Friday, November 28, 2008

Will Obama be pragmatic in energy policy?

President-elect Barack Obama is proving to be remarkably pragmatic and centrist as he tackles the global economic crisis. Big tests are yet to come on energy, however.

Will Obama tilt toward fossil-phobic environmentalists who heavily influence the Democratic Party, or do-it-all pragmatists like his apparent choice for White House national security adviser, retired Marine Corps Gen. James Jones?

Jones' present job is chief executive officer of the U.S. Chamber of Commerce's Institute for 21st Century Energy, which contends that offshore oil drilling, clean coal technology and nuclear power have to be part of America's energy policy.

On Oct. 20, Jones made it clear at a panel discussion I was part of that he regards energy policy as "an international security issue of the highest order," which suggests that he will make it part of his portfolio at the National Security Council.

He released a step-by-step "transition plan" for energy that included "aggressively" promoting energy efficiency and alternative fuel research, but also domestic oil and gas exploration and elimination of restrictions against nuclear power plants, new electric grids, and oil and gas pipelines.

Such ideas are anathema to many Democratic "greens" – including leaders in Congress – who want to close down the carbon economy and base the country's energy future strictly on renewables such as wind, solar and geothermal power, plus conservation.

In particular, Jones has aroused the ire of Senate Majority Leader Harry Reid, D-Nev., for backing disposal of the nation's nuclear waste at Yucca Mountain in Nevada.

The power of the greens was also demonstrated by the toppling of Rep. John Dingell, D-Mich., the auto industry's longtime protector, as chairman of the House Energy and Commerce Committee.

His replacement, Rep. Henry Waxman, D-Calif., is a "green," and his coup was backed by Speaker Nancy Pelosi, D-Calif.

After behaving like a leftish liberal for much of his political career – and becoming the darling of the left during the presidential campaign – Obama so far is fulfilling his self-assessment that he's a pragmatist, willing to try "whatever works."

His economic appointments – Timothy Geithner as Treasury secretary, Lawrence Summers in the White House, Christina Romer at the Council of Economic Advisers and Peter Orszag at the Office of Management and Budget – have sent reassuring signals to terrified financial markets. And his heavily leaked selections for foreign policy posts – Sen. Hillary Clinton as secretary of State, Jones at the NSC and possibly current Defense Secretary Robert Gates – definitely lean toward the "realist" or "national interest" school of foreign policy, not the "liberal internationalist."

On policy, moreover, Obama has shown reassuring resilience, utterly abandoning his previous intention to follow the Franklin D. Roosevelt model of crisis governing.

FDR famously refused to involve himself in policymaking to deal with the Great Depression from November 1932 until his inauguration in March 1933 and refused to have any contact with outgoing President Herbert Hoover's administration.

At his initial press conference as president-elect on Nov. 7, Obama repeated the mantra that "the country has only one president at a time." Crashing financial markets and the impending "Great Recession" – or worse – changed his attitude.

A good case can be made that George W. Bush will go down in history as another Herbert Hoover, but if Obama means to be FDR, at least he's starting early.

The case for Bush as Hoover is this: Bush's carelessness about deficit spending and doubling of the national debt created a nationwide atmosphere of fiscal irresponsibility, leading to over-leveraging (that is, massive debt accumulation) by investment banks, homeowners and consumers.

Bush maintained a hands-off attitude as the housing bubble expanded to the bursting point, as banks invested in impossible-to-understand mortgage-backed securities, and rating agencies slapped triple-A ratings on all of them. Bush and Treasury Secretary Henry Paulson have been un-Hoover-like in expanding government power to rescue the financial industry – Wall Street – but have been reluctant to adopt similarly aggressive policies to deal with the "Main Street" effects, including unemployment and home foreclosures.

For unexplained reasons, the Bush administration also has refused to adopt solutions backed by Sen. John McCain during his presidential campaign – revising the "mark to market" accounting rule and limiting "short-selling" by speculators, both of which are depressing bank stocks.

If Bush won't do anything about those policies, Obama should, along with passing a huge new stimulus package including infrastructure spending and middle-class tax cuts.

As a pragmatist, Obama is signaling that he won't raise taxes on rich people immediately – though he wants to for "fairness" reasons – but he should just declare that policy to spur investment.

And when it comes to infrastructure, Obama should encourage private investment as well as public. Besides roads and bridges, he should encourage wind farms, solar panels – and nuclear plants and offshore oil rigs.

The basis of Jones' case is that the United States will be heavily dependent upon fossil fuels for the next 20 years, until not-yet-mature alternative sources and conservation methods are developed.

The pragmatic thing for Obama to do is "do what works" in energy as well as the economy.

Morton Kondracke is executive editor of Roll Call, the newspaper of Capitol Hill.

Tuesday, November 25, 2008

Dead heat: This cemetery's otherworldly energy is solar

Maybe they're trying to bring the dead back to life.

A Spanish town alarmed about climate change has installed solar panels on its mausoleums, turning "a place of perpetual rest into one buzzing with renewable energy," the Associated Press reports with mirth.

The 462 panels are mounted on graves in the blue-collar town of Santa Coloma de Gramenet outside of Barcelona. The panels started absorbing energy from the sun to power the local grid last Wednesday, three years after the project began, according to the AP.

While this isn't the town's first green-energy project, or even the first time a Spanish cemetery has gone solar (Santa Coloma de Gramenet also has solar parks on the roofs of buildings, as do cemeteries elsewhere in Spain), it is believed to be the first time the panels have been put up over graves, the newswire says.

Santa Coloma de Gramenet took its unorthodox approach because its population of 124,000 people lives in a dense one-and-a-half square miles (3.9 square kilometers). There was little unused, flat and sunny land to install the panels, which will make enough energy to power 60 homes a year and eliminate 62 tons of carbon dioxide in the atmosphere.

