Wednesday, January 23, 2008

Environmentally Responsible Energy Consumption

In keeping with our goal here at CARE, to educate the public regarding energy reality, we love it when we find a source that you are not likely to encounter—especially when the source offers a fresh voice of reason.

Occasionally we feature posting from this unique view point: Whiskey and Gunpowder. This is a newsletter with an investor focus. While we skim their opinions, we seldom use them because they do not usually concur with our mission—though we did include them in our blog two posting ago. However, over the last month they have been posting what was supposed to be two parts, but expanded to four parts.

Not sure where they were going with their clever title of Carbo-geddon, we waited until all the segments had been posted. Now that all four parts are available, we will offer you one a day over the next four days. We hope you will want to come back and check out each one.

This posting—part 1—brings up two elements we find especially interesting. The first is an angle we have been pursuing: the cost to consumers of environmental regulation, compliance, and delay. Check it out. The second is a fresh perspective that we found particularly enlightening: the effective use of fossil fuels. Give it a read and then let us know what you think.

Watch for part 2 tomorrow.

Carbo-geddon, Part I
In the day we sweat it out in the streets of a runaway American dream…

At night we ride through mansions of glory in suicide machines.
— Bruce Springsteen, “Born to Run”

Three recent happenings have got me thinking yet again about America’s energy policies, our “carbon footprint,” and the inextricable link between fossil fuels (especially oil) and economic development of many nations in the modern world.

The first of these was Al Gore’s reception of the Nobel Peace Prize, the second was the November 7 oil tanker spill in San Francisco Bay, and the third is that light, sweet crude dancing around $100 a barrel. These three seemingly unrelated events are nevertheless linked in my mind as harbingers of a rather bleak future — this four-part series explains why…

My views on American oil consumption run in stark contrast to the mainstream’s reflexive condemnation of all things petro. There are two main reasons for this:

One, because no matter what the climate change scare artists (and profiteers, like Gore), clean-corporation spin doctors, and alt-energy utopians say, there’s simply no replacing carbon-based fossil fuels on a global scale at any point in the foreseeable future without massive application of deadly force. I’ll clarify this a bit later.

Two, because even if the United States could snap its collective fingers and instantly be transformed into a 100% fossil-fuel-free and self-sustaining Utopia of perfect green-ness, it likely wouldn’t prevent or even forestall the coming “carbo-geddon” at all. In fact, there’s good reason to believe it would actually hasten it.

One thing before we get started. For the sake of furthering the debate about world and domestic energy use in a manner most resonant with today’s pervasive assumptions about fossil fuels and the environment, this series is written from a standpoint which entertains the possibility that man-generated carbon dioxide and other “greenhouse gases” are the cause of the current trend of global warming. This does NOT mean that I believe this unequivocally, only that a lot of other people do — and that a certain amount of U.S. energy policy is indeed shaped by the possibility of such a correlation.

Pandora’s “Panaceas”
The blunt truth is that realistic, large-scale replacements for petroleum-based products as vehicle fuels and sources of power are either unrealistic, unsustainable or still decades away at least — no matter how wishful the thinking and rosy the rhetoric of pundits and politicians. Need an example?

Anyone who really looks into the ethanol boondoggle will find nothing more than a market-based farm subsidy program. In a nutshell: Politicians drive corn prices higher by playing into (or instigating) “global warming” hype and talking up or mandating demand for ethanol. This keeps farmers happy, profitable, paying more in taxes, and turning down millions in subsidies the federal government used to pay them NOT to grow corn. As long as there continue to be suitable acres for the clearing and planting (there’s only a finite number of these, however), everyone involved goes home in a limousine…

But meanwhile, the cost of every foodstuff either fed by corn (like most meats) or with corn as an ingredient (just about everything else) goes way up. Plus, millions of acres of forest retention, Conservation Reserve land, and wildlife habitat get plowed under to make room for more corn. And all for a relatively inefficient fuel that yields far less power and mileage than gas in today’s engines, while producing just as much carbon dioxide.

As another example, plant-based “bio-diesel” fuels show better promise of sustainability, but with similarly less-than-clear environmental benefits: Bio-diesel vehicles belch significantly more smog-causing hydrocarbons than those powered by gasoline or standard diesel. And although bio-diesel advocates claim the fuels have GHG advantages when evaluated from a “full lifecycle” standpoint (meaning that the extra oxygen produced by the crops used to make them offset their combustion CO2 ), these fuels spew just as much tailpipe carbon dioxide into the air as their petro-equivalents.

