What Am I Doing??

An elderly man smiles into the camera

Over the last few blogs I cried, together with many others, about the direction in which the country and the world are going. It reached a stage where a friend told me that she didn’t celebrate the 4th of July because the country is “misbehaving.” I thought that the time has come for a chat with myself in the “mirror” about what I intend to do about what’s going on.

In our modern age, you don’t just look at yourself in the mirror, you take a selfie and distribute it. I took one and showed it to my wife. She didn’t like it because I didn’t smile, so I looked like a frozen corpse. Fortunately, we had a relative over for dinner who is, among his other qualifications (such as being a former faculty member at Brooklyn College) a Brooklyn artist and a photographer. So, he took the “mirror” image above.

I am now on summer break. This is our third summer under the COVID-19 pandemic. Almost everybody has gotten sick of pandemic-related restrictions. Last semester I taught in person, taking all the mandated precautions, and I will continue to so in the next semester. All of my classes will address changing social issues in which the physical environment and the human environment are central. In physics, as in many other disciplines, we now have a sub-discipline that focuses on such issues: social physics (see February 2, 2021 blog). Wikipedia defines it:

Social physics or sociophysics is a field of science which uses mathematical tools inspired by physics to understand the behavior of human crowds. In a modern commercial use, it can also refer to the analysis of social phenomena with big data.

Social physics is closely related to econophysics which uses physics methods to describe economics.

Throughout the last year of the pandemic, many of us took local trips to visit friends and family, taking all the necessary precautions not to get infected or infect others. My wife and I haven’t flown anywhere yet but plan to go abroad in August to visit friends and family that we haven’t seen for years. At the same time, Bergen-Belsen Memorial, the concentration camp in which I spent two years with my mother and my uncle during WWII (see April 12, 2022, blog), decided to make a delayed celebration of the 75th anniversary of our liberation. The organizers invited me and my wife to attend. The timing, at the beginning of September, a week after our Fall semester starts, could have made it difficult. However, Labor Day made it possible for us to travel there without missing any classes. So, we will end up spending most of August in Europe visiting friends and family, return home for a week of classes, and then fly back to Germany for 5 days. We obviously, under the circumstances, got insurance for all of our flights.

One of the main objectives that most academics have during their summer break is to prepare new teaching material for the coming academic year. Since I teach topics related to social physics and the social reality is changing so fast, I thought that I had better use the summer to prepare. As I have written in earlier blogs, the Russian invasion of Ukraine is currently determining much of the changing global reality. My coming trip to Bergen-Belsen is giving me an opportunity to compare the invasion to the Nazi atrocities in WWII.

To try to do that in quantitative way consistent with the requirements of physics, I decided to focus on the economics of the Nazi regime, both before and during the war. I bought and have been reading Adam Tooze’s The Wages of Destruction: The making and breaking of the Nazi Economy (Penguin Books, 2006). It’s a long book—800 pages with references, tables, and index—but I’m almost finished by now. It is not surprising that there are many differences and similarities between the events described in the book and the current Russian invasion of Ukraine. One central similarity is the terrain. However, one thought has not left me throughout the long reading: what would have happened if Nazi Germany had had functional nuclear weapons in its arsenal? I have described the role of nuclear weapons in the present Russian invasion in previous blogs (see March 22 and April 19, 2022). As I mentioned in those and other blogs, the Russian government has made numerous threats to resort to nuclear weapons in case conventional war doesn’t satisfy their objectives.

For those of us not fluent in the history of nuclear weapons (we teach a course on the topic in school), the first demonstration of nuclear fission took place in 1938 by Otto Hann and Fritz Strassman in Germany. A short descriptive paragraph from the Britannica entry on Hahn is given below:

By the end of 1938, they obtained conclusive evidence, contrary to previous expectation, that one of the products from uranium was a radioactive form of the much lighter element barium, indicating that the uranium atom had split into two lighter atoms. Hahn sent an account of the work to Meitner, who, in cooperation with her nephew Otto Frisch, formulated a plausible explanation of the process, to which they gave the name nuclear fission.