"The best tribute we can pay to our ancestors, whatever your religion may be, is to generate clean energy for new generations," Esteve Serret, director of Conste-Live Energy, which runs the cemetery, told the AP.

Spain is the world's hottest solar market, with generous subsidies for manufacturers, plentiful sunshine and heavy demand from residents for energy-sucking air conditioning. Feed-in tariffs there guarantee 25 years of up to triple the market price for solar energy, and legislation would require all new buildings to include solar technology.

Saturday, November 22, 2008

Challenges To Environmentally Responsible Energy Use In Today's Society

Remember your first drive down the coast in your beat-up convertible, the ocean breeze tousling your hair, which at the time was still gloriously plentiful and, you hoped, desperately attractive to the person sitting next to you?


Chart of fossil fuels. Fossil fuels are getting dirtier and harder to extract. (Credit: Illustration by Nicolle Rager Fuller. Chart figures are courtesy of the energy and resources group at the University of California, Berkeley. Chart authors are Adam Brandt and the late Alex Farrell, with additional analysis by Daniel Kammen.)

If that’s a California cliché, or if you never had a convertible, or if your hair was not that plentiful to start with, think about other lifetime memories: your first flight, your family road trip to Yellowstone, friendships made around the campfire, steam rising off a heated pool on a chilly night, a blast of air conditioning after a day in the withering heat.

Indelible moments and sensations dot our lives like mental sequins. And if you look up to the sky, the carbon atoms used in those moments are still there, each one knocking around with two oxygen buddies, trapping just a little bit of solar heat, forever unavailable in the fossil fuel form that society craves and loathes.

It is not an exaggeration to say that almost all our memories took carbon to make. Whoever invented the famous tag line for cotton growers just had the wrong raw material. Carbon: the fabric of our lives.

Now we are rushing to escape the energy culture as we know it, in order to remake it as we don’t know it. The irony is that a marginal amount of planning – continual improvement in mileage standards, closing of the loophole in those standards that exempted light trucks, steady federal investment in renewable energy – might have alleviated the energy and climate crunch facing us today.

“We could be using half the energy that we’re using,” says political scientist and energy policy expert Mark Bernstein, managing director of the new USC Energy Institute. Launched earlier this year, the think tank aims to build a community of energy and environmental researchers, expand research and education programs, engage outside companies and agencies, and – perhaps most important – help form good policy.

Such policy will have to fit through a shrinking window. Society had more options in the early 1970s, when the concentration of carbon dioxide in the atmosphere was only around 320 parts per million – somewhat higher than the pre-industrial concentration of roughly 280 ppm. Today, with CO2 levels nearing 390 ppm and growing faster than ever, time is a luxury. Predictions of looming “peak oil” – the point at which global oil production starts to decline – add to the urgency.

The energy crisis is not rushing toward the world so much as gaining on it. It’s more a problem from the past than a threat from the future. If only we could have some of that burned carbon back. “We’ve wasted an opportunity,” Bernstein says.

Bernstein’s job at the Energy Institute is to make sure we don’t find ourselves in the same boat 30 years from now. It is the ultimate cross-disciplinary challenge. Today’s policymakers need solid environmental research in a wide range of areas: atmospheric chemistry, land use, biology, physics, materials science, engineering, public policy, health, history – any field that touches on our relationship with the planet and its resources.

It’s a tricky balancing act.

Consider the now-notorious biofuel fiasco. In early 2008, a startling study in the journal Science pointed out what ethanol enthusiasts had overlooked: the huge amount of carbon released when forests are cleared for farming.

According to the study, only sugar cane is worth growing for ethanol. Unfortunately, sugar cane doesn’t grow in Kansas. Ethanol from corn or other plants actually puts more carbon into the air than gasoline, either directly from land cleared for agriculture or from an insidious cascade effect whereby U.S. soybean farmers switch their fields to corn, prompting Brazilian farmers to expand into the Amazon to replace the lost soybeans.

On the other hand, corn ethanol slightly lowers our dependence on foreign oil while enriching Midwestern farmers – a happy coincidence not lost on either political party’s presidential candidates during the Iowa caucuses.

By the time the Science study came out, the federal government had embarked on a bold plan to ramp up domestic ethanol production, largely from corn.

What the plan failed to consider, aside from the environmental cost, was the effect on world food prices. According to Time magazine, the corn needed to make an SUV-sized tankful of ethanol could feed a person for a year. A run-up in grain prices this year failed to derail the plan, despite an appeal by Gov. Rick Perry of Texas on behalf of ranchers blindsided by the skyrocketing cost of feed corn.

In the long term, seductive logic will not solve the energy shortage or abate the greenhouse effect. “Eventually facts count,” says USC chemist George Olah, a 1994 Nobel Prize winner whose achievements include crucial work on clean-burning, unleaded gasoline.

The question is, which facts?

Drawing on experts across the university, the USC Energy Institute stands to become a vital resource for both the research and policy communities. The stakes are high, and the problems complex. Acting correctly is as important as acting quickly.

“This is not just a question of inventing a new technology – it is a matter of changing the way we live and work,” says Randolph Hall, who as vice provost for research advancement guided the institute’s formation. “The Energy Institute is our way of capturing talent across the university toward this mission.”

It was a process that began with the recruitment of key faculty in 2005, when a barrel of oil cost $60 and the Toyota Prius was still an eco-nerd’s car, and culminated this year with an official launch, the installment of Bernstein as managing director and, most recently, the addition of Donald Paul, one of the world’s leading experts on the energy industry, as senior adviser to the provost on energy and technology.

Now comes the hard part.

