence of the observation that known uranium deposits are limited, scientists from many countries have joined forces and created during the year 2001 the Generation IV reactor forum [24].

In their own words (quote):

"The Generation IV International Forum, or GIF, was chartered in July 2001 to lead the collaborative efforts of the world's leading nuclear technology nations to develop next generation nuclear energy systems to meet the world's future energy needs."

The work of over 100 experts from ten countries, including Argentina, Brazil, Canada, France, Japan, Republic of Korea, South Africa, Switzerland, the United Kingdom, and the United States, and from the International Atomic Energy Agency and the OECD Nuclear Energy Agency has resulted at the end of the year 2002 in a roadmap document with the title:

A Technology Roadmap for Generation IV Nuclear Energy Systems

After the definition of the goals, identifying promising concepts, their evaluation, and the estimation of the required R&D efforts, six systems have been selected. The selection was based on their estimation that they (quote):

"feature increased safety, improved economics for electricity production, and new products such as hydrogen for transportation applications, reduced nuclear wastes for disposal, and increased proliferation resistance."

Within the context of this analysis, we are mainly interested to know whether the acknowledged U235 fuel shortages can be solved with future breeder reactors. Therefore, we will only take a closer look at the three FBR's and the one design that has the potential to become a Th232 based thermal breeder. According to a WNA document from August 2009 [25]:

"At least four of the systems have significant operating experience already in most respects of their design, which provides a good basis for further R&D and is likely to mean that they can be in commercial operation well before 2030."

It is remarkable that the same WNA document contradicts this statement a few lines later:

"However, it is significant that to address non-proliferation concerns, the fast neutron reactors are not conventional fast breeders, i.e. they do not have a blanket assembly where plutonium-239 is produced. Instead, plutonium production takes place in the core, where burn-up is high and the proportion of plutonium isotopes other than Pu239 remains high. In addition, new reprocessing technologies will enable the fuel to be recycled without separating the plutonium."

4.1. Some details about Generation IV breeder reactors

The Generation IV roadmap document from the year 2002 describes a detailed planning for what needs to be achieved during the next 10-20 years. Depending on the results, one might be able to decide which of the different future reactor concepts can be used to construct real prototype FBR's.

The qualitative proposed research plans for the three FBR's and the Th232 reactor can be summarized as follows:

The Gas-cooled Fast Reactor System (GFR) is based on a helium-cooled reactor with a small thermal power of roughly 0.5 GW only. A large number of major technological gaps are mentioned in the roadmap leading to a research program of about 20 years and a cost of 940 million US Dollars.
The Lead-cooled Fast Reactor System (LFR) with a possible thermal power between 0.1 GW and 3.6 GW. A relatively long list of "technology gaps" for the LFR is presented, including even some insufficient knowledge of neutron interaction cross-sections. A 15-20 year R&D program with a price tag of 990 million US Dollars is needed before any further statements about the realization of this concept can be made.
The Sodium-cooled Fast Reactor System (SFR) with a thermal power rating between 1 - 5 GW. This concept is closely related to the doubtful success with past sodium-cooled fast reactors in France, Japan, Germany, the UK, Russia, and the United States. It is said that this reactor must be capable of also using the thermal neutron spectrum, because the startup fuel for the fast reactor must come ultimately from spent thermal reactor fuel. The list of technology gaps includes the need to ensure a "passive safe response design base," a "capital cost reduction," and the "proof that a reactor has the ability to accommodate bounding events." A somewhat frightening conclusion of this statement might be that previous sodium prototype FBR's did not satisfy any of these basic reactor safety standards. It is also mentioned that this sodium cooled reactor is the most advanced FBR system. The required R&D program to investigate the remaining problems could be completed over a period of less than 15 years and for 610 million US Dollars.
The Molten Salt Reactor system (MSR) is imagined as 1 GWe reactor with a net thermal efficiency of 44-50%. The design assumes the use of either U238 or Th232 as fertile fuel dissolved as fluorides in the molten salt and that it can operate with thorium as a thermal breeder. The technology gaps mentioned contain a large number of items related to the chemistry of molten salts as well as the need for more accurate basic neutron cross-sections for compositions of molten salt. The time scale of the required R&D program is 15-20 years with an associated price tag of 1000 million US Dollars.

The Generation IV roadmap document can be summarized with the statement that the known technological gaps to construct even prototype breeder reactors were enormous at the time when the document was written. These unknowns are addressed with a detailed planning for the required research projects and the associated cost. Only after these problems shall have been solved, a design and construction of expensive prototype breeder reactors can start.

We are now at the end of the year 2009 and almost half of the originally planned R&D period is over. Essentially no progress results have been presented and the absence of large funding during the past eight years gives little confidence that even the most basic questions for the Generation IV reactors program can be answered during the next few years. Thus, it seems that the Generation IV roadmap is already totally outdated and unrealistic.

This is confirmed by the latest statements at the Global 2009 conference in September 2009 by B. Bigot, the chairman of the French Atomic Energy Commission, which indicate that the plan to have the reactors ready by the year 2030 is now delayed to 2040 and onwards. According to the Website "Supporters of Nuclear Energy," Bigot said "from 2040 onwards, France is planning to use Generation IV FBR's when renewing its fleet" [26].

4.2. The Global Nuclear Energy Partnership (GNEP)

Another initiative, the Global Nuclear Energy Partnership (GNEP) [27] was announced by President Bush in his 2006 State of the Union address. By September 2007, all major nuclear energy countries, except for Germany and a few others, have signed the statement of principles. According to the U.S. Department of Energy, the goals of the initiative are (quote):

"First, reduce Americas dependence on foreign sources of fossil fuels and encourage economic growth. Second, recycle nuclear fuel using new proliferation-resistant technologies to recover more energy and reduce waste. Third, encourage prosperity growth and clean development around the world. And fourth, utilize the latest technologies to reduce the risk of nuclear proliferation worldwide."

However in June 2009, the U.S. Department of Energy announced that it is no longer pursuing domestic commercial reprocessing, and had largely halted the domestic GNEP program. Research would continue on proliferation-resistant fuel cycles and waste management.

According to a WNA press information [28], the status of this initiative is:

"Although the future of GNEP looks uncertain, with its budget having been cut to zero, the DoE will continue to study proliferation-resistant fuel cycles and waste management strategies."

It follows that the GNEP initiative will not result in the construction of future breeder reactors.

4.3. Ideas about using thorium as a reactor fuel

During the past years, a large number of articles and books, websites and blogs propose the use of thorium as the breeder material for future nuclear reactors [29]. The promoters advocate many interesting possibilities, indicating that the Th232 cycle might have lots of advantages compared to the U238 breeder cycles in FBR's.

The main problem with these "great" new insights into the use of nuclear fission energy seems to be that nobody from the nuclear energy establishment is interested.

As a result, little or no private and public research money is invested into the question of how to develop a thorium breeder reactor. Ignoring the possibility that past investigations into the thorium fuel cycle have revealed several important problems, one needs to speculate about other reasons.

that the established nuclear energy experts do not like to see competition from outsiders, or
that the nuclear fusion community has managed to dominate the entire nuclear energy research domain, and that the available research budgets are already allocated to the ITER plasma research project.

If either of these two possibilities contains some truth, those in favor of developing a thorium breeder reactor should start taking a strong position against the current nuclear energy establishment. They should point out that (i) the current use of nuclear energy has no perspective because of the limited amount of available uranium resources, (ii) the Th232 breeder cycle is by orders of magnitude better than the ideas about U238 breeder cycles with FBR's, and (iii) nuclear fusion is at least 50-100 years away. Leaving these more political issues aside, we would like to repeat some rational statements and the otherwise rarely mentioned problems about the use of the Th232 breeder cycle from the WNA information article [30] entitled:

Developing a thorium-based fuel cycle

where one can read that:

"In one significant respect U233 is better than uranium-235 and plutonium-239, because of its higher neutron yield per neutron absorbed. Given a start with some other fissile material (U233, U235 or Pu239) as a driver, a breeding cycle similar to but more efficient than that with U238 and plutonium (in normal, slow neutron reactors) can be set up. (The driver fuels provide all the neutrons initially, but are progressively supplemented by U233 as it forms from the thorium.) However, there are also features of the neutron economy which counter this advantage. In particular the intermediate product protactinium-233 (Pa233) is a neutron absorber which diminishes U233 yield."

The statement continues with:

"Despite the thorium fuel cycle having a number of attractive features, development has always run into difficulties."

The main attractive features are:

The possibility of utilizing an abundantly available resource that has hitherto been of so little interest that it has never even been properly quantified.
The production of power with few long-lived transuranic elements in the waste.
A reduction of radioactive waste, in general.

The problems include:

The high cost of fuel fabrication due partly to the high radioactivity of U233 chemically separated from the irradiated thorium fuel.
Separated U233 is always contaminated with traces of U232 (69 year half-life but whose daughter products such as thallium-208 are strong gamma emitters with very short half-lives). Although this confers proliferation resistance to the fuel cycle, it results in increased costs.
The similar problems in recycling thorium itself due to highly radioactive Th-228 (an alpha emitter with two-year half life) present.
Some concern over weapons proliferation risk of U233 (if it could be separated on its own), although many designs such as the Radkowsky Thorium Reactor address this concern. The technical problems in reprocessing solid fuels are not yet satisfactorily solved. However with some designs, in particular the molten salt reactor (MSR), these problems are likely to largely disappear.
Much development work is still required, before the thorium fuel cycle can be commercialized, and the effort required seems unlikely while (or where) abundant uranium is available. In this respect, recent international moves to bring India into the ambit of international trade might result in the country ceasing to persist with the thorium cycle, as it now has ready access to traded uranium and conventional reactor designs.

The WNA article concludes with the following diplomatic statement:

"Nevertheless, the thorium fuel cycle, with its potential for breeding fuel without the need for fast neutron reactors, holds considerable potential in the long-term. It is a significant factor in the long-term sustainability of nuclear energy."

A "logic" interpretation of the WNA statement and the list of arguments about thorium and within the context of our review could be:

The breeding of Pu239 with fast neutrons has huge problems, and it would be great if another nuclear fuel could be found.
Thorium breeding shows interesting potential if the remaining large number of problems can be mastered in the long term, but right now, we are still far away from this. The contamination with the strong neutron absorber Pa233 and the large radioactivity from U232 and other elements are chief among the currently unsolved problems.
The well known use of nuclear fission energy in PWR's is unsustainable. The problems related to long-lived transuranic elements, e.g. plutonium and heavier elements, as well as nuclear waste in general, are unsolved. The concern with nuclear weapon proliferation cannot be dismissed either.

5. Fusion Illusions

This section offers a short version of a detailed article by the author in the second edition of The Final Energy Crisis [31].

After the second world war, many nuclear pioneers expected that nuclear fusion would provide their grandchildren with cheap, clean, and essentially unlimited energy.

Generations of physicists and physics teachers have been taught at the university and have gone on to teach others that (i) progress made in fusion research is impressive, (ii) controlled fusion is probably only a few decades away, and (iii) given sufficient public funding, no major obstacles stand between us and success in this field.

Here are some quotes from physics textbooks that reflect this sort of optimism:

"The goal seems to be visible now" (Nuclear and Particle Physics; Frauenfelder and Henley 1974)

"It will most likely take until the year 2000 to bring a laboratory reactor to full commercial utilization" (Energy, Resources and Policy; R. Dorf 1978)

"As the construction of a fusion reactor implies a large number of unsolved practical problems, one cannot expect that fusion will become a usable energy resource during some decades! Within a longer time scale however it seems possible!" (Physics, P. A. Tipler 1991)

Obviously this has not happened yet. The fusion optimists have meanwhile become a bit more modest. One can now read: "If everything goes well, the first commercial fusion reactor prototype might be ready in 50 years from now."

Such statements only hide the fact that no concept has yet been developed for how to solve the remaining problems. The uncritical media of today reverberated enthusiastically the recent decision by "world's leaders" to provide the ten billion US Dollars needed to start the ITER fusion project [32]. During the past few years, one could read, for example [33]:

"If successful, ITER would provide mankind with an unlimited source of energy" (Novosti, November 15, 2005).
"Officials project that 10% to 20% of the world energy could come from fusion by the end of the century" (BBC News, May 24, 2006).
"If successful, it could provide a source of energy that is clean and limitless" and "ITER says, within 30 years, the electricity could be available on the grid!" (BBC News, November 21, 2006).

The public, worried about global warming and oil price explosions, seems to welcome the tacit message that "we -the fusion scientists, the engineers, and the politicians- do everything that needs to be done to bring fusion energy on-line, before fossil fuel supplies become an issue, and before global warming boils us all."

In the following, we challenge the assumption that the ITER project offers any solution to the energy problem, and we quantify the arguments of fusion skeptics.