The possibility that Hitler’s Germany could have developed an analog of the Manhattan Project is not farfetched. Wikipedia specifically says, “There were fears that a German atomic bomb project would develop one first, especially among scientists who were refugees from Nazi Germany and other fascist countries.”

Tooze’s book makes it clear (at least to me) that if the Nazi hierarchy had realized the possibilities and had the time and resources available to the Americans, they would have used an atomic bomb, probably on England. The threat itself would likely have prevented the US from joining the war against Germany.

On a much more local level, I am trying to find out how schools can take advantage of the transitions that we are all experiencing and use them as a learning opportunity. For instance, we can use the (often mandatory) adaptation measures of campuses to teach students how to adapt to these changes in real life after they leave college. The reality, of course, is that faculty members haven’t gone to any school to teach us how to implement this. Faculty, administrators, and students are trying to find their way like everybody else. But this is also the case in any research project: if it’s not new, it is not research. Most schools are now encouraging students and faculty to work together, recommending that students join research at the earliest possible stage.

Laboratory research has long been known to be necessary for teaching science:

Science educators have believed that the laboratory is an important means of instruction in science since late in the 19th century. Laboratory activities were used in high school chemistry in the 1880s (Fay, 1931). In 1886, Harvard University published a list of physics experiments that were to be included in high school physics classes for students who wished to enroll at Harvard (Moyer, 1976). Laboratory instruction was considered essential because it provided training in observation, supplied detailed information, and aroused pupils’ interest. These same reasons are still accepted almost 100 years later.

Mostly for this reason, STEM (Science, Technology, Engineering and Mathematics) courses have been found to be more expensive than humanities:

Universities spend more money on STEM courses than on humanities and social science courses, according to a working paper released Monday by the National Bureau of Economic Research.

The paper shows that STEM (science, technology, engineering, mathematics) fields such as electrical engineering, physics and chemistry tend to require greater funding than humanities and social sciences such as English, history and psychology. One notable exception is mathematics, which has the lowest instructional cost of all the fields studied.

Paper co-author Fernando Furquim, a doctoral student at the University of Michigan, said researchers found sizable cost differences across the disciplines they studied, and making these variations known could help higher education practitioners manage budgets.

Climate change require colleges, and everybody else, to adapt. The decarbonization of the campus is a fertile ground for using colleges as a laboratory for students to learn about these topics for use after graduation. I am both teaching students at various levels and working through the process at the same time (See November 23, 2021 blog). This work requires knowledge of a whole variety of disciplines, including most sciences and many social sciences. It is my job to provide students with the background appropriate for their level that will enable them to benefit from the course and use the learning in unanticipated situations. The research projects of my sophomore Honors College students provide a good example of how this can work. You can see their posters here.

Other projects that can use college transitions for a similar purpose include efforts to clean the campus of single use plastic, check the campus sewage for viruses, and find ways to run the campus with a declining student population, etc. This methodology has been labeled “Campus as a Lab” or “College as Lab.” Princeton University is using the concept extensively as part of their effort to increase environmental sustainability on campus.

I will expand on the concept in future blogs.

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The Sky as an Inspiration

Sunset over NYC

A week ago, I got a new email from a young friend, reacting to the recent verdict by the Supreme Court that negates Roe vs. Wade, which has defined the abortion landscape for the last 50 years:

I was reading about roe v wade. Feel like it’s going to create a lot of logistical problems for women who need to get an abortion for legitimate reasons (ectopic pregnancies, etc.). Perhaps the Supreme Court was considering the economic impact of the declining fertility rate in our country.