The Chemists

First, what won’t work. According to Energy Institute experts, besides corn ethanol, you can forget about fusion (still a dream) and hydrogen (too expensive to store and distribute). Nuclear energy, a proven carbon-free technology, is tainted by public anxiety, high capital costs and proliferation fears, and remains something of a last resort. Don’t hold your breath waiting for some miracle of science, either.

“Everybody wants an easy solution,” says USC chemist and longtime Olah collaborator G. K. Surya Prakash. He knows the silver bullet impulse firsthand, having seen his promising but early-stage research cited in overly optimistic articles on another seductive concept: “carbon recycling.”

Prakash and Olah do indeed work on carbon recycling, and for years have been working on the energy problem out of their laboratories in the USC College’s Loker Hydrocarbon Research Institute. Their best prospect is the simplest hydrocarbon: methanol, a synthesis of one carbon, one oxygen and four hydrogen atoms.

Technically, methanol is not an energy source but an energy carrier – a convenient medium for storing and transporting energy.

Oil and gas are energy carriers, too. The ultimate source is the sun, which zaps Earth with what Olah calls “unholy” amounts of energy every day.

“Earth does not have an energy problem,” Prakash explains. “We have an energy-carrier problem.”

While that’s a bit like telling thirsty castaways on the ocean that they have a salinity problem – not really helpful in the here and now – Olah’s and Prakash’s little molecule could be the long-term energy carrier Earth has been looking for.

Unlike hydrogen gas, methanol is liquid at room temperature. Like petroleum, methanol could be transported and pumped in existing tanker trucks and gas stations. And it can be used to make gasoline, jet fuel, dimethyl ether (a diesel substitute) and all kinds of industrial plastics.

“Once you have methanol, you can make everything,” says Prakash.

Other bonuses: Cars can run on methanol with minor modifications. Methanol can be blended with gasoline and ethanol, and it can be made from biomass – organic waste – for less money than ethanol. And, crucially for the reduction of greenhouse gases, it is also possible to make methanol from carbon dioxide and hydrogen. And therefore, in theory, to recycle carbon.

But the story is not so simple, Prakash explains. (Remember, there are no easy solutions.) The caveats: Methanol is not found in nature, so it must be manufactured, which takes energy; methanol has toxic properties; carbon recycling works in the lab, but for commercial use it would need to be scaled up and improved in efficiency.

Caveats notwithstanding, the energy conglomerate UOP-Honeywell saw enough potential in Olah’s and Prakash’s portfolio of “methanol economy” patents that it bought an option to license the lot.

Interest in methanol is not just theoretical, Prakash notes. China is building plants that convert coal directly to a gas mixture, which then is used to make methanol. Such plants still release CO2, though in a concentrated stream that would be easier to collect and recycle.

A new methanol plant in Iceland does much better. The plant uses geothermal steam for power, and makes methanol from CO2 released naturally by the steam vents. That makes the methanol produced fully carbon-neutral.

“Once there is a value for CO2 and CO2 abatement, all these technologies will become commercially attractive,” predicts Prakash, banking on an eventual carbon tax.

Taxing fuel is politically explosive, but some type of “soft” tax may be on the horizon. At a May 2008 forum on climate change policy hosted by USC’s Energy Institute, UCLA public policy scholar J. R. DeShazo sounded a rare note of optimism.

“At the federal level, a remarkable thing has happened,” he told about 100 assembled climate experts. According to DeShazo, both parties in Congress agree on the merits of a cap-and-trade system for regulating carbon emissions.

Cap-and-trade is a foul term to some environmentalists, because it grants explicit permission to pollute. But Adam Rose, research professor in the USC School of Policy, Planning, and Development, who with Bernstein organized the Energy Institute forum, defends the idea.

“You limit the emissions, but then you give people the right to emit something,” he says. “Ironically, this gives them a stake in the environment. Prior to this, polluting was free; but now they have to use a valuable permit for each ton they emit.”

Total emissions would be capped while participants would be allowed to trade emission credits, Rose explains. Theoretically, the emitters who can cut back easily would do so at little cost, and make a profit by selling permits. Meanwhile, the emitters with high costs would buy permits because they are less expensive than mitigating the pollution. While the buyers don’t mitigate, they pay for it to be done by others.

“It’s a way of making people realize there’s a cost in emitting.”

The cost could be higher than people think. Bernstein and geographer Jennifer Wolch, director of USC’s Center for Sustainable Cities, want to quantify the health costs of fossil fuel emissions. They have access to ready data collected by the preventive medicine and environmental health faculty of the Keck School of Medicine of USC.

Led by Keck researchers James Gauderman and John Peters, the group made world headlines in 2007 when it published a study in the British journal Lancet that found stunted lung growth in children living within 500 feet of a freeway. Related studies from the group also found increased rates of asthma and other health problems.

Any accounting of carbon’s cost needs to include the public health burden of vehicle exhaust, Bernstein and Wolch point out.

“People are already paying a big bill, in the form of health effects and the economic burden of these effects – hospital bills, lost economic productivity – on society,” says Wolch, whose effort to tally the bill also involves Keck researchers Rob McConnell and Scott Fruin as well as her geography colleagues Manuel Pastor, Andrew Curtis and John Wilson, and Mansour Rahimi of the USC Viterbi School of Engineering.

Whether they come via carbon tax or cap-and-trade, aggressive cuts in emissions are sorely needed, as climatologist Stephen Schneider noted emphatically at the Energy Institute’s May forum. The Stanford-based scientist was one of the leaders of the Nobel Prize-winning Intergovernmental Panel on Climate Change, which concluded in 2007 that human activities were “very likely” (defined as over 90 percent confidence) changing Earth’s climate.

“We’re on a planetary sustainability train-wreck track, and something has to get done,” Schneider said in his keynote address at USC. “Your institute, I hope, will be at the front lines of that battle. The world badly needs people who do integrative work in the energy field.”