We start our discussion with an overview of the remaining huge problems facing commercial fusion and offer a detailed description of why the imagined self-sufficient tritium breeding cycle cannot work. In fact, as we are about to see, enough knowledge has been accumulated on this subject to safely conclude that whatever might justify the 10 billion US Dollar ITER project, it is not energy research.

5.1. Remaining barriers to fusion energy

Producing electricity from controlled nuclear fusion would require overcoming at least four major obstacles. The removal of each obstacle would need major scientific breakthroughs before any reasonable expectation might be formed of building a commercial prototype fusion reactor. It should be alarming that at best only the problems concerning the plasma control, described in point one below, might be investigated within the scope of the ITER project. Where and how the others might be dealt with is anyone's guess.

These are the four barriers:

Commercial energy production requires steady state fusion conditions for a deuterium-tritium plasma on a scale comparable to that of today's standard nuclear fission reactors with outputs of 1 GW (electric) and about 3 GW (thermal) power. The current ITER proposal foresees a thermal power of only 0.4 GW using a plasma volume of 840 m³ . Originally it was planned to build ITER with a plasma volume of 2000 m³ corresponding to a thermal fusion power of 1.5 GW, but the fusion community soon realized that the original ITER version would never receive the required funding. Thus a smaller, much less ambitious version of the ITER project was proposed and finally accepted in 2005.
The 1 GW (el) fission reactors of today function essentially in a steady state operation at nominal power and with an availability time over an entire year of roughly 90%. The deuterium-tritium fusion experiments have so far achieved short pulses of fusion power of 15 MW (therm) for one second and 4 MW (therm) for 5 seconds, corresponding to a liberated thermal energy of 5 kWh [34]. The Q-value (produced energy over input energy) for these pulses was 0.65 and 0.2, respectively.

If everything works according to the latest plans [35], it will be 2018 when the first plasma experiments can start with ITER. From there, it will take us to 2026, at least another eight years, before the first tritium experiments are tried. The original plans from 2005 are now, even before any serious construction has started, already delayed by four years. In other words, it will take at least 20 years from the agreement by the world's richest countries to construct ITER, before one can ﬁnd out if the goals of ITER, a power output of 0.5 GW (therm) with a Q-value of up to 10 and for 400 seconds, are realistic. Compare that to the original ITER proposal, which was 1.5 GW (therm), with a Q-value between 10-15 and for about 10,000 seconds. ITER proponents explain that the achievement of this goal would already be an enormous success. But this goal, even if it can be achieved by 2026, pales in comparison with the requirements of steady-state operation, year after year, with only a few minor controlled interruptions.

Previous deuterium-tritium experiments used only minor quantities of tritium, and yet lengthy interruptions between successive experiments were required, because the radiation from the tritium decay was so excessively high. In earlier fusion experiments, such as JET, the energy liberated in the short pulses came from burning (fusing) about 3 micrograms (3 × 10^-6 grams) of tritium, starting from a total amount of 20 gr of tritium. This number should be compared with the few kilograms of tritium required to perform the experiments foreseen during the entire ITER lifetime and with the still greater quantities that would be required for a commercial fusion reactor. A 400 sec fusion pulse with a power of 0.5 GW corresponds to the burning of 0.035 gr (3.5 × 10^-2 grams) of tritium, a very large number, when compared to 3 micrograms, but a tiny number when compared with the yearly burning of 55.6 kilograms of tritium in a commercial 1 GW (therm) fusion reactor.

The achieved efficiency of the tritium burning (i.e., the amount that is burned divided by the total amount required to achieve the fusion pulse) was roughly 1 part in a million in the JET experiment and is expected to be about the same in the ITER experiments, far below any acceptable value, if one wants to burn 55.6 kg of tritium per year.

Moreover in a steady-state operation, the deuterium-tritium plasma will be "contaminated" with the helium nucleus that is produced, and some instabilities can be expected. Thus a plasma cleaning routine is needed that would not cause noticeable interruptions of production in a commercial fusion plant. ITER proponents know that even their self-defined goal (a 400 second long deuterium-tritium fusion operation within the relatively small volume of 840 m³) presents a great challenge. One might wonder what they think about the difficulties involved in reaching steady-state operation for a full-scale fusion power plant.
The material that surrounds and contains thousands of cubic meters of plasma in a full-scale fusion reactor has to satisfy two requirements. First, it has to survive an extremely high neutron flux with energies of 14 MeV, and second, it has to do this not for a few minutes but for many years. It has been estimated that in a full-scale fusion power plant the neutron flux will be at least 10-20 times larger than in today's state-of-the-art nuclear fission power plants. Since the neutron energy is also higher, it has been estimated that -with such a neutron flux- each atom in the solid surrounding the plasma will be displaced 475 times over a period of 5 years [36]. Second, to further complicate matters, the material in the so called first wall (FW) around the plasma will need to be very thin in order to minimize inelastic neutron collisions resulting in the loss of neutrons (for more details see next section), yet at the same time thick enough so that it can resist both the normal and the accidental collisions from the 100-million-degree hot plasma for years.
The "erosion" from the neutron bombardment has been estimated to be about 3 mm per "burn" year for carbon-like materials, and it has been estimated to be about 0.1 mm per burn year even for materials like tungsten [36].

In short, no material known today can even come close to meeting the requirements described above. Exactly how a material that meets these requirements could be designed and tested remains a mystery, because tests with such extreme neutron fluxes cannot be performed either at ITER or at any other existing or planned facility.
The radioactive decay of even a few grams of tritium creates radiation dangerous to living organisms, such that those who work with it must take sophisticated protective measures. Moreover, tritium is chemically identical to ordinary hydrogen, and as such is very active and difficult to contain. Since tritium is also a necessary ingredient in hydrogen fusion bombs, there is additional risk that it might be stolen. So, handling even the few kg of tritium foreseen for ITER is likely to create major headaches both for the radiation protection group and for those concerned with the proliferation of nuclear weapons.
Both of these challenges are essentially ignored in the ITER proposal, and the only thing the protection groups have to work with today are design studies based on computer simulations. This may not be of concern to the majority of ITER's promoters today, since they will be retiring before the tritium problem starts in something like 10 to 15 years from now [37], but at some point, it will become a greater challenge also for ITER and especially once one starts to work on a real fusion experiment with many tens of kilograms of tritium.
Problems related to tritium supply and self-sufficient tritium breeding will be discussed in detail in Section 5.2, but first, it will be useful to describe qualitatively two problems that seem to require simultaneous miracles, if they are to be solved.
- The neutrons produced in the fusion reaction will be emitted essentially isotropically in all directions around the fusion zone. These neutrons must somehow be convinced to escape without further interactions through the first wall surrounding the few 1000 m³ plasma zone. Next, the neutrons have to interact with a "neutron multiplier" material like beryllium in such a manner that the neutron flux is increased without transferring too much energy to the remaining nucleons. The neutrons then must transfer their energy without being absorbed (e.g. by elastic scattering) to some kind of gas or liquid, like high pressure helium gas, within the lithium blanket. This heated gas has to be collected somehow from the gigantic blanket volume and must flow to the outside. This heat can be used as in any existing power plant to power a generator turbine. This liquid should be as hot as possible, in order to achieve reasonable efficiency for electricity production. However, it is known that the lithium blanket temperature cannot be too high. This limits the efficiency to values well below those from today's nuclear fission reactors, which also do not have a very high efficiency.
  Once the heat is extracted and the neutrons are slowed sufficiently, they must make the inelastic interaction with the Li⁶ isotope, which makes up about 7.5% of the natural lithium. The minimal thickness of the lithium blanket that surrounds the entire plasma zone has been estimated to be at least 1 meter. Unfortunately, lithium like hydrogen (tritium atoms are chemically identical to hydrogen) in its pure form is chemically highly reactive. If used in a chemical bound state with oxygen, for example, the oxygen itself could interact and absorb neutrons, something that must be avoided. In addition, lithium and the produced tritium will react chemically -which is certainly not included in any present computer modeling- and some tritium atoms will be blocked within the blanket. Unfortunately, additional neutron and tritium losses cannot be allowed, as will be described in more detail in Section 5.2.
- Next, an efficient way has to be found to extract the tritium quickly, and without loss, from this lithium blanket before it decays. We are talking about a huge blanket here, one that surrounds the few 1000 m³ plasma volume. Extracting and collecting the tritium from this huge lithium blanket will be very tricky indeed, since tritium penetrates thin walls relatively easily, and since accumulations of tritium are highly explosive. An interesting description of some of these difficulties that have already been encountered in a small-scale experiment can be found in reference [38].
  Finally assuming we get that far, the extracted and collected tritium and deuterium, which both need to be extremely clean, need to be transported, without losses, back to the reactor zone.

Each of the unsolved problems described above is by itself serious enough to raise doubts about the success of commercial fusion reactors. But the self-sufficient tritium breeding is especially problematic, as will be described in the next section.

5.2. The illusions of tritium self-sufficiency

A self-sustained tritium fusion chain appears to be not simply problematic but absolutely impossible. To see why, we shall now look into some details based on what is already known about this problem.

A central quantity for any fission reactor is its criticality, namely that exactly one neutron, out of the two to three neutrons "liberated" per fission reaction, will enable another nuclear fission reaction. More than 99% of the liberated fission energy is taken by the heavy fission products such as barium and krypton, and this energy is relatively easily transferred to a cooling medium. The energy of the produced fission neutrons is about 1 MeV. In order to achieve the criticality condition, the surrounding material must have a very low neutron absorption cross-section, and the neutrons must be slowed down to eV energies. For a self-sustained chain reaction to happen, a large amount of U235, enriched to 3-5%, is usually required. Once the nominal power is obtained, the chain reaction can be regulated using materials with a very high neutron absorption cross-section. A much higher enrichment of 20% is required for fast reactors without moderators and up to 90% for bombs.

In contrast to fission reactions, only one 14 MeV neutron is liberated in the D + T → He + n fusion reaction. This neutron energy has to be transferred to a medium using elastic collisions. Once this is done, the neutron is supposed to make an inelastic interaction with a lithium nucleus, splitting it into tritium and helium.

Starting with the above reaction, one can calculate how much tritium burning is required for a continuously operating commercial fusion reactor assuming a power production of 1 GW (thermal). One finds that about 55.6 kg of tritium needs to be burned per year with an average thermal power of 1 GW.

Today, tritium is extracted from Canadian heavy water reactors at extraordinary cost - about 30 million US Dollars per kg. These old heavy water reactors will probably stop operation around the year 2025, and it is expected that a total tritium inventory of 27 kg will have been accumulated by that year [39]. Once these reactors stop operating, this inventory will be depleted by more than 5% per year due to its radioactive decay alone - tritium has a half-life of 12.3 years. As a result, for the prototype "PROTO" fusion reactor, which fusion optimists imagine to start operation not before the year 2050, at best only 7 kg of tritium might remain for the start (Normal ﬁssion reactors produce at most 2-3 kg per year, and the extraction costs have been estimated to be 200 million dollars per kg [39].). It is thus obvious that any future fusion reactor experiment beyond ITER must not only achieve tritium self-sufficiency, it must create more tritium than it uses, if there are to be any further fusion projects.

The particularly informative website of Prof. Abdou from UCLA, one of the world's leading experts on tritium breeding, offers relevant numbers both about the basic requirements for tritium breeding and the state of the art today [40]. Yet, let us start with first things first, as understanding such "expert" discussions requires acquaintance with some key terms:

The required Tritium Breeding Ratio (rTBR) stands for the minimal number of tritium nuclei that must be produced per fusion reaction in order to keep the system going. It must be larger than one because of tritium decay and other losses and because of the necessary inventory in the tritium processing system and the stockpile for outages and for the startup of other plants. The rTBR value depends on many system and technology parameters.
The achievable Tritium Breeding Ratio (aTBR) is the value obtained from complicated and extensive computer simulations -so-called 3-dimensional simulations- of the blanket with its lithium and other materials. The aTBR value depends on many parameters like the first wall material and the incomplete coverage of the breeding blanket.
Other important variables are used to define quantitatively the value of the rTBR. These include: (1) the "tritium doubling time," the time in years required to double the original inventory; (2) the "fractional tritium burn-up" within the plasma, expected to be at best a few %; (3) the "reserve time," the tritium inventory required in days to restart the reactor after some system malfunctioning with a related tritium loss; and (4) the ratio between the calculated and the experimentally obtained TBR.

The handling of neutrons, tritium, and lithium requires particular care, not only because of radiation, but also because tritium and lithium atoms are chemically very reactive elements. Consequently, real-world large-scale experiments are difficult to perform, and our understanding of tritium breeding is based almost entirely on complicated and extensive computer simulations, which can only be done in a few places around the world.

Some of these results are described in a publication by Sawan and Abdou from December 2005 [41]. The authors assume that a commercial fusion power reactor of 1.5 GW (burning about 83 kg of tritium per year) would require a long-term inventory of 9 kg, and they further assume that the required startup tritium is available.

