Monday, April 30, 2007

Organic Agriculture and Energy Policy

Last week, I gave a detailed analysis of Energy Consumption in the Chemical Industry, and one of the most disturbing factoids was how inefficient that sector is. Ingredients needed for fertilizers and pesticides account for big chunk of Chemical manufacturing, so by supporting locally-grown Organic agriculture we realize significant savings in fossil fuels.

Organic agriculture has several environmental and ecological advantages over conventional crop production methods, but in this post I wanted to highlight its Energy advantages. Regardless of whether you believe Organic foods have health advantages, the fact that it is significantly more Energy Efficient should be enough to change some of your purchase decisions. By emphasizing Energy Efficiency, I am taking advantage of Green Energy's growing popularity. You can't read the news without coming across more endorsements in support of a Green Energy policy.

So with apologies to Al Gore, I put together a three and half minute slide show to demonstrate why Organic agriculture is a key component of any energy efficient economy. For a closer to a full screen version, click HERE.

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Monday, April 23, 2007

Energy and the Chemical Industry

In a previous post, I estimated that the Industrial sector consumes about a third of all energy used in the U.S. I ended with the results of a 2002 survey which identified which particular industries consumed the most energy. In this post I will do a detailed analysis of what was estimated to be the leading energy consumer in the industrial and manufacturing sector: the Chemical industry. The primary data source is a 2000 study from LBL.

Which Chemical products accounted for the most energy consumption in the Chemical industry? In the chart below, the Chemical sector refers to industries classified under SIC Code 28:

Ethylene and co-products:
In the petrochemical industry mostly relatively simple organic chemicals are produced such as ethylene, propylene and benzene. These chemicals (some through intermediates, e.g. mono vinyl chloride or styrene) form the building blocks for many products such as plastics, resins, fibers, detergents, etc. The single most energy-consuming step in the petrochemical industry is the steam cracking of hydrocarbon feedstocks to produce ethylene, propylene, butadiene and aromatics (benzene, toluene and xylenes).
The less petrochemicals we use, and the more we reuse, the less energy is consumed in the manufacturing of these chemical building blocks. Simple examples include cleaning, health and beauty products which have become available even in mainstream retailers.

Ammonia and Nitrogenous Fertilizer Industry
The production of ammonia is the most energy intensive production step in the manufacture of fertilizers and other nitrogen containing products. In the U.S. ammonia is one of the major chemicals produced ... In the U.S. about 80% of the ammonia is used for fertilizer production, the remainder for a variety of products, mainly explosives and plastics. The most important fertilizers produced in the U.S. are ammonium nitrate (AN), nitric acid (NA), urea, compound fertilizers, and liquid ammonia. Ammonium sulfate (AS) is most commonly produced as a co-product of nylon manufacturing. ... The world fertilizer market grows slowly, due to growth especially in developing countries. The world market price of ammonia has been depressed since the late 1980’s due to cheap exports from producers in Central and eastern Europe and the former Soviet Union, limiting expansion in the Western World (especially Western-Europe).
In a future post, I will compare the energy demands of conventional and organic agriculture. Ignoring the health advantages cited by proponents of Organic food, we will see that the energy and environmental advantages of Organic agriculture are compelling.

The major markets for chlorine are PVC (37%), inorganic chemicals (22%), other organic chemicals (17%), propylene oxide (7%), pulp and paper (6%), water treatment (6%), solvents (5%). The major markets for caustic are: pulp and paper (26%), soaps and detergents (9%), propylene oxide (9%), petroleum (8%), water treatment (6%), other organic chemicals (13%), inorganic chemicals (12%). ... The production of chlorine gas is an energy intensive chemical process requiring between 25-40 GJ (worldwide average) primary energy per tonne chlorine produced.
Avoiding PVC is a key component of Green Architecture. For a hilarious look into the role of PVC in homebuilding, check out the documentary Blue Vinyl -- a cult classic in the Green Building industry.

Energy Efficiency: Chemical Industry is highly inefficient it its use of energy.
The above energy consumption estimates, include the massive amount of energy lost during production/manufacturing processes:
One of the chemical industry’s biggest—and most misunderstood—business opportunities is the recovery of income lost to energy waste. Out of 3.73 quadrillion Btu of fuel and electricity delivered “to the fence” of chemical industry facilities in 2001, a conservative estimate claims that 37 percent (1.36 quads) was lost in combustion, distribution, and energy conversion activities. At today’s fuel prices of about $7 per MMBtu, those losses equate to over $26 billion.

... The fundamental laws of physics and thermodynamics make some losses unavoidable, but much of this loss is an opportunity to embrace efficient technologies and practices. Every one percent recapture of energy losses saves the chemicals industry over $95 million. Estimates of practical energy savings available to industry range from 10 to 20 percent. Note that this is an industry average—some plants can save more than this range, some less. If the chemical industry recaptured 10 percent of energy waste, this would represent $1.7 billion. Keep in mind that each dollar of energy cost savings is one extra dollar of net income.