Bernstein, the institute’s managing director, has a résumé built for integrative work. He earned bachelor’s and master’s degrees in applied mathematics from Ohio State before moving to the University of Pennsylvania for his Ph.D. in energy and environmental policy. He got a firsthand look at the nuclear industry while working for a plant construction company, then served on the faculty of Penn’s interdisciplinary energy program.

During the Clinton years, Bernstein worked in the White House Office of Science and Policy, where he launched a grant program to encourage energy innovation in residential construction. (The USC Viterbi School’s Behrokh Khoshnevis, inventor of an automatic system for making a concrete house, is a current grantee.)

Bernstein infuses his activities for the Energy Institute with a nuance rare among energy and environment experts. Take his position on the emotionally charged issue of offshore drilling. He agrees with other experts that any drilling today will not affect oil prices for at least a decade, while also acknowledging that the risk of disastrous spills is quite low.

The more important question, he says, is whether we should leave this oil in the ground and hold it as a strategic reserve. “If we use up all the oil in the United States now, then when the non-OPEC countries begin to run out, the only place to get oil will be the OPEC countries. To me, keeping it in the ground is like an insurance policy.”

A similar pragmatism marks Bernstein’s views on the energy and climate crises. Yes, he says, one could power the entire country on solar panels covering an area a third the size of Texas. Yes, he agrees, our power plants have enough capacity at off-peak hours to recharge plug-in hybrid cars for most U.S. households. But neither option is cost-effective now or in the near future.

Despite Al Gore’s call for a switch to all-renewable energy within 10 years, Bernstein finds it hard to imagine a future without coal and its huge carbon footprint, at least while we shuffle slowly toward alternative energy sources. As a result, he says: “I don’t think we can get away without doing carbon sequestration. We’re not going to cut emissions fast enough.”

Carbon sequestration refers to the process of storing CO2 under ground. Don Zhang and Kristian Jessen, both from USC Viterbi, are the most recent faculty hires in this growing research field (like Rose and Bernstein, Zhang was recruited with support from the Energy Institute).

Zhang is an expert in reservoir simulation and sequestration modeling; Jessen has been studying CO2 injection at the Weyburn oil field, in the Canadian province of Saskatchewan. At Weyburn, waste CO2 from a coal plant is injected under ground and used to force out more oil from the aging field. Jessen called the results promising.

“The technology is there, it’s just very expensive,” he says. “But it’s time that we in the U.S. change the way we look at energy policy.”

As of this magazine’s printing, the Energy Institute was in talks with an outside company and potential international partners to offer USC expertise for test-site studies of carbon sequestration.

On another front, the Energy Institute is engaged in a bold thought-experiment. What would it take to make Santa Catalina Island fossil fuel-free?

The university has a longstanding relationship with the island through the USC Philip K. Wrigley Marine Science Center, a research institute heavily supported by the same Wrigley family behind the chewing gum, Chicago’s Wrigley Field and the Catalina Island Conservancy.

Bernstein helped start Catalina’s Sustainability Action Group, which also includes representatives from the Conservancy, the Santa Catalina Island Company, the City of Avalon, the Chamber of Commerce, L.A. County and Southern California Edison. The group has been exploring ways to achieve energy independence.

The project has yet to be green-lighted, but Bernstein says that weaning Catalina from fossil fuels is a surprisingly realistic goal (golf carts are already the principal means of island transportation, with gasoline used mostly for emergency vehicles and boats). If implemented, the project may serve as a model for hundreds of other communities.

To start, the island could easily achieve a 25-percent reduction in energy demand, Bernstein says.

He cites the work of Thomas Spiegelhalter, an energy consumption expert on the faculty of the USC School of Architecture, who has shown that common-sense measures and existing technologies can reduce energy use dramatically.

The second big gain for Catalina could come from a source we prefer not to think about: sewage. Renowned geobiologist Kenneth Nealson of USC College has been perfecting a genetically engineered bacterium that makes electricity from a diet most foul.

In just the last year and a half, Nealson’s group – including computational biologist Steve Finkel of USC College and mechanical engineer Paul Ronney and material scientist Florian Mansfeld of USC Viterbi – has improved the efficiency of the “bactery” many times over.

Scaled up for household use, it could generate as much electricity from sewage as the typical rooftop solar-panel installation.

Throw in existing methods of energy generation from waste – non-toxic burning of regular garbage, recovery of methane from sewage – some wind and solar installations, maybe a little tidal power, and all of Catalina could go fossil fuel-free, Bernstein says.

It’s been done before. A Danish island described this year in The New Yorker achieved carbon neutrality mostly through a combination of wind power and geothermal heat pumps for home heating and air-conditioning.

The problem is that every situation is unique. A metropolis, a wind-swept rock in the North Sea, a cool rain forest and a desert plain all have different energy needs.

“And this is why we have a hard time selling people [energy] policies,” says Bernstein. “Because it’s not simple. It’s a complicated story.

“We’re going to need some solar,” he says. “We’re going to need some wind; we’re going to need some hydro; we’re going to need some ocean; we’re going to need some biofuels made from non-food crops. We’re going to need a whole load of stuff, and it’s going to have to be a very diverse portfolio.”

For now, solar energy probably remains the darling of the group, at least in consumer appeal. It is clean, direct and easy to understand.

It is also expensive. But maybe not for much longer.

Led by chemist Mark Thompson, USC researchers are working on a new class of flexible solar panels that would be cheap, thin and easy to install on any surface. These panels still trail their stiffer precursors in efficiency, but Thompson’s group hopes to narrow the gap.

“The other side, where we can get an even bigger bang for the buck, is conservation,” he says. His laboratory is working on organic light-emitting diodes (OLEDs) that use even less energy than fluorescent bulbs, contain no mercury or other heavy metals, have a superior color spectrum and last around 25 years.