They argue that, according to their calculations, the absolute minimum rTBR is 1.15, assuming a doubling time of more than 4 years, a fractional tritium burn-up larger than 5%, and a reserve time of less than 5 days. Requiring a shorter doubling time of 1 year, their calculations indicate that the rTBR should be around 1.5. More numbers can be read out from their figures. For example, one finds that if the fractional burn-up would be 1%, the rTBR should be 1.4 for a 5 year doubling time and even 2.6 for a 1 year doubling time. The fractional tritium burn-up during the short MW pulses in JET was roughly 0.0001%.

The importance of short tritium doubling times can be understood easily using the following calculation. Assuming these numbers can be achieved and that 27 kg tritium (2025) minus the 9 kg long-term inventory would be available at start-up, then 18 kg could be burned in the first year. A doubling time of 4 years would thus mean that such a commercial 1.5 GW (thermal) reactor can operate at full power only 8 years after the start-up.

Unfortunately, these rTBR estimates are far too optimistic as a number of potential losses related to the tritium extraction, collection, and transport are not considered in today's simulations.

The details become even more troubling when we turn to the tritium breeding numbers that have been obtained with computer simulations.

After many years of detailed studies, current simulations show that the blanket designs of today have, at best, achieved TBR's of 1.15. Using this number, Sawan and Abdou conclude that a small window for tritium self-sufficiency still exists theoretically. This window requires (1) a fractional tritium burn up of more than 5%, (2) a tritium reserve time of less than 5 days, and (3) a doubling time of more than 4 years. Yet even using these numbers, the authors believe it to be difficult to imagine a real operating power plant. In their own words: "for fusion to be a serious contender for energy production, shorter doubling times than 5 years are needed," and the fact is, doubling times much shorter than 5 years appear to be required, which means that TBR's much higher than 1.15 are necessary. To make matters worse, they also acknowledge that current systems of tritium handling need to be explored further. This probably means that the tritium extraction methods from nuclear fission reactors are nowhere near meeting the requirements.

Sawan and Abdou also summarize various effects that reduce the obtained aTBR numbers, once more realistic reactor designs are studied, and structural materials, gaps, and first wall thickness are considered. For example, they find that as the first wall, made of steel, is increased by 4 cm starting from a 0.4 cm wall, the aTBR drops by about 16%. It would be interesting to compare these assumptions about the first wall with the ones used in previous plasma physics experiments like JET and the one proposed for ITER. Unfortunately, we have so far not been able to obtain any corresponding detailed information. However, as it is expected that the first wall in a real fusion reactor will erode by up to a few mm per fusion year, the required thin walls seem to be one additional impossible assumption made by the fusion proponents.

Other effects, as described in detail by Sawan and Abdou [41], are known to reduce the aTBR even further. The most important ones come from the cooling material required to transport the heat away from the breeding zone, from the electric insulator material, from the incomplete angular coverage of the inner plasma zone with a volume of more than 1000 m³, and from the plasma control requirements.

This list of problems is already very long and shows that the belief in a self-sufficient tritium chain is completely unfounded. However, on top of that, some still very idealized TBR experiments have been performed now. These real experiments show, according to Sawan and Abdou [41], that the measured TBR results are consistently about 15% lower than the modeling predicts. They write in their publication: "the large overestimate (of the aTBR) from the calculation is alarming and implies that an intense R&D program is needed to validate and update .. our ability to accurately predict the achievable TBR."

One might conclude that a correct interpretation could have been:

Today's experiments show consistently that no window for a self-sufficient tritium breeding currently exists and suggest that proposals that speak of future tritium breeding are based on nothing more than hopes, fantasies, misunderstandings, or even intentional misrepresentations.

5.3. Ending the dreams about controlled nuclear fusion

As we have explained above, there is a long list of fundamental problems concerning controlled fusion. Each of them appears to be large enough to raise serious doubts about the viability of the chosen approach to a commercial fusion reactor and thus about the 10 billion US Dollars ITER project.

Those not familiar with the handling of high neutron fluxes or the possible chemical reactions of tritium and lithium atoms might suppose that these problems are well known within the fusion community and are being studied intensively. But the truth is, none of these problems have been studied intensively and, at best, even with the ITER project, the only problems that might be studied relate to some of the plasma stability issues outlined in Section 5.1. All of the other problem areas are essentially ignored in today's discussions among ITER experts.

Confronted with the seemingly impossible tritium self-sufficiency problem that must be solved before a commercial fusion reactor is possible, the ITER experts tell you that this is not a problem that the current ITER project is to address. It won't be until the next generation of experiments -experiments that will not begin for roughly another 30 years according to official plans- that issues related to tritium self-sufficiency will have to be dealt with. They seem to also be comfortable with the fact that neither the problems related to material aging due to the high neutron flux nor the problems related to tritium and lithium handling can be tested with ITER.

However, among those who are not part of ITER and who do not expect miracles, an ever increasing number of scientists is coming to the conclusion that commercial fusion reactors can never become a reality. They are even starting to receive attention from the media as they argue ever more loudly that the ITER project will contribute very little, if anything, to energy research [42].

One scientist who should be listened to more widely is Prof. Abdou. In a presentation in 2003 that was prepared on behalf of the US fusion chamber technology community for the US Department of Energy (DOE) Office of Science on Fusion Chamber Technology, he wrote that "tritium supply and self-sufficiency are a 'Go-No Go' issue for fusion energy, [and are therefore] as critical NOW as demonstrating a burning plasma" [capitalization in original]. He pointed out that "there is NOT a single experiment yet in the fusion environment that shows that the DT fusion fuel cycle is viable." He said that "proceeding with ITER makes Chamber Research even more critical" and he asked: "What should we do to communicate this message to those who influence fusion policy outside DOE?" [43]. In short, to go ahead with ITER without addressing these chamber technology issues makes very little sense economically.

In the light of everything that has been said in this section, it seems clear that the nuclear fusion scientists should be telling the truth to the tax payers, the policy makers, and the media. They should tell them that, after 50 years of very costly fusion research conducted at various locations around the world, enough knowledge exists to state that:

today's achievements in all relevant areas of nuclear fusion are still many orders of magnitude away from the basic requirements of a fusion prototype reactor;
no material or structure is known that can withstand the extremely high neutron flux expected under realistic deuterium-tritium fusion conditions; and
self-sufficient tritium breeding appears to be impossible to achieve under the conditions required to operate a commercial fusion reactor.

It is late, but perhaps not too late, to acknowledge that the ITER project is at this point nothing more than an expensive experiment to investigate some fundamental aspects of plasma physics. Since this would in effect acknowledge that the current ITER funding process is based on faulty assumptions and that ITER should in all fairness be funded on equal terms with all other basic research projects, acknowledging these truths will not be easy. Yet, it is the only honest thing to do.

It is also the only path that will allow us to transfer from ITER to other more promising research efforts the enormous resources and the highly skilled talents that need now to be brought to bear on our increasingly urgent energy problems. In short, this is the only path that will allow us to stop "throwing good money after bad" and to start dealing with our emerging energy crisis in a realistic way.

6. Summary

In this fourth and final part of our analysis about the Future of Nuclear Energy, we have presented status and prospects for nuclear fuel breeder fission reactors and the true situation as it relates to nuclear fusion.

Despite the often repeated claims that the technology for fast reactors is well understood, one finds that no evidence exists to back up such claims. In fact, their huge construction costs, their poor safety records, and their inefficient performance give little reason to believe that they will ever become commercially significant.

Indeed, no evidence has been presented so far that the original goal of nuclear fuel breeding has been achieved. The designs and running plans for the two FBR's, currently under construction in India and in Russia, do not indicate that successful breeding can even in principle be achieved.

Nevertheless, assuming that extensive and costly efforts are being undertaken during the next 20-30 years, a remote possibility of mastering nuclear fission breeder reactor technology can still be imagined. However, it is unclear if (1) enough highly enriched uranium remains to start future commercial breeder reactors on a large scale in 30-40 years from now, and (2) if the people in rich societies will accept risky and costly research efforts during times of economic difficulties. In any case, fast breeder reactors, even under the most optimistic assumptions, will come far too late to compensate for the looming energy decline following the peaking of oil and gas.

In contrast to the remaining open questions relating to fission breeders, we find that the accumulated knowledge about nuclear fusion is already now large enough to conclude that commercial fusion power is not only 50 years away, but that it will always be 50 years away.

The current situation concerning the future of nuclear energy appears in many respects similar to the one described in a famous fairy tale [44], but with a slightly modified ending:

"In the coming 'autumn and winter' of our industrial civilization brought on by the decline of fossil fuels, it seems clear that the clothes of the Nuclear Fission Energy emperor are far too thin to keep him and others warm, and that the Nuclear Fusion Emperor has no clothes at all!"

Acknowledgments

This report about the Future of Nuclear Energy: Facts and Fiction, and especially its fourth part, is a result of many questions that the author asked scientists active within the fission and fusion research communities over the past few years. Essentially, none was answered and no help was provided to get in contact with the corresponding "fission" and "fusion" experts. Thus in some kind of "hobby" research, which included discussions with friends, colleagues, and many believers in never ending technological progress, the different pieces concerning the future of nuclear energy summarized in this report came together.

During early 2007, an attempt was made to discuss the fusion problems in an open and scientific way directly with scientists from the fusion community. After coming as far as fixing the date for a seminar, the author received an email stating that there had been a "misunderstanding," and the envisaged dialog never took place. A similar initiative to discuss open issues about nuclear fission energy was undertaken in 2008. Again, it came as far as a seminar invitation that was canceled when trying to fix a date.

However during the spring of 2007, the author received an invitation to present the "Status and Prospects of Nuclear Energy" at the 6^th ASPO meeting in Cork, Ireland in September 2007. In preparation for this presentation, the author took the time to study the 2005 edition of the Red Book in detail. Many questions about the uranium resource numbers, presented in the Red Book, came up, but the inconsistencies were not yet large enough to start doubting the data. This view changed however, when the 2007 edition appeared together with an enthusiastic press declaration in June 2008. As it turned out from comparing the 2007 and 2005 editions, the reported uranium resource data were nothing but a collection of proven and unproven geological data mixed with politically correct wishful thinking about a sustainable and bright future for the peaceful use of nuclear energy. This is how this report with its first three parts concerning the Red Book and the analysis of future nuclear energy technologies started to take shape.

Even though the views expressed in this paper are from the author alone, I would like to thank several colleagues and friends who took the trouble to discuss the content of this report during the past few years with me. They all helped me to bring it into its final form. I would like to thank especially D. Hatzifotiadou, W. Tamblyn, and F. Spano for many valuable suggestions and the careful reading of the paper draft. I would also like to thank S. Newman, who had asked me during the spring of 2007 to prepare a chapter about "Fusion Illusions" for the second edition of the book "The Final Energy Crisis." Her encouragement was essential to writing the longer report about nuclear fusion energy.

Finally, after several attempts to complete also the report about the Red Book and the status and prospects of nuclear fission energy, it was Prof. F. Cellier who suggested to split this report into four separate parts and submit it to the Oil Drum for publication. I am very grateful to him about the many valuable discussions we had, for the encouragement to complete this report, and for his editing work to transform the article into the style needed for the Oil Drum publication. I am also grateful to the staff of the Oil Drum for having created a place where such articles, often censored in other places, can be published and confronted directly to the comments of a large number of critical readers.

Thus, the author hopes, with the ideas expressed in the quote from Gustave Le Bon below, that this report will function like some kind of "telescope," helping others to observe that some objects are moving around Jupiter.

"Science promised us truth, or at least a knowledge of such relations as our intelligence can seize: it never promised us peace or happiness"
Gustave Le Bon

References

[1] For a historic overview, cf. http://www.cfo.doe.gov/me70/manhattan/cp-1_critical.htm.

[2] http://en.wikipedia.org/wiki/Nuclear_power.

[3] For the fraction of nuclear electric energy production in 2007, cf. page 17 of http://www.iea.org/textbase/nppdf/free/2009/key_stats_2009.pdf.

[4] Cf. for example http://en.wikipedia.org/wiki/Fast_breeder_reactor; http://hyperphysics.phy-astr.gsu.edu/hbase/nucene/fasbre.html; and under the subtitle "Is nuclear energy renewable?" in http://www.world-nuclear.org/info/inf09.html.

[5] "All agree, however, that successful completion of this research could provide humans with perhaps the 'final solution' to their energy needs." in http://www.bookrags.com/research/nuclear-fusion-enve-02/ or "The final solution of energy problems seems to be achieved only by the realization of nuclear fusion." from the abstract in http://www.osti.gov/energycitations/product.biblio.jsp?osti_id=5915187.

