You Can’t Make Plastic From a Solar Panel

Sep 23 2014

But you certainly can run cars in India and China in the next couple of decades on solar electricity.

This post is a preliminary discussion of a new report by Mark C. Lewis titled “Toil for oil spells danger for majors“. Thanks to this tweet by Chris Nelder for the link.

I have only read the executive summary until now, though I am looking forward to reading more.

Lewis looks at the “energy return for capital investment”, especially for driving cars and trucks.

And he reports that $100 billion invested in oil buys between 1,694 and 2250 TWh, depending on the cost of the development project in question ($75 a barrel or $100), while onshore wind will deliver 2,336, solar 704, and offshore wind 1,246. That makes onshore wind already competitive for gross energy.

But when looking at cars, only 25% of the energy in the oil gets delivered to the wheel (the rest is lost in the inefficiency of the engine). In contrast, electrical vehicles deliver 70% of the energy to the wheels.

That dramatically changes the numbers above. Oil delivers only between 424 and 563 TWh for $100 billion investment, while solar gets 475, wind 1,518 onshore and 779 offshore.

And that’s assuming $3000 per kW of cost for solar. I recall that solar in Germany has been installed for less than 1000 euros already over a year ago.

Anyway, Lewis says that the oil industry faces a risk of “stranded assets” not only because demand may go down because of global warming regulation. He says that they also face the risk of losing out to the competition of electric vehicles because oil prices go up too high.

I certainly hope that happens. People need to stop driving stinking gasoline cars. That’s one of the big factors when pumping CO2 into the atmosphere.

And eventually it will. Already now fuel costs for electrical vehicles are much lower than for stinking gasoline cars. The only thing saving gasoline as an option is the fact that batteries are still expensive, making the electrical vehicles’ purchasing prices higher.

But I agree that this may be a problem for the oil industry. They certainly should not rely on cars and trucks staying with the gasoline option.

So what should they do? There is no way to win in the competition against electric fuel in the long run. And if the price of oil goes up and the price for renewable energy goes down even more, as Lewis thinks it will, then the above figures will look even worse for oil.

I think they should face the inevitable fact that the world is going to use less oil sooner or later. And compensate for that fact with much higher prices.

Let’s take ExxonMobil as an example case. As Wikipedia tells us, they had revenue of $420.836 billion and an operating income of $40.301 billion in 2013, selling around 3.921 million of barrels a day.

Take that number down by 80 percent to 0.782 million a day over the next couple of decades. That would result in revenue of $84.167 billion, all things equal.

Now get the price up by a factor of three, to $300 a barrel, and take revenue up as well to $252.50 billion. Operating income should go up massively, even with revenue down, since they would get a margin of around $200 instead of one of around $20.

The higher price would in turn accelerate the transition away from stinking gasoline cars. And leave ExxonMobil without a market in the transport sector. Stinking gasoline cars would become as rare as steam locomotives are now, something for the occasional tourist attraction.

As well they should, of course. And as they will sooner or later anyway.

But the market for non-fuel use of oil will always remain. You can’t make plastic from a solar panel. You can make it from oil. That non-fuel use is about 10 percent of all oil use right now. Add in another ten percent for air traffic (not suited for batteries) and other niche markets to get your goal of about 20 percent of present oil use.

All the oil companies need to do to stay profitable is accept that they will need to sell less, at higher prices.

To come back to the report by Lewis, I agree with his conclusion: Cars will move to electric vehicles.

But I don’t necessarily agree with the idea that this is bad for the oil industry, or that this will lead to “stranded assets”. I think that if the oil industry handles the challenge from the transition to renewable energy correctly, this will be a large opportunity to increase their profits.

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Book Review: “Nature’s Confession” by J.L. Morin

Sep 23 2014

This was not for me. I struggled to keep reading to the end. I eventually made it. That’s because this is global warming fiction. Any book from that category gets a large advance bonus from me for even trying. And the fact that the author kindly sent me an advance review copy, which made me feel somewhat obligated to finish it.

The first thing that irritated me was the lack of a name for the main character. He is called “boy” over most of the book. That’s because in the world of that book, boys don’t get a name before they are fifteen.

That doesn’t make any sense. You would end up with everybody called “boy”, leading to a lot of confusion when grading end of term tests in school.

I am not actually sure that this “boy” was supposed to be the main character. The novel zaps around aimlessly between lots of characters. That works great for me in the “Song of Ice and Fire” series, which I read immediately before this book. It didn’t work for me here.

Around page seventy I asked myself if eventually there would be some kind of plot I could understand. I failed to understand what is supposed to happen right to the end.