Thompson’s most recent major study on OLEDs appeared in the journal Nature. Universal Display Corporation, a major lighting manufacturer, has an option to license Thompson’s discoveries.

One can think of conservation as a resource like oil and gas, measurable by the amount of energy saved. If the world’s oil reserves are mostly mapped, its conservation reserves are vast and unexplored. This may be the last frontier in the energy universe.

Energy Meets Information Science

On the suggestion of Dean Yannis Yortsos, researchers from the USC Viterbi School of Engineering have banded together to apply some of the university’s greatest strengths – particularly in computer science and information technology – toward energy conservation.

Some time ago, UPS started planning its delivery routes to avoid left turns. That is a basic example of what information technology can do for conservation.

A core group at USC Viterbi, consisting of electrical engineers Urbashi Mitra and Dan Dapkus, mechanical engineers Roger Ghanem and Fokion Egolfopoulos, and computer scientist Gaurav Sukhatme, authored a white paper laying out a research strategy at the intersection of energy and information science.

“This is an area where Viterbi has a significant track record,” says Mitra. “Furthermore, we believe other organizations have overlooked the impact that information technology can make on this very important area of research: energy.”

The others may soon follow. At a hearing on Capitol Hill this summer, Dan Reicher, the head of Google’s energy and environment unit, expressed ideas similar to the USC group’s.

“The increasing interplay between energy hardware and information software – and the corresponding rise of the Internet and the connectivity it brings – adds to the potential to make and to use energy more productively,” Reicher told policymakers, according to The New York Times. “From smart meters and smart appliances to smart homes and a smart grid, we are poised to significantly advance our ability to monitor and manage energy.”

That list could have included smart engines. Separate from his bactery research, Ronney, with USC Viterbi colleague Martin Gundersen, hopes to squeeze more energy out of the humble but enduring internal combustion engine. The researchers are developing alternative ignition methods to make the air-fuel mixture burn more evenly.

“About 40 percent of your fuel energy actually goes right out your radiator,” says Ronney. “If you could burn fast without turbulence, then you could reverse-engineer the engine” for better fuel efficiency.

Gundersen, an electrophysicist who has collaborated with automaker Nissan, confirms that his “nanosecond pulsed-power” device ignites a larger volume than the traditional spark plug. Unfortunately, the old spark plug has a 100-year head start in research and development. “You really have to have a very robust and not terribly intrusive technology,” he says.

“On the science side, we need to understand better what’s really happening,” he adds, explaining that an improved scientific understanding may lead to new applications, such as improved ignition of alternative fuels.

USC Viterbi’s Egolfopoulos agrees. “The new revolution will come from introducing more science into our applications,” he says.

“What goes on inside an engine is one of the more complicated processes in [physics]. We are trying to understand at the molecular level what happens.

“Engineering will not be able to solve the problems of this century,” he adds – a striking admission from a mechanical engineer. “Without more mathematics, physics and chemistry, the future of energy-related technologies will not be as bright.”

His lab, in collaboration with the lab of USC Viterbi’s Hai Wang, recently solved a fundamental problem by showing that large hydrocarbons – like the ones in jet fuel – break up quickly into smaller molecules during combustion.

It was a big advance with big implications, because it opened the entire universe of gas turbines, including jet engines, to improved computer modeling.

“Understanding every single detail of fuel burning at this level is highly desirable, as it will lead to models that the industry can use to design the new generation of engines,” Fokion explains. “That will save billions of dollars to the industry and may result in a 10- to 20-percent increase of fuel efficiency.”

That would be a huge step forward, since according to Egolfopoulos, “[just] 1 percent improvement in a gas turbine equates to several million cars off the street.”

Egolfopoulos and Wang are now the principal investigators on a major grant for gas turbine modeling from the Air Force Office of Science Research. Their team includes researchers from Stanford, Princeton and Drexel universities, Imperial College of London and the National Institute of Standards and Technology.

In a parallel project, Egolfopoulos turned seed money from the USC Provost’s Office into grants from NASA and the U.S. Department of Energy for the study of biofuel combustion. Like other biofuel researchers, Egolfopoulos has become more skeptical than when he started. His results so far suggest that a biofuel engine produces up to 20 times more carcinogenic aldehydes than a regular gas engine (which, for the record, emits other carcinogens).

“Do you want your kids to inhale aldehydes?” he wonders.

A larger issue for Egolfopoulos is the conversion of farmland. “The moment you start messing with the land, you’re messing with the food chain,” he says. “Then people cannot buy milk for their children; they cannot afford vegetables.” In the long run it may be better to dig up fossil fuels, dirty as they are.

Except, dig them up more efficiently. This has been the aim of the Center for Interactive Smart Oilfield Technologies, or CiSoft – a five-year-old partnership between USC and Chevron. CiSoft pairs industry experts with USC faculty to combine digital media technologies, data analysis techniques and classical petroleum engineering in the hunt for improved and automated oil-production methods.

As chief technology officer for Chevron, Donald Paul was half responsible for establishing CiSoft. His USC counterpart was Provost C. L. Max Nikias, then dean of engineering. Nikias proposed the venture when he met Paul at Chevron headquarters in 1999.

“There was an opportunity to find an intersection between traditionally disconnected areas,” Paul says. “Energy and its intersection with technology is the opportunity, many would argue, certainly for today. It’s at these intersections where you always get the most value.”

Now managed by Iraj Ershaghi, a professor of petroleum engineering in USC Viterbi, CiSoft has become the university’s biggest industry partnership.

It also remains one of a select and carefully chosen university joint ventures at Chevron, Paul says. He calls it “enormously successful” due to its influence across the company, with hundreds of technical, operational and managerial staff adopting CiSoft-driven practices.