[6] Parts I, II, and III of this four-part article have been published at the Oil Drum, August/September 2009 at http://europe.theoildrum.com/node/5631, http://europe.theoildrum.com/node/5677, and http://europe.theoildrum.com/node/5744, respectively. The articles are also available at the preprint archive http://xxx.lanl.gov/ filed under Physics and Society at http://xxx.lanl.gov/abs/0908.0627, http://xxx.lanl.gov/abs/0908.3075, and http://xxx.lanl.gov/abs/0909.1421, respectively.

[7] The IAEA data base about existing nuclear reactors can be accessed at http://www.iaea.org/programmes/a2/. A qualitative overview of different FBR's is presented at http://www.eoearth.org/article/Fast_neutron_reactors_(FBR).

[8] The WNA document about Russia, http://www.world-nuclear.org/info/inf45.html, mentions the year 2010 as BN-600 termination date.

[9] The IAEA fast reactor data base with many detailed publications can be accessed at http://www.iaea.org/inisnkm/nkm/aws/frdb/index.html. The BN-600 design breeding gain of -0.15 is mentioned in [22], page 46.

[10] The actual status of the Phenix reactor is described in the WNA document about FBR's: http://www.world-nuclear.org/info/inf98.html.

[11] For a list of previously scheduled Monju restarts, cf. http://www.world-nuclear-news.org/stdsearch.aspx?sparam=monju&ﬁd=778.

[12] The WNA document about India, http://www.world-nuclear.org/info/inf53.html, mentions 2010 as the FBR startup date, with commercial power production starting in 2011.

[13] For some information about running experience with thorium reactors, cf. the WNA document http://www.world-nuclear.org/info/inf62.html.

[14] According to a Wikipedia article, the power density in the sun is estimated at 0.272 W/m³ http://en.wikipedia.org/wiki/Sun. At other places, such as Klaus Heinloth, Die Energiefrage (2003), a roughly 1000 times larger fusion power density is given.

[15] The text of the NPT is reproduced at http://www.un.org/events/npt2005/npttreaty.html. Especially, articles IV and VI have important implications for today’s discussions about Iran and other states.

[16] A three minute documentation about the explosion of the Tsar bomb can be found at you-tube http://www.youtube.com/watch?v=j2nQopP73XI&feature=player_embedded.

[17] Many interesting scenes from the "Dr. Strangelove" movie can be found at you-tube. For example, the ones from ending http://www.youtube.com/watch?v=iesXUFOlWC0&feature=related and http://www.youtube.com/watch?v=wxrWz9XVvls are very revealing.

[18] For some details about the relations between radiation and cancer, cf. http://www.cancer.org/docroot/ped/content/ped_1_3x_radiation_exposure_and_cancer.asp.

[19] The formula is in chapter 4, page 106 of the book Nuclear Engineering: Theory and Technology of Commercial Nuclear Power by Ronald Allen Knief, New York: Hemisphere Pub. Corp., 1992. Many more interesting aspects about energy from nuclear fission are explained in this book.

[20] Details about the thorium breeding experiments with the Shippingport reactor are given in http://www.inl.gov/technicalpublications/Documents/2664750.pdf and http://www.osti.gov/bridge/servlets/purl/769053-hlSCmO/native/769053.pdf.

[21] The breeding ratio of 1.14 for the Phenix FBR is given in many papers and textbooks. However according to the [22] document, this value is the design value, and not the result of an experimental analysis.

[22] The fuel content of the FBR core and other pieces of information are taken from the IAEA document http://www.iaea.org/inisnkm/nkm/aws/frdb/fulltext/03_coreCharacteristics.pdf#37.

[23] For the WNA quote about the BN-800 FBR, cf. http://www.world-nuclear.org/info/inf98.html, and for some interesting details about the timescale of the nuclear energy evolution in Russia, cf. the WNA document http://www.world-nuclear.org/info/inf45.html.

[24] Details about the Generation IV International Forum (GIF) can be found at their website http://www.gen-4.org/. The detailed roadmap program is presented at http://www.gen-4.org/Technology/roadmap.htm.

[25] The statements from the WNA can be found at http://www.world-nuclear.org/info/inf77.html.

[26] The statement by Bernard Bigot, chairman of the French Atomic Energy Commission, made at the September Global 2009 "The Nuclear Fuel Cycle" conference is repeated at the website of the supporters of nuclear energy http://www.sone.org.uk/ at http://www.sone.org.uk/content/view/1349/2/.

[27] Information about the Global Nuclear Energy Partnership (GNEP) can be obtained from their website http://www.gneppartnership.org/index.htm.

[28] The June 29, 2009 news item from the WNA entitled "Fatal Blow to GNEP?" can be found at http://www.world-nuclear-news.org/NP-DoE_cancels_GNEP_EIS-2906095.html.

[29] Many discussion topics, research articles, and discussions about the use of thorium can be found at the http://www.energyfromthorium.com/ website.

[30] The pragmatic down-to-earth statement about future thorium breeders comes from the WNA article about "thorium" in http://www.world-nuclear.org/info/inf62.html.

[31] The original article "Fusion Illusions" is published in the second edition of the The Final Energy Crisis edited by S. Newman. For more details and many other articles about the coming energy crisis, cf. http://candobetter.org/TFEC/.

[32] For the ITER homepage and further details, cf. http://www.iter.org/default.aspx. More technical details about the ITER status can be found at the website of the USA fusion community at http://ﬁre.pppl.gov/.

[33] Cf. for example http://news.bbc.co.uk/2/hi/science/nature/6165932.stm and http://news.bbc.co.uk/2/hi/science/nature/5012638.stm.

[34] Cf. for example John Wesson, The Science of JET, Chapter 1and Appendix I, March 2000 at http://www.jet.efda.org/documents/books/wesson.pdf for the timeline of the JET experiments.

[35] The new, four-year-delayed date for the first deuterium-tritium experiments in 2026 has been announced at the 4^th ITER Council meeting in June 2009, as described at http://www.iter.org/proj/Pages/ITERMilestones.aspx. However, it seems that nothing goes as planned. According to an article in Nature, October 13, 2009, ITER has been at a standstill since April, http://www.nature.com/news/2009/091013/full/461855a.html.

[36] For more details, cf. the presentations by B. D. Wirth at http://www.nuc.berkeley.edu/courses/classes/NE39/Wirth-FusionMaterials_lecture2.pdf and
S. J. Zinkle (2004), page 47 at http://ﬁre.pppl.gov/aps_dpp04_zinkle.pdf.

[37] The ITER people seem to be working on a new quantitative construction and operation timeline, as details are currently not available on the ITER homepage. However a qualitative overview can be be found at http://www.iter.org/PROJ/Pages/ITERAndBeyond.aspx. The original 50 year timeline towards the realization of the DEMO and PROTO fusion devices is described at http://www.fusion.org.uk/culham/fasttrack.pdf.

[38] J. L. Anderson, Tritium Systems: Issues and Answers, Journal of Fusion Energy, Vol 4, Nos. 2/3, 1985 and http://www.springerlink.com/content/m34445687252l544/.

[39] Cf. for example M. Abdou, Notes for Informal Discussion with Senior Fusion Leaders in Japan (JAERI and Japanese Universities), March 24, 2003.

[40] The website of Prof. M. Abdou, http://www.fusion.ucla.edu/abdou/.

[41] M. E. Sawan and M. A. Abdou, Physics and technology conditions for attaining tritium self-sufficiency for the DT fuel cycle, Fusion Engineering and Design, 81 (2006) 1131-44 and http://dx.doi.org/10.1016/j.fusengdes.2005.07.035.

[42] Cf. for example S. Balibar, Y. Pomeau and J. Treiner, La France et l'énergie des étoiles, point de vue, Le Monde, 24 October 2004, and W. E. Parkins, Fusion Power: Will It Ever Come, March 10 Science Vol 311.

[43] M. Abdou, Briefing to DOE Office of Science, Washington June 3, 2003 at http://www.fusion.ucla.edu/abdou/abdou presentations/2003/orbach pres (6-1-03) Final1.ppt.

[44] It seems that "history" sometimes repeats itself. Hans Christian Andersen (1837) fairy tale, "The Emperor’s New Suit," can be found at http://hca.gilead.org.il/emperor.html.

Guardian Raises Questions about Past IEA Forecasts of World Oil; New IEA Forecast is Out - With a Lower Forecast

Gail the Actuary — Tue, 10 Nov 2009 10:23:58 -0400

Yesterday's Guardian raised questions about whether oil reserves published in the past by the IEA have been inflated.

Key oil figures were distorted by US pressure, says whistleblower

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The article makes several other points, including that the US has been encouraging understatement, and that the new 2009 forecast released today may still be overstated.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies.

One wonders whether similar pressures are put on the US Energy Information Administration. The article also talks about the possibility that we are "already in the 'peak oil' zone":

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was "imperative not to anger the Americans" but the fact was that there was not as much oil in the world as had been admitted. "We have [already] entered the 'peak oil' zone. I think that the situation is really bad," he added.

Today, the IEA released its new World Energy Outlook 2009. The Oil Drum staff will be writing posts about it in coming days and weeks. This is a key graph from the press release packet, indicating the IEA is now seeing things through somewhat less rosy glasses, but still views world oil supply with more optimism than we would:

The new report also indicates that non OPEC production is peaking, with this statement:

"As conventional oil production in countries not belonging to the Organization of the Petroleum Exporting Countries (OPEC) peaks around 2010, most of the increase in output would need to come from OPEC countries, which hold the bulk of remaining recoverable conventional oil resources."

Drumbeat: November 10, 2009

Leanan — Tue, 10 Nov 2009 09:42:05 -0400

Interview With Russian President Dmitry Medvedev: 'Oil And Gas Is Our Drug'

SPIEGEL: In a recent article that you wrote entitled "Go, Russia," you spoke of your country's "humiliating" economic "backwardness." Why hasn't Russia managed to overcome its dependency on natural resources in the time since the end of the Soviet Union?
Medvedev: Because people quickly get addicted to drugs. Trading gas and oil is our drug. People can't get enough of it, even when prices are going through the roof. Five years ago, who could have imagined an oil price of $150 a barrel? Trading in natural resources is easy, it leads to the illusion of economic stability. Money flows in -- considerable sums of money. Acute problems can be effectively resolved with it. You don't need any economic reforms; you don't need to deal with diversifying production. We could rid ourselves of this lethargy if we would only learn the right lessons from the crisis.

Energy body rejects whistleblower allegations of oil cover up

London, England (CNN) -- The International Energy Agency has rejected reported allegations from a whistleblower that world oil reserves have been exaggerated to avoid panic buying in the oil market.

IEA: something for everybody in the 2009 outlook

Perhaps the most significant numbers in the World Energy Outlook, at least in terms of the current policy and the international climate negotiations, pertain to China. Indeed, the IEA suggests that if China actually follows through on all of the goals and targets it has announced (for renewables, nuclear power, energy efficiency and the like), it alone could account for 25 percent of the reductions that the world needs to make by 2020 in order to remain on track for limiting global warming to 2 degrees Celsius. Put another way, China would be doing more to address global than either the United States or Europe.

The dollar is weak because ...

NEW YORK (CNNMoney.com) -- Here's the latest twist on the timeless chicken versus the egg debate. Which came first: the stock and commodities rally or the weaker dollar?
There is no denying that the dollar has lost a fair amount of ground over the past few months while at the same time, stocks, oil and gold have skyrocketed.
But is there a real cause and effect relation here? And if so, what exactly is it? Has the greenback slid against other currencies because stocks and commodities are surging or is it the other way around?

Mexico: Refining sector could be opened to private participation

Mexico's energy ministry Sener will attempt to open the country's refining sector to private participation in a new energy reform currently being prepared, deputy minister of energy planning Jordy Herrera told reporters at an event in Mexico City.
A proposal by Mexico's President Felipe Calderón in 2008 had the same goal, but it was strongly opposed by the country's political left and not included in the reform that ultimately passed.

Brazil's Petrobras eyes Angola's deep water oil

LUANDA (Reuters) - Brazilian state-owned Petrobras (PETR4.SA: Quote) is interested in developing Angola's ultra-deepwater oil exploration, known as pre-salt, Brazil's Trade and Development Minister Miguel Jorge said on Tuesday.
Angola shares a similar underwater rock formation as Brazil, which in 2007 made a pre-salt discovery of some 8 billion barrels of crude in its Tupi field.

Study: Cooperation key to growth in oil sands supply

HOUSTON, Nov. 10 -- Although the oil sands industry will continue to develop in Alberta despite the jolt it received when oil prices plunged last year, total Canadian oil exports to the US face constraints, according to a study by the Center for Global Energy Studies, London, and Geopolitics Central, Calgary.
Oil sands production will increase by 1.19-1.99 million b/d during 2009-20, depending on the degree of economic and environmental cooperation among major countries, the study says.
Cooperation extensive enough to keep the global recession relatively short and ensure strong and lasting growth afterward would support oil prices and enable oil sands production in Alberta to rise from 1.21 million b/d in 2008 to 3.2 million b/d in 2020.