... Energy management is a process, not a project. Sure, engineering hardware projects are part of the solution. But energy-smart behaviors, folded into standard operating procedure, represent about 30 percent of potential energy savings.
A detailed analysis (from a separate data source) yields the following interesting graph (the red bars represent energy losses):

I. Energy (in the form of fuel or electricity) is produced for Chemical plants. 27% is lost by the utilities during electricity generation or during the delivery of fuel and electricity.

II. 73% of total energy is delivered "to the fence" of chemical industries. Close to 27% more energy is lost, with the largest loss due to Energy Conversion ("energy is converted to motive energy used by motor drives, pumps, heat exchangers, etc.").

III. 47% total energy available for useful consumption. Another 3% is lost, primarily to space conditioning and heating.

IV. Only 44% of total energy is actually used for Industrial processes!

Conservation and efficiency on the part of homeowners and consumers is something we highlighted in an earlier post. Using the Chemical Industry as a case study, it appears that end-use efficiency is even more important in the industrial sector. Besides the environmental benefits and reasons, the potential financial savings are huge. Why wait for mandates to be imposed when end-use efficiency is such an obvious competitive advantage?

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Monday, April 16, 2007

Hydrogen Production

A friend alerted me to a recent Popular Mechanics article on the "Hydrogen Economy": a concept frequently promoted by politicians (especially Bush and Schwarzenegger). The article is an excellent overview on the Production, Storage, Distribution, and Use of Hydrogen energy. Needless to say, the article brings up lots of hurdles that need to be overcome before Hydrogen becomes a viable source of clean energy. I also recommend the National Hydrogen Roadmap, published by the DOE in 2002. In this post, I will summarize the state of Hydrogen production.

In 2002, about 9M tons of Hydrogen was produced in the U.S., the small fraction used for energy purposes was consumed mostly by NASA. As far as I can tell the "Hydrogen Economy" refers to Federal and State initiatives to promote the use of Hydrogen as a transportation fuel. Critics point out that other applications of Hydrogen Energy -- batteries for mobile electronics, electricity generation -- would require less infrastructure investments than the construction and deployment of Hydrogen fueling stations. However one feels about the near term viability of Hydrogen-powered vehicles, in order for the Hydrogen economy to come to fruition, the U.S. needs to produce Hydrogen cleanly on a much larger scale. Let's look at the current production methods:

Currently 95% of all Hydrogen produced in the U.S. comes from natural gas, using a process called steam methane reformation. This production method generates emissions in order to arrive at an emission-free source of energy! Some forecasters predict that fossil fuels will remain the primary feedstock over the next decade or two. There are research initiatives (BP has even announced plans to build plants) aimed at developing technologies that can generate Hydrogen from natural gas while capturing the resulting CO2 and trapping it underground. It is important to emphasize that these carbon capture technologies are unproven on large scale. These next generation steam methane reformation plants would be clearly better than the current technology, but they still involve the use of fossil fuels -- natural resources subject to mining, and the usual supply and demand fluctuations.

Electrolysis involves the use of electricity to split "... water into its constituent parts, hydrogen and oxygen". While not yet as cost and energy efficient as steam methane reformation, given that it relies on electricity, electrolysis leads to more distributed generation facilities. Unfortunately as I noted in an earlier post, the U.S. currently gets close to 70% of its electricity from fossil fuels. Ideally one can use renewable energy to generate the required electricity. Proponents of Nuclear Power will point to Hydrogen production as yet another argument in favor of generating electricity using Nuclear power.

Other methods being developed include " ... thermochemical water-splitting using nuclear and solar heat, photolytic (solar) processes using solid state techniques (photoelectrochemical electrolysis), fossil fuel hydrogen production with carbon sequestration, and biological techniques (algae and bacteria)." Thermochemical water-splitting from Nuclear heat won't be viable for another decade:
Next-generation nuclear power plants will reach temperatures high enough to produce hydrogen as well as electricity, either by adding steam and heat to the electrolysis process, or by adding heat to a series of chemical reactions that split the hydrogen from water. Though promising in the lab, this technology won't be proved until the first Generation IV plants come on line — around 2020.
Ignoring the challenges with large-scale Hydrogen production for a moment, how would the different production methods scale from the current 9M tones per year to 150M tons per year? 150M tons/annually, is based on the stated goal of replacing fossil fuels used in cars with Hydrogen, by the year 2040. First we look at the TOTAL cost (infrastructure + raw materials) of scaling production to 150M tons:

The total cost using only solar energy is prohibitive, while relying solely on wind is still thrice as expensive as natural gas. While scaling wind and solar in their current form doesn't make sense, can next generation solar PV or solar thermal systems be viable? Using the total cost estimates cited above, what would be the cost to consumers at the pump? We look at the cost of the Hydrogen equivalent of a gallon of gas:

This chart is reminiscent of estimates I presented on the cost per kilowatt hour of electricity. Wind is cost-competitive, but the estimate for solar makes it a non-starter. On financial costs and CO2 emissions, Nuclear appears to be the most sensible option. The U.S. Federal goverment is providing huge subsidies for Nuclear energy, I wonder if the costs reflected are based on having equal subsidies regardless of technology? In a future post, I will highlight challenges which face Nuclear Energy: Waste, Accidents, Terrorism, and the High Costs without subsidies.

Depending on the mode of production, the total cost estimates should reflect the CO2 emissions which results from producing the 150M tons of Hydrogen. Using Solar, Wind, Nuclear results in no CO2 emissions, while Natural Gas is estimated to result in 300M tons. Using optimistic assumptions ("90% will be captured and stored underground") Coal is estimated to lead to 600M tons of CO2 emissions. In the following treemap, the size of a square reflects the total cost required to produce 150M tons of hydrogen, the color of a square represents the amount of CO2 emissions resulting from producing that amount of hydrogen. A large square implies the project is costly; a red square implies the project will generate a lot of CO2 emissions, a green square implies no CO2 emissions:

To summarize, here is a list of some of the key (large-scale production) challenges listed in the National Hydrogen Roadmap:
  • Hydrogen production costs are high relative to conventional fuels.
  • Low demand inhibits development of production capacity.
  • Current technologies produce large quantities of carbon dioxide and are not optimized for making hydrogen as an energy carrier.
  • Advanced hydrogen production methods need development.
In future posts, I will cover the other aspects of the Hydrogen Economy: Storage, Distribution, and Usage. Detroit has always hinted that they are investing in Hydrogen powered vehicles, and that current technologies (i.e. hybrids) are a compromise. As we delve into other aspects of the Hydrogen economy it will become clear that Hydrogen powered vehicles are years away. In the meantime, the Big 3 should embrace hybrids, plug-in hybrids, and electric cars. Current generation green cars are not only great for market share , they could resuscitate Detroit's less-than-hip brands.

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Thursday, April 12, 2007

U.S. Energy Consumption By Sector

Over the next several posts, I will attempt to highlight the major uses of energy in the U.S. The Energy Information Administration provides a breakdown of energy use by sector:

While the share of energy use from the Industrial sector has dropped over the last decade (1995 to 2005), it still accounts for about one-third of total energy in the U.S.

In the next several posts I will try to analyze each sector in detail. We start by examining the Industrial and Manufacturing sector. Statistics on Industrial use of energy is typically based on surveys. The most recent data I could find was based on a survey conducted in 2002:

NEXT: Energy use in the Chemical industry.

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Monday, April 09, 2007

Detroit's Market Share

The last few weeks have not been kind to the Big 3 U.S. automakers. First the SCOTUS ruled that under the Clear Air Act, the EPA has the authority to set fuel efficiency standards. Second, March vehicle sales showed the Asian carmakers continuing to grab market share from Detroit. With gasoline prices rising, and with the Big 3 weaker in the compact and subcompact categories, expect things to get worse over the next few quarters.

As I will illustrate using a few simple charts, the SCOTUS and the EPA might be doing the Big 3 a favor by forcing them to improve the fuel efficiency of their fleets. As the Union of Concerned Scientists points out, the Asian carmakers have vehicles that are on average more environmentally-friendly:

Each automaker has been scored on the average per-mile emissions of global-warming and smog-forming pollutants from the vehicles it sold in MY2005. The emission average across all eight manufacturers is defined as a score of 100, and each automaker is assigned a score indexed to this average. Thus a score of 80 indicates that an automaker's average emissions across all vehicles is 80 percent of the industry average. Lower scores indicate lower emissions.

(To enlarge an image, click on it.) The Environmental Score rewards fuel efficient vehicles because increasing fuel economy reduces global-warming pollutants. I correlated the Environmental Scores with U.S. vehicle sales figures from Auto Data Corporation. Manufacturer's market share reflects totals when applicable: G.M. (includes Saab), Ford (includes Jaguar, Land Rover, Volvo), DaimlerChrysler (inludes Mercedes, Maybach), Volkswagen (includes Audi, Bentley). In the following bubble chart, the size of a bubble reflects market share for Q1-2007, the vertical axis measures the percentage change in total vehicles sold from Q1-2006 to Q1-2007, the horizontal axis is the manufacturer's average Environmental Score:

Recall that a lower environmental score, means less pollution, and that the industry average is 100. The chart gives a natural segmentation between the environmentally-friendly Asian carmakers, and the less environmentally-friendly Big 3 U.S. companies. Volkswagen scored around the industry average. More importantly, the Japanese carmakers all sold more vehicles in Q1-2007 compared to Q1-2006: Toyota sold 11% more vehicles, while Honda and Nissan sold 6% more vehicles compared to Q1-2006. The Big 3 U.S. carmakers all sold less vehicles in Q1-2007, with Ford selling 13% less than it did in Q1-2006. From the chart, one can detect that the Environmental Score and Year-over-Year change in total sales are quite negatively correlated.