The life-tenured conservative majority that now leads the Supreme Court was just warming up. Next, they decided that the long-standing New York State law that requires a special license to carry arms in public places is unconstitutional, in spite of the major increase in mass-killings in schools and other public places. The Court also decided that people with authority can force public prayers at events under their control. After that, they ruled that the president and Executive Branch have only limited authority to enforce greenhouse gas emissions limits for electrical utilities. This decision will seriously hinder our ability to fight climate change. At the same time, we are still dealing with the global impacts of issues that are not directly connected to Supreme Court decisions, such as the Russian invasion of Ukraine and its impact on energy inflation (see last week’s blog), as well as COVID-19 and general inequality.

My first order of business in confronting these issues is to separate global ones from national ones. Such a determination, obviously, will help us narrow down who to blame for our problems and what can we do to be less miserable.

Everybody around me is depressed. I have written a great deal about the impacts of global issues including Russia’s invasion of Ukraine, declining fertility, COVID-19, and climate change (just put any of these terms in the search box). Until now, I hadn’t written anything about the Supreme Court because it was off-topic but that is no longer the case. Because of the dominant global position of the United States, the lifetime tenure of the justices determines almost all aspects of our national reality, and through us they have large impact on the rest of the world.

In the middle of all of this, I looked at the sky for inspiration. For a short period of time, the “fight” between the dark clouds and the still sunny ones that covered my city seemed to me, the right analogy. I took the picture that is shown at the top of this blog. I knew who would “win” that battle – night always takes over after day. What, then, will the future hold for all of us???

If we look closely, many of the Court’s recent decisions didn’t make any direct judgments about the issues on which they decided to address. Instead, they were saying that it is not their business to decide, and shunting the responsibility back to the “people,” saying we should decide such matters through elected representatives. The one big exception to this argument was its ruling about the requirement for special permissions for New Yorkers to carry weapon in public places. Here, the Supreme Court decided that the elected representatives of New York who voted on this law contradicted the Second Amendment of the American Constitution, thus making these laws invalid. To understand this reasoning, we should examine the relevant part of the Second Amendment:

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

It is basically one sentence. Its interpretation over the years has rested primarily on different interpretations of one word: people. Does this word refer to every person? or alternatively to a nation or state, as in, “We the people….” To rephrase the question, does the right to bear arms refer to us as individuals or does it refer to the state in a way that separates the current, sovereign state from its colonial past? Over the last generation, this issue has become highly politicized, and the current version of the Supreme Court just ruled in favor of the “individual” interpretation. Even so, they have tried, in every decision that relates to this issue, to argue that legislators can limit both the individuals who are allowed to carry arms and the locations where they can do so.

The Court’s other monumental new decisions, including the reversal of Roe vs. Wade and restrictions to the Environmental Protection Agency (EPA), make statements about separation of powers between the three independent branches that govern the Republic (legislative, judicial, and executive):

separation of powers, division of the legislativeexecutive, and judicial functions of government among separate and independent bodies. Such a separation, it has been argued, limits the possibility of arbitrary excesses by government, since the sanction of all three branches is required for the making, executing, and administering of laws.

This action was always political and as such, in democratic countries, is always determined by voters. A valid question is who has the last say? In a Constitutional Democracy, the constitution is the ultimate authority:

CONSTITUTIONAL DEMOCRACY is the antithesis of arbitrary rule. It is democracy characterized by:

  1. POPULAR SOVEREIGNTY. The people are the ultimate source of the authority of the government which derives its right to govern from their consent.
  2. MAJORITY RULE AND MINORITY RIGHTS. Although “the majority rules,” the fundamental rights of individuals in the minority are protected.
  3. LIMITED GOVERNMENT. The powers of government are limited by law and a written or unwritten constitution which those in power obey.
  4. INSTITUTIONAL AND PROCEDURAL LIMITATIONS ON POWERS. There are certain institutional and procedural devices which limit the powers of government. 