The Palin Persuasion

The popular and sensible approach to energy policy is obvious. Remove the restrictions on offshore oil exploration--if Obama thinks it's fine for Brazil to drill offshore, why can't the United States? Lower tariffs and reduce subsidies for domestically produced ethanol. Get rid of the regulations limiting the construction of oil refineries. Dismiss airy prophecies about "peak oil," "green jobs," and "limits to growth." Pledge, instead, that Americans will have access to as much of the cheapest, cleanest energy they need to stimulate the economy. Palin is right. No limits. "All of the above" is best.

Carolyn Baker: From The Wilderness To The End Of Civilization

Why would someone go to a movie that is essentially an interview of someone else? Don't we go to movies to be entertained or watch documentaries in order to be inundated with voluminous information and breath-taking cinematography? What would compel anyone to sit for 82 minutes watching some guy chain smoking while he's being interviewed about the collapse of industrial civilization in a room that looks like a bunker?
If incessant adrenalin rushes enhanced by stupefying special effects are what you desire, seeing "Collapse" should be postponed until you are ready to hear, see, and feel how Director Chris Smith's uncanny discernment is brilliantly conveyed in one of the most poignant, but inspiring movies of this decade.

Kenya's wind power project snagged

NAIROBI (AFP) – A Kenyan wind power project aiming to be the biggest in sub-Saharan Africa suffered a setback Tuesday after talks with one of the key investors foundered, an official said.

After the Recession, Will the World Face an Energy Crisis?

Here's the bad news about the global recession potentially coming to an end: the recovery could spark a massive energy crisis with increased demand for fossil fuels from China and other developing countries, tighter oil supplies and skyrocketing oil prices. And this is just in the near future. The longer-term picture looks even more daunting: if the world continues guzzling oil and gas at its present pace, global temperatures will rise by an average of 6 degrees Celsius by 2030, causing "irreparable damage to the planet."
The warning from the International Energy Agency (IEA), an intergovernmental energy watchdog based in Paris, could add extra weight to the negotiations leading up to the climate change summit in Copenhagen next month, where leaders will attempt to come to an agreement on a successor to the Kyoto Protocol limiting greenhouse gas emissions. "Saving the planet cannot wait," reads the agency's annual World Economic Outlook report, which was released Tuesday. "The time to act has arrived."
But the energy crisis may be even more critical than the IEA is saying. According to a report in The Guardian newspaper Tuesday, the organization, under pressure from the U.S., has in past reports deliberately underestimated just how fast the world is running out of oil. The paper quoted an unnamed senior IEA official as saying that the U.S. encouraged the agency to "underplay the rate of decline from existing oil fields while overplaying the chance of finding new reserves."

Saudis bomb rebels, blockade Yemeni coast: Offensive raises concerns of new proxy war pitting Tehran against Riyadh

CAIRO - Saudi Arabia on Tuesday imposed a naval blockade on the Red Sea coast of northern Yemen to combat Shiite rebels along its border, an adviser to the government said, in the latest escalation of fighting in the southern Arabian peninsula.
The Saudi move comes as Iran, the region's dominant Shiite power accused by the Arabs of backing the rebels, warned neighboring countries not to interfere in Yemen's internal affairs.

Saudi warns Yemeni rebels to retreat from border

SANAA (Reuters) - Saudi Arabia said on Tuesday it would continue its offensive against Yemeni rebels unless they retreated well away from its borders, after insurgents said they had seized more territory near the world's largest oil exporter.
Saudi Arabia is getting increasingly drawn into a conflict to its south between the Yemeni government and Shi'ite Muslim rebels, which Riyadh fears could weaken the kingdom's stability.

World needs Canada’s 'dirty oil', says IEA

The world needs Canada's so-called dirty oil, the International Energy Agency said Tuesday even as it called on leaders to make decisive moves to slash greenhouse gas emissions at a United Nations-sponsored negotiating session next month.
"World leaders gathering in Copenhagen next month for the UN Climate Summit have a historic opportunity to avert the worst effects of climate change," IEA executive director Nobuo Tanaka said in a statement after releasing the agency's annual World Energy Outlook analysis.

IEA sees 1.3 billion people without power in 2030

LONDON (Reuters) - The proportion of the world's population with access to electricity will rise over the next 20 years but more than a billion people will still be without power in 2030, the International Energy Agency (IEA) said on Tuesday.
The IEA, which advises 28 industrialised countries on energy policy, said most of the people still living without power in 2030 would be in Sub-Saharan Africa and South Asia with four out of five of these people in rural areas.

World oil demand growth to be led by Asia - IEA

LONDON (Reuters) - China and India will be responsible for most of the world's oil demand growth over the next two decades, the International Energy Agency (IEA) said on Tuesday.
The agency's annual World Energy Outlook said if government policies stay as they are, Indian oil demand is likely to rise by 3.9 percent every year until 2030, while Chinese demand will rise by 3.5 percent annually over the same period.
This compares with just 1 percent year-on-year oil demand growth for the world as a whole. Most industrialised economies in the Organisation for Economic Cooperation and Development (OECD) will see demand fall due to greater energy efficiency.

A developing thirst: How demand for oil will change by 2030

GLOBAL demand for oil is set to rise from 84.7m barrels per day (bpd) in 2008 to 105m bpd in 2030, says the International Energy Agency in its latest annual energy report. Transport will account for 97% of this increase as rising numbers of cars hit the roads of the developing world. Demand from these countries will overtake that of the industrialised OECD nations by 2030. By then, America, Japan and Europe will be using less oil than in 1980. But the thirst for oil will balloon in Asia—and in India and China in particular—where demand is predicted to rise by as much as 400% compared with 2008.

Investment in renewables falls by 20 per cent in 2009

The renewable power sector has been hit by a significant fall in investment over the past year, according to the International Energy Agency (IEA).
Energy companies around the world have been cutting back on project spending as a result of falling energy demand faltering cash flows because of the global financial crisis.
However, renewables-based power generation has suffered far worse than any other sector, with investment expected to fall by almost one-fifth.

Gazprom Expects Gas Demand to Recover Within 3 Years

(Bloomberg) -- OAO Gazprom, the world’s biggest natural-gas producer, expects demand for the fuel to rise in the next two or three years, narrowing the oversupply caused by the recession and new production projects.
“We are in a long-term business,” Deputy Chief Executive Officer Alexander Medvedev said today in a Bloomberg Television interview in Washington. “In two, maximum three years, we will be back on track with demand for gas because we see the first signs of economic recovery.”

Iraq's Kurds to hold on to oil revenues -Barzani

BRUSSELS (Reuters) - The president of Iraq's Kurdish region criticised the central government on Tuesday for its failure to draw up a clear law on sharing oil revenues and said the Kurds would hold on to what they earn for now.
Speaking during a visit to the European Parliament, Masoud Barzani said Kurdistan had the right to retain the income from the export of about 100,000 barrels of oil per day, despite a law stating that all Iraq's oil and gas assets are shared.
"The Iraqi oil ministry has failed ... in their laws and therefore we are not obliged to adhere to the oil laws of Iraq because they have failed in producing a much more transparent situation," Barzani told a news conference.

Independence Hub may resume production Tues - owner

HOUSTON (Reuters) - The Independence Hub, a major hub for natural gas production in the Gulf of Mexico, may resume production Tuesday evening as workers return to the facility following the passage of Tropical Storm Ida, said owner Enterprise Products Partners.

The fight over the future of food

NEW YORK/WASHINGTON/MILAN (Reuters) - At first glance, Giuseppe Oglio's farm near Milan looks like it's suffering from neglect. Weeds run rampant amid the rice fields and clover grows unchecked around his millet crop.
Oglio, a third generation farmer eschews modern farming techniques -- chemicals, fertilizers, heavy machinery -- in favor of a purely natural approach. It is not just ecological, he says, but profitable, and he believes his system can be replicated in starving regions of the globe.
Nearly 5,000 miles away, in laboratories in St. Louis, Missouri, hundreds of scientists at the world's biggest seed company, Monsanto, also want to feed the world, only their tools of choice are laser beams and petri dishes.

Carbon capture projects around the world

A quick survey of carbon capture projects and efforts around the world:

Power for U.S. From Russia’s Old Nuclear Weapons

MOSCOW — What’s powering your home appliances?
For about 10 percent of electricity in the United States, it’s fuel from dismantled nuclear bombs, including Russian ones.
“It’s a great, easy source” of fuel, said Marina V. Alekseyenkova, an analyst at Renaissance Bank and an expert in the Russian nuclear industry that has profited from the arrangement since the end of the cold war.
But if more diluted weapons-grade uranium isn’t secured soon, the pipeline could run dry, with ramifications for consumers, as well as some American utilities and their Russian suppliers.

The Peak of the Oil Age - The Uppsala World Energy Outlook

A new study has been accepted for publication in the journal of Energy Policy. The article performs an analysis of the oil production forecast done by the International Energy Agency in 2008 and highlights several shortcomings as well as confirms other parts.

'Collapse' is the strangest doomsday film yet

It's telling that Hollywood also has a batch of scary, post-apocalyptic films coming our way. Roland Emmerich's "2012" takes off this weekend, promising a vivid, special-effects-filled look at the Earth's possible demise. There are more bad vibes in the air. John Hillcoat's brooding adaptation of Cormac McCarthy's "The Road" opens this month, offering a bleak view of a father and son attempting to survive in an ash-covered America. Denzel Washington returns, "Road Warrior" style, in January, starring in "The Book of Eli," another stark, days-end vision of the future.
But what is surely the strangest film about our doomsday fantasies arrives Friday. Called "Collapse," it features a spellbindingly weird one-man monologue by Michael Ruppert, a former LAPD officer and investigative journalist who believes that we are about to run out of oil, an event sure to plunge the world into a state of collapse. If you ever thought it was impossible to top Beck's over-the-top fantasies, listen to Ruppert who says that "what I see now is the end of a paradigm that is as cataclysmic as the asteroid event that killed almost all the life on Earth, and certainly the dinosaurs."

Tropical Storm Ida activity statistics update

Offshore oil and gas operators in the Gulf of Mexico are evacuating platforms and rigs in the path of Tropical Storm Ida. The Minerals Management Service’s Continuity of Operations Plan team is monitoring the operators’ activities. This team will be activated until operations return to normal and the storm is no longer a threat to the Gulf of Mexico oil and gas activities.
Based on data from offshore operator reports submitted as of 11:30 a.m. CST today, personnel have been evacuated from a total of 126 production platforms, equivalent to 18.1 % of the 694 manned platforms in the Gulf of Mexico. Production platforms are the structures located offshore from which oil and natural gas are produced. These structures remain in the same location throughout a project’s duration unlike drilling rigs which typically move from location to location.

Floods force Mexico to shut 20,000 bpd oil - paper

MEXICO CITY (Reuters) - Mexico's state oil company Pemex has been forced to shut down approximately 20,000 barrels per day of oil production due to flooding, Reforma newspaper reported on Monday.
Pemex was not immediately able to confirm or deny the report, which cited local Pemex executive Jose Serrano.
Heavy rains have caused extensive flooding in Mexico's Tabasco state.
A Reuters photographer in the region witnessed several flooded oil installations in Tabasco and neighboring Veracruz state, including what appeared to be a drilling site, crude oil separation tanks, and a pipeline manifold.

Special Report: Improved oil, gas demand, price forecasts raise drilling rig trend

The US working drilling rig count has started to reverse its steep drop as expectations for crude and gas prices and demand have become more bullish.

Angolan Oil Output To Surge Over Next 5 Years

LONDON - Angola's oil industry is booming as money pours in after the end of three decades of civil war, and officials say output could increase by as much as two-thirds over the next five years.
Buoyed by a scramble for energy and raw materials by China and other emerging nations, oil companies are spending tens of billions of dollars drilling oil and gas wells deep below the Atlantic many miles off the African coast. Production capacity has increased steadily over the last two years and oil analysts say Angola could now comfortably pump at least 2 million barrels per day (bpd) and is increasingly only held back by political constraints.

Shell’s Nigerian Oil Output Yet to Recover After Rebel Amnesty

(Bloomberg) -- Royal Dutch Shell Plc, operator of Nigeria’s largest oil venture, has yet to see a rebound in output after a three-month truce that’s quelled violence in the country’s crude producing region, production reports show.
Combined output from ventures operated by Shell Development Production Co. and Shell Nigeria and Exploration and Production Co. fell 10 percent to 410,690 barrels a day at the end of October from early September, according to reports obtained by Bloomberg News. Precious Okolobo, a Shell spokesman in Nigeria, declined to comment on the figures. “We continue to repair facilities to try and bring up production,” he said.