Paul remembers meeting a chief mechanic in New Orleans who, thanks to CiSoft technology, was able to simultaneously monitor the maintenance schedules for thousands of compressors operating across the Gulf of Mexico. More significantly, Paul points to the hundreds of Chevron and USC experts who have attended CiSoft’s annual forum.

“The fact that many people are implementing the technologies and practices as quickly as they can tells me you’ve got the right thing,” he says.

The venture also has led to a unique master’s degree in petroleum engineering with an emphasis on smart oilfield technologies – a USC program that, according to Paul, now is steadily pumping out a critical mass of young technical talent.

It seems safe to assume that technology will continue to bring gains in our energy efficiency. The question is, will it make a difference?

“People tend to consume their efficiency gains,” Paul warns.

After the technological gains of the late 1970s, energy prices dropped, so consumers bought more powerful cars and moved into bigger houses farther from cities. Per capita energy use stayed more or less the same. Meanwhile, the population grew, and with it, total energy consumption.

One way to spring the efficiency trap would be to put a floor on the price of energy, to prevent backsliding by individuals and businesses. New York Times columnist Thomas Friedman and others have proposed such an approach, which would amount to a tax that would grow if the cost of energy fell.

The more pressing issue is how to lower the cost of energy in the first place. Paul’s expertise – which includes starting Chevron’s energy diversification portfolio – makes him a valuable counselor on the legislative, scientific and policy aspects of the energy problem.

A graduate of the Massachusetts Institute of Technology, where he earned a bachelor’s in mathematics and a doctorate in geophysics, Paul spent his entire career at Chevron. A theoretician with a practical bent, he moved easily between the company’s research complex in La Habra, Calif., and its operations and development effort in the Gulf of Mexico. After holding several management positions, he was appointed president and CEO of Chevron Canada in the mid-’90s, then became Chevron’s first CTO, a position he held for the past 11 years.

Fossil Fuels

After retiring from Chevron earlier this year, Paul renewed his partnership with Nikias as senior adviser on energy and technology. Part of his charge will be to work with Bernstein on expanding research programs through the Energy Institute. His take on conventional and alternative energy research: “Do it all. Do it now. The world is going to need all the energy we can develop.

“The size of the problem is what most people don’t understand,” he says. “You’re going to need absolutely every molecule. You’re not going to be able to choose.”

The problem with alternative energy is vexingly simple, Paul explains. Renewables like wind and solar pack a lot less energy than oil and gas.

It’s not that alternative energy won’t work. It’s that it takes work. Fossil fuels are easy, and we expect energy to be easy.

Fossil fuel is air conditioning at the touch of a thermostat; alternative energy is passive ventilation, a whole-house fan, heat pump, reflective roof and extra attic insulation, and a house that still is not always quite cool enough.

Fossil fuel is first love; alternative energy is marriage.

We will probably keep flirting with fossil fuels. Like other industry experts, Paul doubts the world can turn away from oil and gas any time soon. After all, fossil energy use is more than 80 percent and very large resources remain – especially for coal.

“And you’d better fix coal while you’re on the way,” he adds.

In a 2007 report to the Secretary of Energy by the National Petroleum Council, Paul (one of its principal authors) identified carbon capture and sequestration as “a critical path” for the United States and China.

But fossil fuels eventually will run out. One could argue that the best stuff, like sweet crude, is already on the way down. Energy companies are grubbing around for dirtier and more carbon-intensive alternatives (see diagram). Alberta’s tar sands are generating millions of barrels of oil, but also spewing millions of tons of greenhouse gases during the laborious extraction process.

At some point, we enter what Paul calls the “then what?” scenario. If the world cannot continue to increase its energy consumption, as it has done from prehistoric times until now, then what?

“Historically, economic growth has a very high correlation with energy consumption,” he says. The consequences of a world without growth would be at least as severe as those of a world without energy, he notes.

Try to imagine a zero-sum economy where a gain by one person must always come at another’s expense. Now try to imagine a civilization that accepts such a proposition.

The Scholars

People tend to think our appetite for growth was literally fueled by oil, and that before World War II – or at least before the Industrial Revolution – Americans lived in pastoral contentment.

The record shows otherwise, says USC’s Peter Mancall, associate vice provost for research advancement and a historian in USC College, where he studies and teaches early American history.

He cites a 1983 book, Changes in the Land, in which author William Cronon traced profound changes in colonial New England’s ecosystem back to British ideas about individual property and man’s dominion over nature.

Cronon famously concluded that in the settlers’ haste to exploit the New World’s vast resources, the “people of plenty” were a people of waste.

Although Mancall can point to alternative views in the 19th century, notably articulated in Henry David Thoreau’s Walden, he finds that the legal system consistently favored exploitation over conservation. “The dominant tradition is one of economic development,” he says.

No matter how far back one looks, at least in American history, there is no large-scale model for a sustainable society. In growth speak, “sustainable” is just another word for “limited,” a concept as American as arugula pie.

In 2006, as part of a precursor initiative to the Energy Institute, cultural scholar Karen Pinkus received a seed grant to study alternative fuels and the American obsession with cars. Disillusionment set in when she realized our culture of consumption transcends individuals.

In her view, the current focus on individual action – buying hybrid autos, switching to fluorescent bulbs – only diverts attention from the real issues.

She argues that even the most appealing green consumer technologies, such as the famous and now-defunct General Motors EV-1 electric car, “are dangerous in that they distract us from issues such as the emissions generated by industrial production, by constant building of new housing, by the transportation of goods in a global economy, agribusiness and so on.”

Pinkus, a professor of Italian, French and comparative literature in USC College, has no single answer to the climate crisis, except to say that as a first step, we should “undo the certainty of common sense” – the belief that our society, as structured, can reduce greenhouse gas emissions to the necessary degree.