From there, the Supreme Court has the last word in interpretation the constitution. A politicized Supreme Court can and often does politicize such interpretation. Judges of the Supreme Court have lifetime appointments but as was shown recently, their decisions do not. Additionally, they can be impeached and the balance in the court can be shifted through changes in the number of judges and the lifetime appointment is not constitutionally guaranteed.

My last blog tried to analyze the balance between the top-down and the bottom-up efforts that are now taking place to fight inflation, with a particular emphasis on energy inflation. Time will tell how effectively these efforts will be. In democracies, much of the power is bottom-up: that of the individual citizens. However, plenty of examples from all over the world are emerging that show those in power (top-down) are working to find ways to manipulate those at the bottom so they can hold onto their institutional leadership and power.

Modern communication technology contains a great deal of resources to facilitate such manipulation. The New York Times recently provided a good example when it exposed the use of these technologies in China:

‘An Invisible Cage’: How China Is Policing the Future The more than 1.4 billion people living in China are constantly watched. They are recorded by police cameras that are everywhere, on street corners and subway ceilings, in hotel lobbies and apartment buildings. Their phones are tracked, their purchases are monitored, and their online chats are censored.

Now, even their future is under surveillance.

The latest generation of technology digs through the vast amounts of data collected on their daily activities to find patterns and aberrations, promising to predict crimes or protests before they happen. They target potential troublemakers in the eyes of the Chinese government — not only those with a criminal past but also vulnerable groups, including ethnic minorities, migrant workers and those with a history of mental illness.

So, I know how the sky will turn out after my beautiful sunset. My ability to guess the next step in my human landscape is much more complicated. The only thing we can do is to do what we can and hope for the best. Meanwhile, I hope that you all had a great 4th of July.

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Fighting Energy Inflation: Top-Down vs. Bottom-Up

Two weeks ago (June 14, 2022), I referred to Gina Raimondo, the US Commerce Secretary, whose thoughts of gas prices CNN summarized: “there is not much more the White House can do to tackle record high gas prices for Americans, [Raimondo cast] blame on Russia’s invasion of Ukraine.” The secretary restricted herself to top-down activities coming from the White House. More recently, President Biden tried to prove her wrong by proposing that congress enact a temporary (3 month) “holiday” from federal taxes. The reaction in the political arena was not encouraging. The arguments against such proposals are well known. Figure 1 shows the components of gasoline pricing over the last three years. Taxes are actually a relatively small component in gas pricing; it’s obvious from the figure that the inflation in gas prices is driven primarily by the price of crude oil, which is determined internationally. Furthermore, Figure 2 shows that in most states, state taxes are higher than federal ones. President Biden added a recommendation that states join the “tax holiday.” However, many voices predict that such measures will not help: oil companies will just “absorb” the saved tax into their own balance-sheet, with no impact or relief for consumers.

The New York Times piece where I found Figure 1 (based on the Energy Information Administration data) summarizes some of the issues:

Gas prices in the United States are at record highs. And even when adjusting for inflation, they are on average at levels rarely seen in the last 50 years, including during the energy crisis of the late 1970s. When fuel prices go up, consumers are hurt directly at the pump, but also indirectly when higher transportation costs raise prices on everything from food to diapers to construction materials.

The single biggest factor driving the spike now is the price of crude oil. As of April, according to the Energy Information Administration, the cost of the raw material accounted for 60 percent of the price of a gallon of regular gasoline. That compares to 52 percent the same time a year ago, and just 25 percent in April 2020 — when the pandemic sapped demand for fuel, along with most other goods and commodities.

A visual representation of monthly input costs for a gallon of regular gasoline, U.S. average

Figure 1 – Components of gas pricing

                             Chart comparing federal and state taxes of each US state

Figure 2 Composition of gas taxes

The most effective remedy is not top-down but bottom-up: drive less, try not to drive alone, be comfortable with slightly lower heating temperature, keep track of your use of electricity, and wherever possible, follow Phil Gallagher, last week’s guest blogger, and try to supplement your energy input with fossil-independent sources. For some of us, these choices mostly have to do with convenience and will not have major impacts on our lifestyle. But, for many who live from paycheck to paycheck and are dependent on driving to earn livelihood, some of these changes are existential.