Ukraine to convert IMF cash to pay for Russian gas

KIEV (Reuters) - Ukraine will convert Special Drawing Rights (SDRs) from the International Monetary Fund to pay for November's Russian gas bill, Deputy Prime Minister Hryhory Nemyrya told a television channel late on Monday. SDRs are a nominal monetary unit of the IMF. In August the fund injected about $250 billion of liquidity to its 186 members and Ukraine received the equivalent of $2 billion. Ukraine has been paying around $500 million a month for Russian gas. EU leaders are concerned Kiev may fall behind its payments for Russian gas, prompting another energy crisis that in January led to supply cuts affecting hundreds of thousands in Europe.

ADNOC takes a knock as Japanese oil imports decline

The UAE and its chief oil producer, the Abu Dhabi National Oil Company (ADNOC), have taken the hardest hit from a decline in Japanese oil purchases.
In recent years, Japan has been the biggest buyer of ADNOC’s crude, placing the UAE consistently among the top two oil exporters to Asia’s biggest economy.
But in September, Japan’s oil imports from the country had dropped 28 per cent from a year earlier, by more than 278,000 barrels per day (bpd), Japanese government figures show. The decline was equal to 12 per cent of the Emirates’ total September oil output of about 2.23 million bpd.

Raymond J. Learsy: The Price of Oil and the Massacre at Fort Hood

The relationship between the price of oil and the slaughter that took place at Fort Hood is hardly as far-fetched as it would appear. In an instructive article that was reprinted as an Op-ed in the NY Post on Saturday Nov 7, one Stephen Suleyman Schwartz, Executive Director of the Center of Islamic Pluralism, talks about the influences that apparently formed Major Nidal Hassan's murderous hatred.

The Philippines: Price freeze sparks supply problems at gas stations

MANILA - Some gas stations in the provinces have begun to report low fuel inventories and untimely deliveries, raising fears that the government-imposed ceiling on prices have sparked a supply shortage.

Qatar: Diesel crisis blamed on hoarding

DOHA: A temporary diesel crisis that hit some petrol stations in the country recently following alleged hoarding and black marketing by some shady operators is over, it is learnt.
The Ministry of Interior had to intervene and come up with a novel idea of setting up a number of committees with petrol station workers also on them, to keep a strict vigil on the affected facilities.

Ecuador Government Declares Electricity Emergency Due to Blackouts

QUITO – The Ecuadorian government declared an emergency in the electricity sector due to a generating shortfall at the nation’s biggest hydroelectric plant, which has forced the adoption of energy rationing programs across the country.

Somali pirates attack another oil tanker

LOS ANGELES -- Somali pirates, firing rocket-propelled grenades at a Hong Kong-flagged oil tanker, have launched their deepest attack ever into the Indian Ocean, according to the European Union Naval Force (EU Navfor).
“This was the longest range of a pirate attack off the Somali coast ever,” EU Navfor said. The attack on the BW Lion was launched by pirates in two fast attack skiffs 400 nautical miles northeast of the Seychelles and 1,000 nautical miles east of Mogadishu.

Barack Obama says he will go to Copenhagen climate change conference

A key global treaty to stop global warming almost collapsed last week after poorer nations threatened to walk out unless rich countries like America agree to cut their emissions.
However President Obama said he thinks a deal can still be done and he will go to Denmark in mid-December to make sure it happens.

Spain's windfarms set new national record for electricity generation

Wind energy provided more than half of Spain's total electricity needs for several hours over the weekend as the country set a new national record for wind-generated power.
With high winds gusting across much of the country, Spain's huge network of windfarms jointly poured the equivalent of 11 nuclear power stations' worth of electricity into the national grid.

International Energy Agency warns falling investment risk to economic recovery

PARIS (AP) — The global financial crisis has led to a dangerous drop in energy investment around the world which could choke off the nascent economic recovery, the International Energy Agency said Tuesday.
...The IEA, a policy adviser to 28 mostly industrialized oil-consuming nations, estimates that the financial and economic crisis is responsible for a $90 billion drop in global oil and gas investment this year, a 19 percent cut from 2008.
"Falling energy investment will have far-reaching and, depending on how governments respond, potentially serious consequences for energy security, climate change and energy poverty," the IEA said in its annual World Energy Outlook report.
The resulting drop in oil and electricity supplies could "undermine the sustainability of the economic recovery," the IEA warned.

IEA Cuts 2030 Oil Demand Forecast on Economy, Climate Policy

(Bloomberg) -- The International Energy Agency cut its long-term forecast for global oil demand as the economic crisis saps consumption in developed economies and environmental policies encourage alternative energy use.
Global oil demand is expected to advance 1 percent a year to 105 million barrels a day by 2030 from 85 million barrels a day in 2008, the adviser to 28 nations said today in its annual World Energy Outlook. The figure is below last year’s 2030 estimate of 106 million barrels a day.
“The global financial crisis and ensuing recession have had a dramatic impact on the outlook for energy markets,” the Paris-based agency said in its executive summary of the report. “World energy demand in aggregate has already plunged with the economic contraction.”

IEA report sees oil price at $100 a barrel in 2020

PARIS: The International Energy Agency forecast on Tuesday that the oil price would be $100 a barrel in 2020 and $115 in 2030, saying oil demand would rise by one percent per year.

Energy demand to rise rapidly without CO2 deal: IEA

World energy consumption will rise rapidly over the next 20 years, pushing up costs and increasing greenhouse gases, unless a deal is reached to curb carbon dioxide emissions, the International Energy Agency (IEA) said on Tuesday.
In its annual World Energy Outlook, the IEA said global energy demand would increase by an average of 2.5 per cent per year over the next five years if governments made no changes to their existing policies and measures.

IEA Expects Gas Glut as Unconventional Output Rises

(Bloomberg) -- There may be an “acute glut” of natural gas in the next few years because of rising production of so-called unconventional fuel in the U.S. and Canada, according to the International Energy Agency.
Global unconventional gas output will rise to 629 billion cubic meters in 2030 from 367 billion cubic meters in 2007, or to 15 percent of worldwide supply from 12 percent, the Paris- based adviser to 28 countries said in its annual World Energy Outlook. Gas supply capacity is set to outpace annual demand growth of 2.5 percent between 2010 and 2015, the IEA said.
“The looming gas glut could have far-reaching consequences for the structure of gas markets and for the way gas is priced in Europe and Asia-Pacific,” the IEA said in the report today.

IEA says oil-gas price link may break

An oversupply of natural gas NG-FT and continuing pressure on oil CL-FT supplies could break the link between gas and oil prices, the head of the International Energy Agency (IEA) said on Tuesday.
In many parts of the world outside the United States gas prices are contractually linked to world oil prices but this link has been under pressure in a market that looks awash with cheap gas for years ahead.

Oil stat shock

What the Guardian is saying is that the IEA has been massaging its figures on account of pressure from the US government.
As Morgan Downey over at Scarce Whales points out, that’s a very grave allegation indeed; the IEA after all is an OECD taxpayer-funded institution.
But given the numbers of abrupt revisions the IEA has had to make to its forecasts of late would it be too much of surprise?
As the Guardian states the body is expected to publish its latest World Energy Outlook on oil demand and supply on Tuesday, with the market expecting some “substantial” downward revisions to its long-term forecast for global oil demand.

Kevin Drum: Watching the Watchdog

It's pretty much impossible to know how seriously to take this. It's almost certainly true that analysts within the IEA disagree with each other about long-term projections, and it's also probably true that there are regional pressures of various kinds within the organization. That's pretty normal for international groups.
But is the U.S. actively pushing the IEA to produce figures that it knows to be wrong? And are these two anonymous sources the first ones to ever go public with this? Hmmm. I'm not so sure about that. But the IEA's 2009 World Energy Outlook comes out on Tuesday (last year's projections are above), and we'll see what they have to say then.

Ida makes landfall on U.S. Gulf Coast, hits oil supply

MOBILE, Alabama (Reuters) – A weakening Tropical Storm Ida lashed the U.S. Gulf Coast with drenching rain and high surf on Tuesday as it moved ashore after shutting down almost 30 percent of Gulf of Mexico energy production.
Ida, once a Category 2 hurricane, made its first U.S. landfall at around 6:40 a.m. EST on Dauphin island, the barrier island off Mobile, Alabama, packing maximum sustained winds of 45 miles per hour (75 kilometers per hour).

The Backside of Peak Oil

It's no secret that production in the United States has been tumbling down the backside of peak oil for the last three decades.
I haven't met anyone that believes U.S. production will ever return to its 1970 production level. Believe me, peak oil in the U.S. isn't a myth. It's about as real as it gets.
In fact, it gets downright ugly when you look at our top oil producers.
Let's take a closer look. . .

Goldman Keeps Crude Forecast at $85 a Barrel by End of Year

(Bloomberg) -- Goldman Sachs Group Inc. is maintaining its forecast for West Texas Intermediate crude to reach $85 a barrel by the end of this year and $95 next year as it expects the market to shift into a “global deficit” in coming months.
“Strong activity” in China’s petrochemical and metals sectors is likely to provide support to global oil demand, while production outside the Organization of Petroleum Exporting Countries is set to decline, generating “further price and returns upside,” Goldman’s analysts led by Allison Nathan said in a report dated Nov. 9.

CNN Student News: Economy News

JONATHAN STERN, OXFORD INSTITUTE FOR ENERGY STUDIES: National oil companies and their governments have taken over the access to all their oil. So, anything that is cheap and easy to produce they will do themselves. They now have the technology and the money to buy the technology. They don't need the IOCs for that.
DEFTERIOS: The IOCs, or international oil companies, are left battling it out for more costly prizes where their expertise and technology remain in demand. Recent discoveries in Kazakhstan, the Gulf of Mexico and off the coast of Brazil have allayed fears of what many call peak oil, the term used to describe falling global production. The new finds, however, come with a heftier price tag.

World oil demand to grow 700,000 bpd in 2010 - OPEC

DOHA (Reuters) - Global oil demand will grow 700,000 barrels per day (bpd) in 2010, OPEC's Secretary-General Abdullah al-Badri said in a speech delivered on his behalf on Tuesday.
China and India will lead global economic growth next year, with the producer group forecasting world GDP growth at 2.7 percent next year, up from an earlier forecast of 2.3 percent in July, he said in the text of a speech.

OPEC Won’t Raise Output Because of Stockpiles, Qabazard Says

(Bloomberg) -- OPEC won’t need to raise oil production levels when it meets next month in Angola because stockpiles are “very high,” the group’s head of research said.
“I don’t see that production should be increased,” Hasan Qabazard said in an interview today in Doha, Qatar. “Stocks are a worry, particularly the product stocks. At current calculations we will go to stock build early next year.”
The Organization of Petroleum Exporting Countries made a record 4.2 million barrel-a-day cut in production targets last year as fuel demand tumbled during the worst recession since the 1930s. The group has left quotas unchanged at its three meetings this year.

China slashes Iraq debt for oil deals

China has agreed to forgive 80% of $8.47 billion in debt owed by Iraq, sealing a preliminary deal struck more than two years ago, Iraqi officials said today.
The agreement comes as China's imports of Iraqi crude rise and Chinese oil companies like China National Petroleum Corporation eye contracts to develop Iraq's vast oil reserves as the world's 11th largest oil producer emerges from years of war and sectarian bloodshed.

ANALYSIS - Oil rally complicates China fuel pricing

BEIJING (Reuters) - China's latest fuel price rise may be its last easy fuel pricing decision for a while.
Under a pricing regime that links retail fuel prices to the the global cost of crude, the government upped pump prices for gasoline and diesel by about 7 percent from Tuesday, taking them to the highest ever.
But the system's clarity, the main reason for its introduction at the start of the year, only operates when crude is below $80 a barrel, a level the global benchmark is bumping up against.

China May Have to Raise Gas Price on Higher Costs

(Bloomberg) -- China, the world’s second-largest energy user, must increase domestic natural gas prices to accommodate higher-priced supplies from Qatar and Central Asia, an analyst said.
Liquefied natural gas supplies from Qatar on multiyear contracts may cost 3.95 yuan per cubic meter, or about $16 per million British thermal units after regasification, at the city gate, about 58 percent higher than what households and businesses pay for the fuel in Shanghai, said Tony Regan, a consultant at Tri-Zen International Ltd.

Newcastle Weekly Coal Exports Fall; Ship Queue Rises

(Bloomberg) -- Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, fell by 11 percent last week while the number of vessels waiting to load increased.

E.ON Sells Grid to Tennet for 1.1 Billion Euros to End Probe

(Bloomberg) -- E.ON AG sold its German power network to Dutch electricity-grid operator Tennet BV for 1.1 billion euros ($1.7 billion) to help settle a three-year European Union probe into whether it thwarted competition.