The next chart is similar to the previous bubble chart, except the vertical axis measures the (absolute) change in Market Share from Q1-2006 to Q1-2007. Since total U.S. vehicle sales was down 1% from Q1-2006, we expect the Japanese carmakers to have gained market share:

Toyota's market share was 1.74% higher compared to its market share in Q1-2006; Honda gained 0.63% and Nissan gained 0.49% in market share. On the other hand, the less environmentally-friendly Big 3 all lost market share in Q1-2007: in particular Ford's Q1-2007 market share was 2.28% lower than what it was in Q1-2006.

The Environmental Score compiled by the Union of Concerned Scientists is something the Big 3 should take seriously. Detroit's low Environmental Scores are not simply due to their propensity to build larger vehicles. As the full report points out, Toyota produces vehicles of all classes, but their fleet is still more environmentally-friendly than Detroit's.

While things change slowly in the American auto industry, there are some positive signs. Ex-Boeing executive now Ford CEO, Allan Mullaly, an auto industry outsider, seems to be bringing a fresh perspective (WSJ, subscription required):
Ford President and Chief Executive Officer Alan Mulally says the Supreme Court ruling earlier this week that federal environmental regulators have a duty to consider limits on the carbon dioxide chugging out of vehicle tailpipes made him even more committed to improve fuel efficiency, develop alternative fuels technology and advanced engines. "The citizens of the U.S. are really going to decide what we want to do about energy and what do we want to do about the environment," Mr. Mulally said in a dialogue with reporters on the sidelines of the show. "The cars you see today are what customers want. The customers are going to decide, not Ford."
Based on recent history, it might take years for the Big 3 to catch up with the Asian automakers. Toyota has a shot at overtaking G.M. in terms of market share, AND replacing Honda as the greenest automaker.

UPDATE: NPR's Science Friday on Green Cars.

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Monday, April 02, 2007

The Global Water Crisis

Growing up in Southeast Asia and having gone through seasonal water rationing, I still wonder whether I appreciate how precious water is. Having lived in the U.S. for years I take for granted that water is available on demand. But in large regions of the world, water is increasingly becoming a precious commodity. Political scientists and environmentalists have been warning that wars and crises might erupt over water in the near future.

In this post, I will use time-series and geographic data to highlight the serious challenges that lie ahead. Water availability is measured, in terms of cubic meters per capita (annually), during three periods: 1975, 2000, 2025. I use the following definitions which appeared in a recent issue of Plenty Magazine:
  • Scarcity = less than 1000 cubic meters per capita
  • Stress = 1000 to 1700 cubic meters per capita
  • Vulnerable = 1700 to 2500 cubic meters per capita

(To enlarge a particular image, click on it.) In 1975, Scarcity and Stress was centered primarily in North Africa.

By the year 2000, three large countries (China, India, Iran) were classified as vulnerable. East African nations were experiencing Stress or Scarcity.

To forecast water supply per capita in the year 2025, we need to make some assumptions regarding population growth (low, medium, or high growth rates). In the map below, I elected to use medium population growth rates. Looking towards the year 2025, current forecasts paint a bleak picture:

By 2025, the impact of drier climate translates to well over 2 Billion people experiencing water Scarcity or Stress. If we include Vulnerable countries, we are looking at over 3 Billion people! Besides North and East Africa, the Middle East and South Asia will be struggling to meet their water needs. The humanitarian, geopolitical, and security implications are quite scary. (The more optimistic forecast, using low population growth rates, paints essentially the same picure.)

The coming water crisis is a global problem -- the number of people and the regions affected means that the industrialized countries cannot ignore this issue. Can regions and adjacent nations work together peacefully to meet their water needs? Will desalination overcome its current economic and environmental deficiencies? Just as energy conservation and efficiency are important components of any sound energy policy, water conservation and efficiency need to be emphasized.

Green architects in industrialized countries are already designing buildings which incorporate design features like reusing gray water and low-flow toilets. Suitable water capture and efficiency solutions need to be funded for developing and poor countries. Poor nations can use funding and expertise from the industrialized nations, particularly the OECD members. Unfortunately, Western leaders are not acting fast enough. When was the last time you heard a politician talk about this issue?

UPDATE: Newsweek has a short article on China's water crisis.

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