I have repeatedly mentioned selective measures to help many of the “losers” in this needed energy transition (see the December 18, 2018 blog about the Yellow Vest demonstrations in France). In this context, we do need top-down help. Particular attention should be now directed toward Europe. Some of the difficulties that Europe is now facing, and the steps that they trying to take to overcome them, are summarized in the following WSJ piece:

Europe is hitting roadblocks as it tries to find alternatives to Russian gas in the Middle East and North Africa, as talks with big producers like Qatar, Algeria and Libya have become complicated.

The issues that have snarled negotiations range from the pricing of Qatari gas to stability in Libya and the politics of Western Sahara, a disputed North African territory. The challenges mark another indication that Europe will struggle to fully replace energy from Russia, which supplies 38% of the continent’s natural gas.

The WSJ piece mainly focuses on the short-term resiliency requirements of moving Europe away from its dependence on the Russian energy supply, especially given the immediate energy needs for electricity and heat in preparation for the coming winter. Resilience on such a short time scale invariably requires replacing one source of fossil fuels with another. Fortunately, Europe is much more advanced than many other regions in its transition to sustainable energy sources. This brings into focus another aspect of the European energy transition that can be adapted globally: modernizing the power grid by extending its boundaries as far as possible.

The US is not dependent on import of fuel supply from belligerent countries. However, many states are still fully dependent on coal as their primary energy source and climate impacts vary across states, commensurate with the requirements of their electricity load. Resiliency necessitates a timely transfer of power supply to prevent massive shortages. There is progress in all these areas, but it is too slow.

Our collective and individual challenges should not be used to weaponize difficulties in addressing energy distribution as a tool to replace the people in power. Instead, we need to work together to help solve these important challenges by increasing our efficiency in using the available energy.

In this globally connected environment, the interplay between top-down and bottom-up efforts to control various aspects of our lives is all consuming. We are all living through it. I will return to this in future blogs.

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Guest Blog by Phil Gallagher: Going Solar in 2022 

This week, we have a guest blog from one of my friends, a retired Brooklyn College History professor, who just installed solar power in his home in Brooklyn.

Going Solar in 2022

My wife and I recently succeeded in going solar on our home in Brooklyn, choosing Brooklyn SolarWorks (BSW) to do the installation. We had attempted to do this back in 2015 with two other companies that were participating in the “CUNY-Sunshares” program. What happened back then is instructive; anyone considering going solar should be aware of the various factors that are involved, even if they are not mentioned up-front by the would-be installers.

The first salesperson we dealt with seemed informed and provided us with a written proposal within a few hours of our initial meeting. After considering the proposal, we were nearly ready to go forward and sign a contract with company #1 but decided to see what company #2 had to offer.

The salesperson for that company set up an appointment to meet but then canceled abruptly, calling to say that their engineers had determined that the needed number of panels couldn’t be installed on our flat 16′ x 40′ roof due to NYC Fire Code restrictions. This prompted us to ask company #1 if it was certain that it could install the needed number of panels and be within the Fire Code; the reply was that their engineers had approved installation and that it was a “go” – Company #1’s engineers found no problem with the NYC Fire Code requirements. But a few days later, the company called again and informed us that an additional $7,500 would be needed to finance the necessary NYC Fire Code permits. This had not been mentioned in the initial written proposal. Either the company was duplicitous in dealing with us or seriously unaware of the NYC fire code for flat roof solar panel installations, which require that paths be left on the roof for possible firefighter use.

Needless to say, we were disappointed. We had very much wanted to install solar panels. What we learned from the encounter was how important it is that every aspect of photovoltaic system installation and how it relates to the NYC Fire Code be fully understood by everyone involved.