Taylor claims US sought to oust him from power

THE HAGUE, Netherlands -- Charles Taylor claims he was indicted for war crimes as part of a U.S. "regime change" plan to gain control of West African oil reserves.
The former Liberian president has made the allegation in a typically defiant final day of direct testimony in his own defense at the Special Court for Sierra Leone.

PTTEP Won’t Comment on Oil Spill Cause Amid News Report Claim

Bloomberg) -- PTT Exploration & Production Pcl, facing an Australian investigation into the country’s third- worst oil spill, declined to comment on a news article that said the Timor Sea leak was caused by improper capping of a well.
“The company is declining to comment on the possible cause of the incident ahead of the Federal commission of inquiry,” Roley Myers, Perth-based spokesman for the Thai company, said by phone today. The company has seen the news article, he said.

Pennsylvania lawsuit says drilling polluted water

AVELLA, Pennsylvania (Reuters) - A Pennsylvania landowner is suing an energy company for polluting his soil and water in an attempt to link a natural gas drilling technique with environmental contamination.
George Zimmermann, the owner of 480 acres in Washington County, southwest Pennsylvania, says Atlas Energy Inc. ruined his land with toxic chemicals used in or released there by hydraulic fracturing.

‘Reclaim town hearts’

“We have constructed urban places for the last 50 years assuming cars have primacy, with everything built around them,” he said.
“That was the thinking from the 1950s to the 1990s, but now, in the noughties, we are getting different impressions.”
Dr Tolley said health through exercise, Peak Oil and climate change are all forcing changes on our designs and have “put pedestrians and cyclists back on the top of the pile”.

Communities try to prevent pedestrian traffic deaths

Some communities are working to curtail sudden, puzzling increases in pedestrian traffic deaths while safety advocates urge states to spend more federal transportation dollars on sidewalks, crosswalks and safety programs for walkers and bicyclists.
More than 76,000 Americans have been killed walking or crossing the street in the past 15 years, and pedestrians account for about 11.8% of all traffic fatalities, according to the groups Transportation for America and the Surface Transportation Policy Partnership. However, less than 1.5% of federal transportation money is spent on projects for walkers and bicyclists.

Of fish and men: A fable of modern times

Do you think that the US are frantically trying to look for alternate sources of energy just because of climate change? In a decade or so, the petrochemical refinery will most likely be a white elephant, whereas the skills of the fisher folk and the mangrove forest will be vital in keeping their neighbours alive.
Local resilience has started to become a concept that is being propagated by more and more grassroots NGOs the world over. But you can't have local resilience without a working local eco-system.

Crude World

In Crude World: The Violent Twilight of Oil, Maass presents humanity with a snapshot of the implications of our oil addiction. Examining oil collection and storage and transportation from locales in the furthest reaches of the globe, “Crude World” is authentic, persuasive, and damning.
“Across the world,” Maass writes, “oil is invoked as a machine of destiny. Oil will make you rich, oil will make you poor, oil will bring war, oil will deliver peace, oil will define our world as much as the glaciers did in the Ice Age.” “Crude World” depicts the inner workings of this petroleum machine to “reveal an order in the world’s disorder.” The power to create great opportunity is part of the myth of petroleum; Maass travels the globe in order to create lively vignettes of the opposite destiny.

Solar Thermal Electricity Production to Jump 100-Fold, IEA Says

(Bloomberg) -- Power generation using giant mirrors and solar panels to concentrate the sun’s rays and turn turbines will expand more than 100-fold over the next two decades, according to the International Energy Agency.
Solar thermal production will increase to 124 terawatt hours of energy in 2030 from less than 1 TWh in 2007, the Paris- based group said today in its annual energy outlook report.

Japan eyes solar station in space

TOKYO (AFP) – It may sound like a sci-fi vision, but Japan's space agency is dead serious: by 2030 it wants to collect solar power in space and zap it down to Earth, using laser beams or microwaves.
The government has just picked a group of companies and a team of researchers tasked with turning the ambitious, multi-billion-dollar dream of unlimited clean energy into reality in coming decades.

U.A.E. Atomic Program May Propel Region Into Nuclear Arms Race

(Bloomberg) -- The United Arab Emirates, which plans to award the Persian Gulf’s first nuclear power contracts this year, may start a regional arms race as its neighbors seek similar technology, according to a Chatham House report.
“Risks from nuclear proliferation cannot be eliminated entirely” from the U.A.E.’s program, Ian Jackson wrote in “Nuclear Energy and Proliferation Risks: Myths and Realities in the Persian Gulf,” published today. “It is possible that the genuine desire of Gulf states to engage in civil peaceful nuclear power could possibly tip the region into a nuclear arms race, especially if state intentions are misunderstood.”

Recession Opens ‘Narrow Window’ to Cut Global CO2, IEA Says

(Bloomberg) -- The global economic crisis has opened “a relatively narrow window of opportunity” to halt the increase in greenhouse gases released by power plants, factories and cars through 2020, the International Energy Agency said.
Annual emissions from using energy may peak at 30.9 billion tons over the coming decade, assuming there is “radical and coordinated policy action across all regions,” the Paris-based agency said today in its World Energy Outlook. The report reiterated estimates first published on Oct. 6, including its forecast that global energy use is set to decline this year for the first time since 1991 because of the recession.
“The financial crisis offers what maybe we a unique opportunity to take necessary steps as the political mood shifts,” the IEA report says. “But this saving will count for nothing if a robust deal is not reached in Copenhagen.”

Texas Gov. Perry: Cap-and-trade would harm state

AUSTIN, Texas — Texas Gov. Rick Perry told renewable energy industry officials that a cap-and-trade climate bill in Congress would increase taxes and devastate the state's energy sector.
Perry, contending that the climate bill would mean "economic disaster" in Texas, said the state is encouraging alternative energy sources while improving the environment.

Climate change makes English winemakers see red

DORKING, England (Reuters) – The pickers working their way along the hillside, clipping bunches of small, dark purple grapes from the rows of vines and dropping them into plastic buckets are harbingers of a warmer planet.
In recent years, aided by milder springs and autumns, a few British wineries have revived a red winemaking tradition which died around 600 years ago.

US seeks climate framework, not legal pact: experts

WASHINGTON (AFP) – Lack of action on the climate change bill bogged down in the US Senate will not stop Washington from seeking a framework to curb carbon emissions at next month's summit in Copenhagen, experts say.
"I don't think that anyone is expecting a legal pact at this point," Michael Levi, an expert on climate issues at the New York-based Council on Foreign Relations, told AFP.
But US President Barack Obama already hinted this week that the United States would seek to create a "framework for progress" at the summit, which he said would pave the way to stem a "potential ecological disaster."

The Maldives' battle against extinction

As its own gesture the Maldives now aims to go "carbon-neutral" by 2020. That means switching to renewable energy sources where it can, and balancing the carbon it does emit through measures like planting forests elsewhere.
There is a major problem - the islands' main earner, top-end tourism, cannot be environmentally friendly. All the clients, and all manner of extraordinary luxury foods from Europe and elsewhere, are flown in.

Glorious vision in Kenya's sky melts away

Mt. Kenya's ice cap was so stunning that some began revering it as God's home. But most of the shining glacier has now disappeared, robbing communities of water and leading to a crisis of faith.

India environment minister under fire over glaciers

India's environment minister came under fire Tuesday from scientists for denying climate change was causing Himalayan glaciers to melt and disputing the work of the UN's top global warming body.
On Monday, Environment Minister Jairam Ramesh said there was no "conclusive scientific evidence" linking global warming to the melting of the glaciers and questioned work by the Intergovernmental Panel on Climate Change (IPCC).
The IPCC, a UN body regarded as the world's top authority on climate change, has warned Himalayan glaciers are receding faster than in any other part of the world and could "disappear altogether by 2035 if not sooner".

Geologists Vote that Peak Oil is a Concern

Gail the Actuary — Mon, 09 Nov 2009 10:16:50 -0400

This year's Petroleum Geology Conference in London included the following item on the agenda:

Peak Oil: Advancing the topical debate over the timing of peak oil & gas

The aim of the Geological Society's Peak Oil evening meeting is to further discuss and debate the timing and impact of Peak Oil & Gas. Have we become so efficient at exploring and producing petroleum resources that we are we already there as Colin Campbell (ASPO) would argue? Or will technology solutions and a move to more unconventional deposits save the day as Mike Daly (BP) and Glen Cayley (Shell) would suggest? And let's not forget gas. Malcolm Brown (BG Group) sees a longer future for gas but will the progressive use of gas as a substitute for oil hasten its decline? Lots of questions, but do we really have the answers? Come along to the Geological Society . . . and join in the debate. Our four invited speakers will present their case, to be followed by a panel discussion.

The debate took place in the plenary session, with a change in speakers from the original announcement. BP chief geologist David Jenkins argued for the motion that peak oil is "no longer a concern," and Jeremy Leggett argued against, incorporating the UK Industry Taskforce on Peak Oil and Energy Security conclusions into his case. At the end of the debate, approximately five hundred oil-industry geologists voted. Only about a third voted in favor of the motion "Peak oil is no longer a concern." The debate has been written up in November's issue of Petroleum Review.

In this post, I ask Jeremy Leggett a few questions about how he interprets his experience.

Q: Were you expecting to win this debate?

No way! I thought I’d be lucky to get 10% of the vote. I expected it to the one of those masochistic experiences I put my hand up for, from time to time, in the possibly misguided feeling that it is better to preach to the unconverted than the converted. And I don’t kid myself that ten minutes of woffly rhetoric from me changed any minds, or that David’s arguments were so poor that he converted people for me. This was a pre-formed group opinion.

Q: What do you think the result means?

The result seems to suggest that the rank-and-file practitioners hold a very different view of peak oil from the BP/Shell/Exxon etc. top tables. In this, the forthcoming energy crunch seems very different from the run up to the credit crunch. Presented with the motion that "major downside risk in derivatives is no longer a concern,” a hall full of investment bankers would no doubt have been near unanimous in support of the motion.

I increasingly think there are worthwhile comparisons between the financial crunch and the coming oil crunch. Before the financial crunch, only a few maverick economists and financial journalists were blowing whistles. Ahead of the oil crunch, many people in and around the oil industry are busy sounding off. So are some companies spanning a wide spectrum of petroleum-user industries, and so is the IEA – the equivalent of the World Bank warning of a financial crash several years ahead of the reality.

Q: If it is true that the footsoldiers don't buy into the top tables' analysis, why don't they speak out more?

If I knew the answer, I’d be a better campaigner than I am. Pensions? School fees? Some misplaced sense of brotherhood? An oil company geologist told me once that it is viewed almost as an unspoken act of treason to voice doubts about the industry’s ability to meet projected demand. Perhaps that explains why so many geologists wait until retirement before speaking out.

Q: When was your own realisation that peak oil might be a problem with peak oil?

This is a shocking story, and I hold my hand up with an appropriate amount of shame and embarrassment, to help make an important point. It was March 2004, and Shell dropped a bombshell. We are sorry, dear financial regulators, but we don’t seem to have as much oil as, er, we said we have. Our CEO and head of exploration have been telling the board, well …. lies, we fear. The biggest scandal in British corporate history duly unfolds. Why, I ask myself? I had always assumed there would be enough oil for decades to come, but maybe not: not if other companies are in anything like the mess Shell seems to be in.

I knew that a few geologists had been saying, since the mid 1990s, that the peak of production would come all too soon. The dean of the early peak oil camp is Colin Campbell, a geologist like me trained by legendary stratigrapher Stuart McKerrow at Oxford. I always assumed – simply assumed, I’m ashamed to say – that Colin was wrong. My response, I now see, was a cultural knee-jerk. So I checked out what was going on. I finally did some homework. And so my peak oil moment came, belatedly.

I think there is an important lesson here. Cultures have all sorts of dysfunctional ways of protecting themselves: the “social silences,” the unspoken erection of information screens and the like. Since joining Association for the Study of Peak Oil, of course, I have met some of the psychologists at work on this kind of thing. None of this will be surprising to them.

Q: How do you think the peak oil drama is going to play out?

We will find out who is right about peak oil before the decade is out – earlier, rather than later. The discontinuities will be seismic. My preferred scenario is this one. Within just a couple of decades, the world will be floating on a sea of cleantech energy technologies, and enjoying a renaissance built around the many social value-adders inherent in those technologies. Oil shocks, oil wars, and all the other dismal paraphernalia of the hydrocarbon age will seem so very ….twentieth century. I elaborate in my books “Half Gone”, and “The Solar Century.” Of course, there are other scenarios.

Q: You're known as a climate-change campaigner as much as a peak-oil whistleblower. How do you think these two issues are related?

Peak panic will prompt a race to mobilise oil-replacement technologies. If cleantech wins out, we win, and renaissance beckons. If coal-to-liquids and tar sands win out, we lose, and we are on a road to hell. We start destroying wealth faster than we create it well before the mid point of the century. Again, I elaborate in my books, and keep the drama updated on my Triple Crunch Log website, www.jeremyleggett.net.