See what I mean about some of the leading energy alternatives being false panaceas for planet Earth? Also, “environmental benefit” is hard to pin down when it comes to new fuels for vehicles, home heating, power plants, etc. It’s a matter of priority. Should less GHG be the most important thing, even though man-caused global warming is a theory that’s far from proven?

I maintain that if the environmental impact analysis of some of today’s front-running alternative fuels gave appropriate weight to things like wildlife habitat destruction, increased water use, fertilizer contamination of waterways and aquifers, and related economic ripple effects, their “benefits” would seem less crystalline. Of course, as a lifelong outdoorsman and freedom-loving American, I have only two main concerns with regard to domestic energy policy, neither having to do with fuel costs:

1) The lowest possible negative impact on the environment as a whole — not simply the atmosphere (like so many “environmentalists” today) — but the land, wildlife, rivers, streams, aquifers and oceans, too.

2) Preserving Americans’ freedom to live in comfort, thrive in a free market and drive what’s safest and most capable (like light trucks and SUVs).

As I see it, aside from its inflation of certain segments of the market, perhaps the only true benefit to the mass adaptation of (viable) non-fossil fuels in the future would be the reduction in our consumption of foreign oil. If the U.S were to curb its thirst for imported petroleum, the environment would stand to benefit in a couple of ways: Less risk of disastrous oil spills from tankers, and less pollution from the consumption of fossil fuels used in shipping — IF man-caused greenhouse gases really are killing the planet, that is.

Also, all other things being equal, America would likely stand to benefit to some degree economically in both a direct sense — from a boom in the domestic alt-fuel industry — and in the more Machiavellian sense that we’d weaken the economies of petroleum exporting nations by softening the market for their oil, making our economy comparatively stronger.

Again, all this would be contingent on actually having large-scale, workable alternatives to gas and diesel fuels for vehicles, fossil fuels for power plants, etc. Which we don’t yet.

But here’s the really scary part: Even if the day comes when we do ultimately have an abundance of “clean” alternative fuels — whether it’s next year or in 2030 — it won’t matter a hill of beans in terms of a cleaner world.

In fact, it could make it even more polluted…

Once More From the Top: More U.S. Consumption = Less Global Pollution
In past Whiskey & Gunpowder essays (such as I wrote on March 10, 2005, June 20, 2006 and July 18, 2006 ), I’ve shown with hard numbers how America burns its fossil fuels far cleaner and extracts more power, productivity and wealth from them than other major oil-consuming nations — especially China and Russia, not to mention rapidly developing countries in Africa, Asia and the Middle East…

It’s a fact. To recap, here’s what I wrote on this topic last year, as derived from statistics from GeoHive, the Pew Center, the World Resources Institute and other sources:

* Measured on a per-unit-of-oil-consumed scale, the U.S. produces less GHG than every other major developed or developing nation except Japan (we’re on a par with militantly green Germany). While consuming 25.4% of the world’s oil in 2000, we emitted only 20.6% of the GHGs. Compare that to China’s 6.5% of world oil consumption versus 14.8% of the GHGs (2.8 times as much as the U.S. per unit of oil consumed); India’s 3.0% consumption versus 5.5% GHG (2.26 times as much as the U.S. per barrel); and Russia’s 3.5% consumption versus 5.7% GHG (more than twice as much per unit as the U.S.). Even darling of the greenies Canada belches more GHG per barrel of oil consumed than the U.S.

* Measured in terms of economic yield (meaning how much we get from the oil we use), one need only compare GHG emission to gross domestic product (GDP) to get the full picture of just how much more effectively the U.S. consumes fossil fuels than almost any other industrialized nation on Earth (again, Japan and Germany are the exceptions). In 2000, America produced 39% more dollars in domestic GDP per unit of GHG expelled than Canada, 569% more dollars per GHG than India, a whopping 642% more dollars per GHG than China, and an incredible 1,041% more GDP per unit of GHG than the Russian Federation.

Remember, this is data from seven years ago. The picture is even bleaker based on the latest data, which shows that China alone is on the verge of eclipsing America’s total output of GHGs — and will no doubt dwarf us in the near future, if economic and fossil-fuel consumption numbers from the last few years are any indication. Some cool cartograms I found show, by relative size, every nation’s consumption of energy from all sources (oil, gas, coal, etc.)…

As expected, the U.S. out-consumes any other single nation, all sources considered. Judging by this map, it looks like the U.S. consumes a little less than twice the energy that China does, for instance (Geohive puts this figure at about 1.5 times as much, in terms equivalent to millions of tons of oil).