In mid-January of 2022 we were approached at the front door by another company, Brooklyn SolarWorks (BSW). We agreed to receive a phone call. On January 25th, we and their salesperson met at our home for about 90 minutes. We listened, asked questions, took notes on the conversation, and provided a Con Edison summary of our electric use during 2021. Within days, 2 BSW engineer/mechanics came to the house; I accompanied them to our flat roof where they took measurements and worked out a plan for installation on tilted racks that would meet both the NYC Fire Code and our electrical needs. On January 30th, we received a contract proposal for a 4 kW Flat Roof–Tilt Rack Photovoltaic System; it included a 3-D sketch of where the needed panels would be placed.

3-D sketch of planned placement of solar panels

Among the details of the 11-page contract was a listing of the crucial components: 10 400-watt LG solar panels and an SMA SunnyBoy Inverter. On January 31st, we signed a contract and made a down payment. During February and March, we were regularly informed of the steps in the NYC application and permitting process and of the anticipated dates as the paperwork between BSW and NYC Department of Buildings (DOB) went forward.

In early March, we received word that BSW’s application for our system had been approved by NYC DOB and that the application for an NYS incentive grant had been filed and approved. A few weeks later, installation was scheduled for April 15th. The morning of that day, a team of 7 comprising 4 mechanics and 3 electricians arrived at 9 AM; they completed the process in 6 ½ hours. We were very pleased with their efficiency and with the care with which they proceeded. I followed them around from the basement to the roof, photographing most aspects of the process. In the basement they installed the conduit-protected wiring that descended from the solar panels and inverter, and connected it to Con Edison’s grid and meter. On the roof, they set up the heavy-duty racks and bound the panels to them. By the end of the day, we were generating electricity.

Two steps remain before we get credit from Con Edison for the electricity we generate. Next week, NYC DOB is scheduled to inspect the system to be sure everything has been completed to code. If it has all been done appropriately, Con Edison will begin to monitor what we generate and give us credit for it via a process called net metering. When we use more electricity than we generate, we pay ConEd; when we generate more than we use, ConEd pays us—that is, the value of what we generate is subtracted at market rate from our monthly bill. At least, that’s what we’ve been promised.

The system comes with a 30-year warrantee from SolarInsure that covers materials and labor. Like every insurance policy, it’s important to read the fine print, but it appears to be a solid policy. Only time will tell.

Lastly, there’s the question of money. There are federal, state, and NYC tax incentives for installing a photovoltaic system on your home. They are payable in the four years following installation.

Update: A few minutes ago, our mail arrived, and with it came the first bill from ConEd since the new setup. The bill for the same period last year was $86.43. Today’s bill totaled $21.30, which they called a “delivery” charge; the charge for electricity was $0.00.

Phil Gallagher retired from Brooklyn College in 2012 after 45 years teaching Medieval European History. With his family, he has enjoyed 50 summers in their off-the-grid log cabin on a mountain lake in Maine, where they fish, hike, swim, cook, read, and write. Their cabin has just enough solar panels to keep a few LEDs and their computers and cell phones going.

A man with a white beard, a baseball hat, and a pair of sunglasses smiles at the camera

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Analyzing Global Energy Inflation

In almost every news broadcast, fuel inflation holds the top spot. This is not surprising. With an energy inflation growth of around 30% per year (see Figure 1) and the average price of gasoline at around $5/gallon (occasionally up to $10/gallon in parts of California), consumers are unhappy. Almost every report on the issue includes comments from consumers that they cannot support a government that has allowed (or is causing) such increases and if given a chance they will vote for people that are not part of the current administration. However, in a recent interview, Gina Raimondo, the US Commerce Secretary, responded to the issue:

Commerce Secretary Gina Raimondo conceded Tuesday that there is not much more the White House can do to tackle record high gas prices for Americans, casting blame on Russia’s invasion of Ukraine.