Such logic relies on “the same paradigms that got us into this mess,” she says. In other words, society needs a radically new approach.

Whether the world is up to the challenge is another question. In their 2004 financial guide The Oil Factor, noted money managers Donna and Stephen Leeb – whose only agenda presumably is to make good investment calls – advised readers to park some capital in defense stocks in anticipation of the coming “oil wars.”

Then again, maybe we will all learn how to share.

Perhaps the greatest source of comfort is Earth and its capacity to endure. In his presentation at May’s Energy Institute forum, USC College earth scientist Lowell Stott surveyed changes in the planet’s climate over a relatively short time span – a few centuries.

Stott, who served as a reviewer for the Nobel-winning climate change panel, specializes in paleoclimatology; the study of climate change over geological time.

But you don’t have to go back very far to see that Earth’s climate is capable of tolerating far greater change than we have seen to date. Stott presented evidence that the 19th century was far harsher, hotter and drier in California than the past 100 years. In fact, glaciers began receding well before the start of the Industrial Revolution.

“The climate always changes; it always has changed,” he told the audience.

The best we can do, he added, is to understand thoroughly the causes of global climate change, “and by doing so, make better policy choices.”

Good policy. There’s a natural resource that is clean, renewable and no more limited than human ingenuity.

Thursday, November 20, 2008

Payback plan to invest in solar energy

A NATIONAL scheme to pay people for generating solar energy would drive a $17.9 billion investment in the industry, generate thousands of jobs and reduce Australia's carbon emissions by 4.6 million tonnes a year, a report to be released today reveals.

The report by Access Economics for the Clean Energy Council comes after Australia's biggest solar-panel factory, BP Solar, announced it would close its doors early next year, saying it could make panels more cheaply overseas.

The research shows that a gross feed-in tariff, under which people would be paid for all of the electricity they generated, including the energy they used themselves, would invigorate the solar industry, leading to strong take-up of solar panels and bringing forward investment in the technology.

The scheme would cost the federal Government $16.2 billion over the next 20 years if it were available to businesses and residents. It would cost less than half of that - $6.5 billion - if only householders were included.

The feed-in tariff would allow people to recoup the costs of their investment in solar panels within 10 years.

The report says an emissions trading scheme and mandatory renewable energy target were expected to be insufficient on their own to drive significant growth in the industry.

Feed-in tariffs have sparked rapid growth in solar industries overseas. In Germany, which implemented a gross feed-in tariff in 2000, solar installations have grown on average by 72 per cent over the past five years, and the industry has generated about 42,600 jobs.

The report predicts that some of the costs would be offset by a saving of $610 million by deferring new investments in electricity generation capacity.

The take-up of solar energy would help to reduce electricity demanded from the grid during peak periods.

Access Economics director Steve Brown said the research revealed there was potential for a strong solar photovoltaic industry in Australia, especially given Australia had the highest solar radiation levels in the world.

"We've seen overseas that the uptake of solar does respond to policy settings," Mr Brown said.

He said it was up to policy-makers and the industry to balance the costs and benefits of the scheme.

The solar industry and environmental groups have pushed strongly for a national feed-in tariff scheme, saying it would encourage the take-up of renewable energy and reduce greenhouse emissions.

Earlier this month, a federal parliamentary committee recommended that a national scheme be developed in consultation with the states.

It followed an agreement between Kevin Rudd and the states to consider options for a harmonised approach.

Many jurisdictions have already pushed ahead with their own schemes.

The ACT recently became the first Australian jurisdiction to announce the introduction of a gross feed-in tariff scheme. Householders and businesses that installed renewable energy systems, including solar panels or micro-wind turbines, would be paid for all the energy they produced at nearly four times the current cost of electricity.

Victoria, Queensland and South Australia have also introduced feed-in tariff schemes, but people are paid only for the excess energy they feed back into the system.

In South Australia and Queensland, the scheme is open to residents and small businesses, while Victoria's scheme is open only to householders.

Wednesday, November 19, 2008

U.S. consumer prices drop 1 per cent

WASHINGTON — U.S. consumer prices plunged by the largest amount in the past 61 years in October as gasoline pump prices dropped by a record amount.

The Labour Department said Wednesday that consumer prices fell by 1 per cent, the biggest one-month decline on records that go back to February 1947. The drop was twice as large as the 0.5 per cent decline analysts expected.

The big drop reflected not only a huge fall in gasoline and other energy costs, but widespread declines in other areas. Core consumer prices, which exclude food and energy, fell by 0.1 per cent last month, the first drop in core prices in more than a quarter-century.

The big retreat in consumer prices reflects a remarkable turnaround from just a few months ago when a relentless surge in energy prices raised concerns that inflation could get out of control.

Since that time, the economy has been jolted by the most serious financial crisis in seven decades with all the turbulence expected to push the country into a severe and prolonged recession.

The U.S. troubles have quickly spread overseas, depressing growth around the world and cutting into demand for oil and other products, a development that has resulted in sharp declines in the price of crude oil and other commodities.

While some are worried that the price retreat could raise the prospect of a deflation, a prolonged bout of falling prices, most economists believe that current conditions are not likely to set the stage for such a development, which last occurred in the U.S. during the Great Depression.

Over the past 12 months, consumer prices have risen by 3.7 per cent, substantially below the 17-year high of a 12-month price increase of 5.6 per cent set this summer. Core prices are up 2.2 per cent over the past 12 months.

This price moderation is giving the Federal Reserve the room it needs to cut interest rates to battle the economic slump. The central bank is expected to cut the federal funds rate, the interest that banks charge each other, to 0.5 per cent at its December meeting, even lower than the 1 per cent where the funds rate stands currently. The 1 per cent funds rate ties the record low for the past half century.