The treatment of the global warming problem is, like much of the book, hyperbole and caricature. That may work as humor for some people. It just served to irritate me more reading about “CO2 smog” and one head of one evil corporation ruling the world. None of that has any base in reality.

I divide global warming fiction into two categories. Those that try to propose a solution and those that just try to show the problem or use global warming as a world building element.

I am not sure in which category this should belong. There is a solution at the end, which is taking your energy from the souls of dead people. At the end of the book, they fuel some space ships with that energy.

I have been writing about energy issues for some time, but that is the first time I heard someone propose this. It reminds me of James Altucher’s proposal:

I don’t know why nobody has thought of this yet. Just look at the words “Global. Warming.” i.e. The surface of the planet is getting hotter. That means it’s giving off energy. Use photovoltaic strips to harness the energy coming off the planet to reduce our need for carbon-based energy. BAM! Problem solved. 

That one I can at least understand, though I don’t think it would work.

I still don’t know who that “Nature” character is and what evil deed she is supposed to be confessing.

This may work for readers who enjoy satire like Swift’s “Modest Proposal” (which I hate). Just don’t expect a normal novel with well developed plot, characters, and some kind of base in global warming reality.

Link to Amazon page (not yet released).

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How Much For 10 Million Barrels Oil Each Day?

Sep 19 2014

A group of 347 investors holding assets of $24 trillion has called for introducing world wide “carbon pricing”. They want effective climate policy.

I agree with their position.

But there already is a price on carbon. That is the price the market sets for oil (I am restricting my discussion here to oil, but the same is true for coal, lignite, and gas).

That price is changing all the time. But let’s just set it to $100 a barrel for this post.

That means if these investors started buying 10 million barrels a day, they would need to find $1 billion each day for such an investment fund. With $24,000 billion in their portfolios, that looks quite possible.

So, if they start taking 10 million barrels a day off the market, what would happen to the price of oil? World consumption is estimated to be around 92.4 million barrels a day right now. Taking 10 million barrels a day off the market, equal to about one third of OPEC production and over 10% of demand would bring prices up.

Which would be good news for the investors who bought that oil. They can sell their position with a profit, if they are after short term gains.

Anyway, this just shows that a small amount like $1 billion a day may be enough to get phaseout profit going.

And this could be done tomorrow. If these rich investors want higher prices for oil, all they need to do is buy some.

 

 

 

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Bitcoin 10 Years After

Sep 18 2014

My talk on “Bitcoin 10 Years After” of June this year will be published in our Journal at the end of this month. Here is a PDF file (still with some kanji use errors, this is before the final check):

Bitcoin10

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Do It Again, OPEC

Sep 17 2014

OPEC is expected to reduce their production next year from 30 million to 29.5 million barrels a day at their next meeting in November, says Reuters. They cite OPEC Secretary General Abdallah Salem el-Badri for this expectation.

Already the news of a possible reduction in production has sent up oil prices to S99.05, from a previous 26 month low of $96.21. That’s an increase of $2.84.

Multiply with the 1.3 trillion barrels of world wide oil reserves, and we  understand that this announcement of a possible reduction next year made the oil owners richer by $3.692 trillion (the increase in the value of their reserves).

So what would happen if they did that again next year, and then for every year until 2020? Announce that they will reduce production by 500.000 barrels each year from 2015 to 2020.

How many trillions of dollars would the worth of their oil reserves go up with such a simple announcement?

The only way to find out would be to do it.

Again.

 

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“Germans Have Been Buying Price Decline”

Sep 16 2014

From this article by Justin Gillis at the New York Times on the transition to renewable energy in Germany.

The whole quote would be “The Germans were not really buying power – they were buying price decline”, attributed to Hal Harvey, CEO of the “Energy Innovation” think tank.

I agree with the sentiment that the price decline was the more important result of installing all that renewable energy in Germany. But clearly Germany has also bought some power in the deal, and some price declines in the long term and in the short term wholesale markets.

My way of saying that is that the ebbing tide lifts all the boats.

The article closes with another quote, this time from Markus Steigenberger of Agora Energiewende. “Indeed, the German people are paying significant money. But in Germany, we can afford this – we are a rich country. It’s a gift to the world.”

Exactly. And it is not only a gift, but also payback for the fact that Germany as one of the early industrialized countries has profited most from the irresponsible use of fossil fuel over the last two centuries. Germans have a moral obligation to help with the solution of this problem.

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My Book “Last Week” on Kindle

Sep 15 2014

I just published a Kindle version of my global warming bitcoin science fiction time travel novel “Last Week“.