“Unfortunately, that is the brutal reality,” Raimondo said in response to CNN’s Kate Bolduan saying there’s not much action left that President Joe Biden can take.

In this blog, I will try to analyze the situation and the challenges that it invokes.

Figures 1 and 2 summarize the timelines. For reference, President Biden was inaugurated on January 20, 2021. That same month, effective vaccination for COVID-19 started to become available within the US, less than a year after it was declared a global pandemic.

Four graphs depict the change in consumer price index for core goods, core services, energy, and food

Figure 1The recent growth of the yearly Consumer Price Index (CPI) (Source: Brookings)

The key part of Figure 1 is the energy price (C). It underlines all other inflation markers. The only marker that seems not to be affected is the Core Services (B), but that might well just involve a time-lag marker in the case that inflation persists. An important aspect of the data that is directly linked to the energy inflation markers is its globality. Recent data show that the inflation rate is at about the same level of above 8% both in Europe and the US. The inflation levels in many developed countries are significantly higher because they are sensitive to the exchange rates with global trading currencies such as the US$ and the Euro. For example, the inflation rate in Brazil exceeds 12% and in Turkey, it is around 75%.

As I have mentioned before, the start of the changes in the energy prices coincided with two events: the inauguration of President Biden and the availability of effective vaccines against the COVID-19 pandemic. Republicans, not surprisingly, point to the former; the globality of the phenomenon strongly suggests the latter.

Figure 2 shows the expansion of the changes in oil prices over the last 10 years. In a sense, it is the extension of earlier changes in oil prices in response to political events that had a strong influence on global oil prices. My January 13, 2015 blog, in particular, discusses the changes in oil prices between 1947 and 2015. That blog shows that toward the end of 2014, the price reached negative territory. Namely, it cost the oil companies more to store oil than they could recoup from selling it. Figure 2 shows a minimum but not a negative number. This might be due to a different reference for the value of the US$. However, Figure 2 shows that toward the end of 2020, at the height of the pandemic, when everything was at a global stand-still, with no relief in sight, the oil price reached a minimum that was considerably lower than that of late 2014. The energy inflation in the marker in Figure 1 is plotted against that minimum.

Timeline of oil prices over the last 10 years

Figure 2Timeline of oil prices over the last 10 years

Figure 1 doesn’t show what happened in 2022 after the February 24th Russian invasion of Ukraine. Suddenly, Europe, much more than the US, has found itself dependent on an energy supply from a country that is a major security risk to the existence of many of its members. As I discussed earlier this year (February 8, 2022), energy export is a major income generator that fuels Russia’s military. The need to change Europe’s role in this became immediate. Energy “independence” has become a rallying cry. Energy security became another face of the energy transition—not dependence on a few petrostates but control of a country’s own energy supply and ability to create alliances based on it. The transition, on this level, starts in Europe. Europe was also at the forefront of the climate change-related energy transition, acknowledging its need to decarbonize its energy sources.

After President Biden’s inauguration, American policy too began to join in the transition, as symbolized by an immediate return to the Paris agreement, with commitments to decarbonize completely toward mid-century and decarbonize its electricity supply by 2035. These have now became long-term commitments. Meanwhile, the immediate goal is to use everything short of military action to deprive Russia of its energy income and disable it from military expansion. In view of the much greater dependence of Europe on Russian energy supply, the President of the European Commission, Ursula von der Leyden, visited the White House to outline a joint strategy on how the US can help Europe in the transition without resorting to steps that impact the longer-term transition to sustainable energy. The document cited below shows the results:

Today, President Joe Biden and European Commission President Ursula von der Leyen announced a joint Task Force to reduce Europe’s dependence on Russian fossil fuels and strengthen European energy security as President Putin wages his war of choice against Ukraine.