Toyota to close Canadian, U.S. factories for two days

TOKYO — — Reeling from a relentless sales slide, Toyota Motor Corp. [TM-N]said on Wednesday it would stop all of its North American factories for two days next month, while rival Nissan Motor Co. [NSANY-Q] renewed its pessimism over the industry's near-term prospects.

Tight credit and worries over the spread of recession around the world have battered car sales in all major markets, forcing automakers to cut production to prevent inventories from ballooning further.

Toyota, the world's biggest automaker, had already cancelled all U.S. production of slow-selling light trucks for three months this summer. A spokeswoman said production would be reduced further in 2009 at three U.S. assembly plants.

Toyota did not say how many vehicles' worth of production would be lost as a result of the two-day stoppage on Dec. 22 and 23, on top of a scheduled break for Christmas and New Year.

Toyota
Nissan


The worst economic crisis since the 1930s has hit healthy car makers hard and ailing rivals even harder, threatening the survival of Detroit's Big Three.

Chief executives of General Motors Corp., Ford Motor Co. and Chrysler LLC warned Congress on Tuesday that their industry was teetering on the brink of disaster as they pleaded for a $25-billion (U.S.) aid package to ride out the storm.

Carlos Ghosn, chief executive of Nissan and Renault SA, speaking separately in Washington, chimed in with his own bleak view of the sector's short-term prospects with a reminder that Nissan was expecting virtually no profit in the October-March second half.

"We have to recognize 2009 will be one of the most challenging years for our industry and the whole economy in the last 50 years," Mr. Ghosn told the Wall Street Journal in an interview.

Mr. Ghosn told CNBC that U.S. industry-wide sales falling to 11-11.5 million vehicles next year was a "realistic" assessment. Sales totalled 16.15 million in 2007.

His deputy, chief operating officer Toshiyuki Shiga, told reporters in Tokyo on Wednesday the company was sticking to its annual operating profit target of 270-billion yen ($2.8-billion U.S.). That would mean a second-half profit of just 78-billion yen — less than a fifth of last year's 424-billion yen.

Mr. Shiga added that if the U.S. and European governments offered financial assistance to their automakers to help them fund development of cleaner and more efficient technologies, Japan should follow suit to provide a level playing field.

"I would want the Japanese government to consider the same," he said at the unveiling of the third-generation Cube, remodelled for sale globally for the first time as smaller, fuel-sipping vehicles gain traction.

In the latest sign that the demand slowdown has spread to previously healthy emerging markets, a Toyota official said the automaker was tracking towards Chinese sales of around 600,000 cars in 2008, instead of an official target of 700,000 units.

"We haven't given up on the target, but if the current pace continues, it looks like we'll end with 600,000," a spokesman said.

Sales of 600,000 units would still represent a 20 per cent increase from last year.

In the more important U.S. market, Toyota's sales are down 12 per cent in the year to date, prompting the roll-out of zero-per cent financing and threatening to erase profits in the second half.

The automaker has the capacity to build about 2 million vehicles a year in the United States and Canada.

It produces cars, trucks, engines and other parts at 11 factories in the two countries, including at a joint venture plant with GM and a factory belonging to Fuji Heavy Industries Ltd, the maker of Subaru cars.

Toyota said it would also slow the pace of production at its Kentucky plant, which builds the gasoline and hybrid Camrys, among others, and halve its temporary workforce of 500 by March.

Its Indiana factory and California joint venture plant will reduce production of the Sienna minivan and Tacoma pickup truck indefinitely from January.

Earlier this month Toyota cut its production plans outside Japan by 7 per cent to 4.07 million vehicles for the business year to March 2009.

Mazda buys back chunk of own shares from Ford


Mazda 6

TOKYO -- Mazda spent 17.8 billion yen ($184 million) to buy back 6.8 per cent of its own shares from cash-hungry Ford Motor Co., the Japanese automaker said Wednesday.

The move cames a day after Ford said it's slashing its stake in Mazda from an earlier 33.4 per cent to 13.8 per cent. That would still make Ford the top shareholder in Mazda, with which it has had a partnership for nearly 30 years.

The sale would give Ford 52 billion yen ($540 million) based on Mazda's closing stock price Tuesday of 184 yen, or $1.90 -- barely a quarter of what it was worth one year ago.

The move comes amid growing losses at America's major automakers, which are pleading with Washington for an emergency $25 billion bailout loan from the U.S. government to get through the economic slump.

On Monday, GM said it would sell its remaining 3.02 per cent stake in Japan's Suzuki Motor Corp. for 22.37 billion yen ($230 million).

Mazda Motor Corp., which makes the RX-8 sports car and Miata roadster, bought 96.8 million shares at 184 yen ($1.90) a share, the Hiroshima-based company said. The shares rose in morning trading but then dipped one per cent Wednesday to 182 yen.

Ford racked up losses of $8.7 billion in the second quarter, its worst result ever, and has used up $11 billion of a cash stockpile in the past year.

Ford formed a capital alliance with Mazda in 1979, taking a 25 per cent stake. That was raised to 33.4 per cent in 1996 -- a controlling share in Japan.

Over the last decade, Ford helped engineer a turnaround at once-struggling Mazda, sending executives and sharing technology and auto parts to cut costs. Ford and Mazda have said they will maintain their strategic relationship.

Mazda has not given the identities of the other buyers. But Japanese media reports have listed Hiroshima Bank, auto parts maker Denso Corp. and trading houses as potential buyers.

Although Japanese automakers have also been hit by the global slump, especially the slowdown in the key U.S. auto market, they have fared relatively better than their U.S. rivals becauase of their reputation for making smaller, fuel-efficient models.

Mazda is expecting net profit to fall to 50 billion yen ($518 million) for the fiscal year ending March 2009.