The next one shows the total output of all GHG by country… America’s “carbon footprint” almost exactly mirrors its global energy consumption. But China is already rivaling the U.S. for the world greenhouse gas Heavyweight Championship — despite consuming far less energy. India, South Africa and the notoriously environmentally careless Russian Federation are much bigger on the GHG map than on the energy map…

Once again, this shows what I’ve been saying for years: Very clearly, the U.S. consumes its energy far more environmentally responsibly than almost every other rising economic power or existing industrialized nation (take another look at South Africa and both North and South Korea — they’re four or five times as big on the GHG map as on the energy map!).

Now, here’s the hot-house question of the century: How do you think this map would look in another 10 years? Especially given the following:

* Chinese economic growth at a rate of 10% per year — This could be a conservative estimate. From 2004-2005 alone, China’s GDP jumped 15.38%, compared to American growth of around 4% per annum. Conversely, this estimate of U.S growth could be optimistic. Consulting firm Global Insight projects U.S. GDP growth in 2008 at just 1.9%!

* China’s continued expansion of oil consumption — From 2000 to 2005, China’s demand for oil boomed more than 30%, while America’s appetite for crude increased just over 5%, and it’s trending even lower. U.S oil consumption actually declined around a half-percent from 2004 to 2005 (the last full year I could find statistics).

* China’s coal demand keeps skyrocketing — Overwhelmingly, China burns coal for its electricity (coal is by far the worst of the fossil fuels to consume, GHG-wise). And their appetite for power is expanding at a mind-boggling rate. From 2000-2005, Chinese demand spiked by over 62%. Over this same period, U.S. consumption was nearly flat-lined, edging up only 1%, and actually declining between 2000 and 2004. Completion of new coal-fired electricity plants in China is reported to be around one per week…

And let me reiterate that China is just one of the major up-and-coming polluter nations. The Russian Federation, India, the Koreas and numerous African republics also pose a huge and growing threat to the environment from a GHG standpoint. For the proof, all you need to do is look at the map, the consumption trends and the GDP growth numbers from just the last full year that statistics were posted (2005):
* Russian Federation: Up 31.48%
* South Korea: Up 15.88%
* India: Up 13.64%
* South Africa: Up 12.87%
(Source: GeoHive)

Now mix in the “China Syndrome” I was fleshing out earlier and extrapolate it all over a decade — or a century…

Scary, huh?

But as I’ve said time and again: Were the U.S. to force other major consumer nations to curb their appetites for oil and fossil fuels — by ramping up our own oil/gas/coal consumption and stockpiling to monopolize a greater share of the world petro-marketplace — we’d actually be helping save Earth’s environment from massive amounts of pollution.

Headin’ for Carbo-geddon?
My “global” point with all of this analysis is that, if we don’t make some changes real quick, it’ll be just like The Boss said:

They’ll be living a runaway American Dream of prosperity without responsibility — and we’ll all end up riding around in the suicide machines (hybrid/electric cars) in a vain attempt to offset their eco-carelessness…

The U.S. can play clean and green by shackling the domestic marketplace and regulating American industry all it wants to. It feels good to “do our part,” right? But in the end, we’ll only be committing economic suicide so that the world’s largest polluter nations can thrive on the sea of money we spend with them, directly or indirectly.

Think about it: Communist China has been able to make itself “factory to the world” precisely because of their lax environmental policies and cheap labor — things that are only possible under a non-democratic model. They’ve been able to do this because they aren’t beholden to the same standards of conscientious production that a concerned, informed populace with the power to vote could hold them to.

Because of this imbalance (or “competitive advantage,” depending on who you ask), China can now afford to suck up all the fossil fuel resources they need to expand even more wildly — but without the regulatory guardrails that would be in place in a democracy. In turn, this enriches many other nations with little or no incentive toward concern for the environment, like most major oil-producing nations, a lot of which are major polluters in their own right...

And here we are, buying their tainted pet food and bits of cheap, lead-painted junk by the billions of dollars worth (yep, me too). Seriously, imagine what your local Wal-Mart or Target store would look like without any Chinese-made goods in it. The shelves would be as barren as they’d be after a post-tsunami looting.

Bottom line: If mankind-generated CO2 and other GHGs are indeed responsible for climate change that ultimately puts us all in peril, it’ll definitely be America’s fault…

But not because we’re polluters. It’s because, like the Eloi in H.G. Wells’ The Time Machine, we’ll have stopped being producers and world leaders of economic prosperity ourselves. Instead, we will have outsourced our polluting to a horde of eco-Morlocks who use the money they make from us to buy and consume resources we use increasingly less of in ways that will bring about “carbo-geddon” worlds faster than we ever would have.

Next up: What we can do about it. Brace yourselves, it won’t be easy — or easy to hear.

Dreading where we’re heading,
Jim Amrhein

Freedoms Editor, Whiskey & Gunpowder

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