For those interested, this is a link to the Petroleum Review article.

Scientific American's Path to Sustainability: Let's Think about the Details

Gail the Actuary — Mon, 09 Nov 2009 10:10:28 -0400

Scientific American presents "A Path to Sustainable Energy by 2030" in its November issue. In many ways, it sounds good. But let's think about the details: What would the end result look like? Would it really be sustainable? What would the costs really be? Is there any way we could afford to do what is proposed?

The authors of the article, Mark Jacobson and Mark Delucchi, propose substituting wind, water, and solar (WWS) energy for all other forms of energy by 2030, not for just the US, but for the world. The types of energy sources that would be eliminated include the following:

• Petroelum (including gasoline, diesel, propane, heating oil, etc.)
• Natural gas
• Coal
• Liquid biofuels, such as ethanol
• Wood and other biomass
• Nuclear

All that would remain would be wind, wave power, tidal energy, hydroelectric, geothermal, and solar. Because of the ambitious timeframe, the only techniques that can be used are ones that work at large scale today, or are very close to working.

What would we end up with?

Essentially, we would need to change all of the world's infrastructure to use either electricity or solar or water power directly--by 2030. What might this mean?

• Airplanes. The authors propose that airplanes be powered by hydrogen powered fuel cells (with the hydrogen be made by hydrolysis using WWS energy sources). I understand that hydrogen is three times as bulky as gasoline, explodes easily, and escapes fairly quickly from its holding tanks, making it difficult to store for very long. It seems like airplanes and helicopters would need to look more like blimps, to hold the necessary fuel. Unless the explosion issue is solved, the popularity of hydrogen fuel cells would likely be pretty low.

• Ships. The authors don't tell us how ships would be powered. Clearly sailing ships would meet the criteria, but would be quite slow. Because of their slow time for passage, we would need a lot more sailing ships than the types of ships we use now, because so many would be in transit at a given time. Barges could float down rivers, and if the current isn't too strong, could perhaps be towed back in some way (boat with fuel cell?). Ships powered by hydrogen fuel cells might also work, but they would have the same issues as for airplanes. Because of their long trips, leakage would be more of an issue than on airplanes.

• Automobiles and Trucks. According to the authors, these would be powered by batteries or hydrogen powered fuel cells. There are several issues--the technology is only barely there for automobiles and trucks--for example, I don't know of anyone working on battery-powered technology for long distance trucking. Fuel cell technology is very expensive. David Strahan in The Last Oil Shock says that the current cost is about $1 million dollars per car. He quotes the chief engineer at Honda as saying it would take 10 years to get the cost down to $100,000 a car.

Minerals shortages are also likely to be a problem for converting autos and trucks to batteries or to hydrogen fuel cells. The Scientific American article mentions following materials as being in short supply: rare-earth metals for electric motors, lithium for lithium-ion batteries and platinum for fuel cells. The article mentions recycling as a partial solution. Analyses published at The Oil Drum, such as this one, indicate that we would likely run out of rare materials fairly quickly, even with recycling.

• Farm equipment; bulldozers; cement mixers; and other heavy equipment. Would need to be converted to electric. It is not clear that the technology (or rare materials needed for the technology) exist to do so.

• Heating of buildings; heating for cooking and baking; hot water heating; commercial heating; heating of grains to remove excess moisture. Would need to be converted to electric, or in some cases solar. This would be true, even where heating is now done over wood or charcoal fires, such as in Africa or China.

• Mining and manufacturing. Would need to be converted to all electric. Presumably oil and natural gas extraction would continue, but at possibly lower rates, because of their uses for non-energy uses, such as textiles, asphalt, plastics and lubrication. Drilling for oil and gas would be converted to electric as well.

What steps would be needed to build all of these things?

It seems like we would first need to figure out what the end point would look like, and then work backwards.

We are told that the authors of the Scientific American article think we would need the following:

• 3.8 million large wind turbines

• 90,000 solar electricity generating plants

• "Numerous geothermal, tidal, and rooftop photovoltaic installations"

Besides these, we would need to build all of the new airplanes, ships, cars, trucks, heavy equipment, and new appliances that would be needed under the new regime. Individual homeowners would need to get their homes rewired for the larger amount of electricity they would use--especially if they are converting to electric home heating.

One thing we need to plan for is a greatly expanded and improved electrical grid. The Scientific American article indicates that the variability in generation would be mostly smoothed out by combining electrical transmission of many different types--wind, hydroelectric, solar, geothermal, and wave--over a wide geographical area. To do this will require considerable long distance transmission, often between different countries--including some that may not be friendly with each other. The grid will also need to be upgraded to be "smart," so automobiles can draw electric power at the times of day when it is not needed elsewhere.

Once we have figured out what the new system will look like, we will need to figure out what kind of factories are needed to build all of the devices for the new system, and what raw materials the factories will need. Some of the raw materials can perhaps be obtained by recycling, and some factories can perhaps be obtained by converting other factories, but this won't always be the case. It is likely that new factories will need to be built, and new mines opened, especially for the rare minerals.

By the time we start seeing many finished good produced, it is likely that we will be at least half way through the 20 year period. In part, this is because we are still working out technology details (for example, how to efficiently build a hydrogen fuel cell powered airplane). Also, once we get those details worked out, we need to build mines for raw materials and build the factories to make the new devices. It is only when we get those steps taken care of that we can build what we really want--the airplanes, the new ships, the wind turbines, the solar PV, and all of the rest.

When sizing the factories, we will need to size them not for "normal" production levels, but for converting the economy quickly to use the new power sources. For example, under normal circumstances, if earth-moving equipment is expected to last for 40 years, we would expect to need factories to make 1/40 of the world's needed earth-moving equipment in a given year. But if we need to ramp up to replacement in 10 years, we will need 4 times as many factories. (What do we do with the excess factories at the end?)

How much would this all cost?

The authors tell us that they expect the cost of the new WWS energy generation equipment would be $100 trillion over 20 years. But that doesn't include the cost of all the new infrastructure to go with it--the new airplanes and ships and cars and trucks, or the electrical transmission lines. In total, the cost will be far higher than $100 trillion--lets guess $200 trillion--to be paid for over the next 20 years.

The Scientific American article gives the impression that the costs will be low, because it looks only at the cost the new electricity generation, and assumes that cost of generation will go down with volume and with additional research. It also implicitly assumes that debt financing over a long period, such as 40 years, will be used, so we don't have to pay for the cost of the new system before we start using it. But how realistic is that?

The cars, trucks, boats, airplanes, coal fired power plants, etc. we are currently using won't have much trade-in value once power is generated by WWS, and the new equipment will likely be fairly expensive. So we will be faced with buying new high priced equipment, with little trade-in value from what we used previously. In many cases, businesses would not normally be replacing equipment this soon. The debt that was taken on to pay for all of our current equipment won't magically go away either--it will still need to be paid.

So how will we pay for all of the new equipment? The governments of the world are pretty much maxed out for borrowing. Companies are not going to be able to take on a project of this magnitude either, especially since they already have debt to service. It seems to me that the only way a program such as the program of WWS fuels replacing other fuels can be financed is through increased taxes that would cover each year's expenditures, as they are made.

So let's think about how much this would cost. $200 trillion over 20 years amounts to $10 trillion a year, spread over world economies. The US share of this would be something around 21%, based on the ratio of US GDP to world GDP. So let's say that the US would need to fund $2.1 trillion a year. Let's compare this to current taxes. In 2008, US Federal, State, and Local taxes combined amounted to $4.1 trillion according to the US Bureau of Economic Analysis. In order to collect $2.1 trillion more, a tax increase equal to slightly more than 50% of all taxes currently paid would be required. If the additional tax were collected as a percentage of "personal income" (which includes wages, social security income, rents, dividends, etc.), it would amount to 17% of personal income. It seems unlikely that a tax of this magnitude, or even half of this magnitude, would be agreed to by tax payers.

If such a tax were passed, after a few years there would be benefits that would start offsetting its cost, and might lead to a lower tax, and after 2030, perhaps lower costs overall, because it is no longer necessary to purchase fossil fuels. The benefits that would start offsetting costs would be sales of electricity and other energy, and sales or leasing of vehicles and other goods produced. Many of the sales of goods would be going to replace automobiles that had worn out, factories beyond their useful life, and ships that no longer had value to the owners.

But there is a remaining issue. There will be a lot of assets which would still have considerable value in 2030, if it weren't for the new law. For example, a new car with an internal combustion engine that was manufactured in 2028 will still have considerable value, and a gas fired stove a homeowner owns will still have value, even though he needs to replace it with an electric one. A coal fired power plant built in 1980 is likely to still have value, apart from this law, and so will all of the tankers used for international transport of oil, and all of the natural gas pipelines. Should the owners of these assets be compensated for value of their otherwise-useful assets? There is nothing built into the tax to do so.

It would seem to me that these owners should be compensated, even if it takes a higher tax to do so. In part, this compensation could come in the form of "trade in" value, if a new automobile or electric stove or other item is purchased. But suppose the assets that lose value belong to businesses, and aren't easily traded in for corresponding asset--such as a coal fired power plant, or natural gas pipelines. I would argue that compensation for the remaining value of these is really needed as well.

The assets that will lose value because of the new law are typically owned by a company. The stocks and bonds of these companies will generally have a wide variety of owners--very often pension plans, insurance companies, endowment funds, and individuals saving for their retirements. If the otherwise-useful assets of these companies are taken without compensation, the companies are likely to default on their bonds, and the stocks of these companies will lose value. This will mean that some pension funds will not be able to pay their promised payments, and some life insurance policies will not pay as promised. If there is no compensation to these companies by a tax or some sort, the loss will flow through the system and hit others--with retirees likely hit the hardest. So there will be a loss to the system, one way or another.

How sustainable would this system be?

There are a number of weak areas in this system:

• There are not likely to be enough rare minerals (and even not-so-rare minerals), to make all of the desired high-tech end products. Recycling will help, but it is likely that the system will run into a bottleneck in not very many years.

• The system will use a huge number of electrical transmission lines. These transmission lines are subject to all kinds of disturbances--hurricane or other windstorm destruction, forest fires, land or snow slide, malicious destruction by those not happy for some reason (perhaps those unhappy by wealth disparities). Fixing lines that need repair will be challenging. We currently use helicopters and specialized equipment. These would need to be adequately adapted to a system without fossil fuels.

• If electricity is out in an area, pretty much all activity in an area will stop (except that powered by local PV), and there will be no back-up generators. Residents will not be able to recharge vehicles, so they will quickly become useless. Even vehicles coming into an area may get stranded for lack of recharge capability. Food deliveries and water may be a problem. The current system at least offers some options--back-up generators, and cars and trucks powered by petroleum that one can drive away.

• Operating the system will require a huge amount of international co-operation, because the transmission system will cross country lines. If one country becomes unable to pay its share, or fails to make repairs, it could be a problem.

• All of the high tech manufacturing will require considerable international co-operation and trade. This could be interrupted by debt defaults by major players, or by countries hoarding raw materials, or by difficulty in producing enough ships and airplanes to handle international trade.

• The system clearly can't continue forever. It could be stopped by a lack of rare minerals, or international disputes, or lack of adequate international trade. The system doesn't provide any natural transition to a truly sustainable future. For example, food production is likely to still be done using industrial agriculture, with the food that is produced shipped to consumers a long distance away. It will be difficult to transition to a system which is truly sustainable at the point the system stops working.

What would a reasonable timeframe for transition be?

It seems to me that a reasonable timeframe for a transition such as that discussed in the Scientific American article would be 50 years, rather than 20 years suggested in the Scientific American article. With such a timeframe, there will be a little more time to fine tune technology, so as to find cost-efficient solutions that scale well. We also have more time to use the factories that are built, so that we don't have to overbuild, just to meet a deadline. Costs are likely to much easier to handle, since there will not be as much of an overlap issue. In addition, there will be much less problem of having to dispose of other-wise useful assets.

The problem is that we really don't have 50 years to make a transition. We already are on the downslope. We should have started back in the 1960s with a project like this.

It seems to me that all we can do is a very much reduced version of an approach such as the one described in the Scientific American article. Given the timing, we may not even want to do an approach such as described in the article. The approach described assumes a high level of international trade continuing long-term. This is a fairly optimistic assumption, given the difficulty of air and ship transportation without fossil fuels.

Instead of the high tech approach advocated by Scientific American, we may want to find solutions that can be done locally, with local materials. For example, we may want to encourage local agriculture. For industry, we may want to look at solutions that have worked in the past, such as wind powered factories, as discussed in this recent post. These were built with local materials, and were used to power factories directly, without conversion to electricity. With such solutions, a transition to a truly sustainable future will be much more of a possibility.