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It is available at Amazon.com here for $0.99, and at Amazon.co.jp here for 1o4 yen.

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My Book “Japanese Bitcoin Law”

Sep 12 2014

I have written a short book on Bitcoin regulation in Japan.

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A free PDF file is here: Lenz Japanese Bitcoin Law

This post has the following short URL: k-lenz.de/btcjapan

A printed edition is available for $8.99 at the Createspace store. You can also buy it at Amazon.com

And a Kindle edition is available for $0.99 (the cheapest price Amazon would let me choose). You can also buy the Kindle edition for 104 yen at the Japanese Amazon site.

 

 

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Book Review: Superintelligence

Aug 06 2014

By Oxford professor Nick Bostrom. Link to Amazon Kindle edition.

This book has its own Wikipedia page. I read it because Elon Musk recommended it in this Tweet.

The main argument, as far as I understand it: Artificial intelligence may improve to levels far exceeding those of human intelligence. This may happen very fast, in an “intelligence explosion”. The consequences of such an event may be an “existential risk“, which may lead to extinction of humans. Therefore there is a need to think about safety when developing artificial intelligence.

Our own record shows that humans rule the planet because of our superior intelligence. In the same way, an Artificial Intelligence actor may rule the world after such an explosion. And humans may not be needed in such a world.

I agree that this might be a problem. However, I don’t see how anything Bostrom or any other human can say about the matter could hope to achieve anything.

By definition, a “superintelligence” is so much superior to human intelligence as human intelligence is compared to that of monkeys.

That means any speculation of a human author about what a superintelligence might want or be able to do is about as reliable as the thoughts of a monkey about a human’s motivations and abilities. That includes smart human authors, like Bostrom.

Bostrom also neglects the most obvious path to superintelligence, which is that humans just become dumber and dumber, so that a present state of the art Artificial Intelligence is already vastly superior to those stupid and lazy inhabitants of a “Pump Six” world.

I understand that there may be some risks in unleashing an “intelligence explosion”. That’s especially true because the people doing the experiment are humans, and as such, not very smart.

But, on balance, I would still rather have a future where computers help people solve problems than one entirely without computers. That’s because there are a lot of problems ahead, especially from global warming.

Sure, if we switch off all computers and shut down the Internet, the risk of an “intelligence explosion” will be avoided completely. If we don’t take such a radical step, it is only a question of time before it happens.

I would rather have it happen earlier than later. Humanity has not exactly a stellar record in managing the planet. It can’t get much worse if an Artificial Superintelligence takes over.

We might even solve global warming in time (though I already have figured that one out).

 

 

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Germany Dirtiest Country of the World

Aug 02 2014

That’s not a title to be proud of. I like the World Cup win much better.

Unfortunately, Germany is the largest producer of lignite in the World. I just learned this because I read this blog post by Craig Morris about Germany’s large lignite reserves, and their relation to the transition to renewable energy. Morris points out that Germany might continue producing “cheap” lignite electricity even once it is not needed any more domestically and export it.

Wikipedia explains that Germany has over 14 percent of the World’s lignite reserves and is the World’s largest producer. At least the trend is in the correct direction: Production is down to 169 million tons in 2010, from 388 million in 1980.

I think Germany should greatly reduce production of lignite. The way to do this is easy. All that is needed is to stop granting permits to expropriate citizens’ real estate for these projects, which typically require whole villages to relocate. The only way that can be done under German Constitutional law (Article 14 Paragraph 3) is if the project is necessary for the common welfare (Wohl der Allgemeinheit).

Digging lignite out of the ground and burning it to produce electricity is making global warming worse, since that is the most CO2 intensive way of producing electricity. There is no fuel as dirty as lignite. As such digging it out of the ground is incompatible with the common welfare. Common welfare interests require phasing out the dirtiest energy first. They certainly don’t require expanding lignite mining.

If it is impossible to expropriate real estate owners, companies who want to relocate villages to get at the lignite buried below them will have to pay much higher prices. That in turn will remove the only remaining advantage of this dirty fuel: Price.

Another way to increase the price of lignite would be to reduce production (phaseout profit theory). In contrast to coal, lignite is sold at localized prices, since it doesn’t make sense to transport lignite over long distances. Reduce supply each year by 3 percent (which would result in a reduction around 60 percent over the next 30 years) and watch prices go up. That’s good for the owners of these lignite resources, good for people who else would see their home villages disappear in a big hole, good for future generations (who will have left more of the valuable resource left), and good for the climate.

And all it takes to do that is to stop relocating people and destroying whole villages.

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