This Task Force for Energy Security will be chaired by a representative from the White House and a representative of the President of the European Commission. It will work to ensure energy security for Ukraine and the EU in preparation for next winter and the following one while supporting the EU’s goal to end its dependence on Russian fossil fuels.

The Task Force will organize its efforts around two primary goals: (1) Diversifying liquefied natural gas (LNG) supplies in alignment with climate objectives; (2) Reducing demand for natural gas.

Diversifying LNG Supplies in Alignment with Climate Objectives

  • The United States will work with international partners and strive to ensure additional LNG volumes for the EU market of at least 15 bcm in 2022, with expected increases going forward.
  • The United States and the European Commission will undertake efforts to reduce the greenhouse gas intensity of all new LNG infrastructure and associated pipelines, including through using clean energy to power onsite operations, reducing methane leakage, and building clean and renewable hydrogen-ready infrastructure.
  • The European Commission will prepare an upgraded regulatory framework for energy security of supply and storage, as well as working with EU Member States to accelerate regulatory procedures to review and determine approvals for LNG import infrastructure. The United States will maintain its regulatory environment with an emphasis on supporting this emergency energy security objective and the REPowerEU goals.
  • The European Commission will work with EU Member States toward the goal of ensuring, until at least 2030, demand for approximately 50 bcm/year of additional U.S. LNG that is consistent with our shared net-zero goals. This also will be done on the understanding that prices should reflect long-term market fundamentals and stability of supply and demand.

Reducing Demand for Natural Gas

  • The United States and the European Commission will engage key stakeholders, including the private sector, and deploy immediate recommendations to reduce overall gas demand by accelerating market deployment of clean energy measures.
  • Immediate reductions in gas demand can be achieved through energy efficiency solutions such as ramping up demand response devices, including smart thermostats, and deployment of heat pumps. The REPowerEU plan estimates that reductions through energy savings in homes can replace 15.5 bcm this year and that accelerating wind and solar deployment can replace 20 bcm this year, and through EU’s existing plans such as “Fit for 55” contribute to the EU goal of saving 170 bcm/year by 2030.
  • As global leaders in renewable energy, the United States and the European Commission will work to expedite planning and approval for renewable energy projects and strategic energy cooperation, including on technologies where we both excel such as offshore wind.
  • We will continue to collaborate to advance the production and use of clean and renewable hydrogen to displace unabated fossil fuels and cut greenhouse gas emissions, which will include both technology and supporting infrastructure.

The emphasis of the document is on diversifying supply, reducing demand, and strengthening the transition to sustainable energy. Everybody at the meeting fully realized that direct commitments by governments require a transformation of these guidelines into policy. This, by necessity, involves major political persuasion. The options are very complex. As I argued in the last blog, in complex situations, it is much easier to vote “against” something as opposed to “for.” Republicans are currently using the word “inflation” at every opportunity. It is effective. In last week’s blog, I mentioned the recent House Republicans’ related approach:

An example of this strategy for voting “against” something can be seen in the new House Republican platform:

  • Republicans this week introduced a road map describing how they would mitigate rising gasoline prices and address climate change if the party wins control of the House in November’s midterm elections.
  • The plan arises from the energy, climate and conservation task force established last year by House Minority Leader Kevin McCarthy, R-Calif., and involves proposals that run counter to the warnings of climate scientists.
  • The strategy provides a broad overview of how the party would address high energy prices but doesn’t set specific greenhouse gas targets.

It can be summarized as “drill, drill, and drill some more.” The plan helps reduce dependence on Russian oil but does so by endangering the longer-term energy transition to decarbonized energy sources. It’s a complex issue and I will try to follow along with the process.

In future blogs, I will try to respond to Commerce Secretary Gina Raimondo’s comment that I mentioned at the opening of this blog: that governments basically have very few tools left to directly impact the energy supply part of the energy inflation, and try to make the case that all of us have a major role in directly impacting the energy demand part of the equation.

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Changes Too Quick to Follow!

Confetti fills the air above graduates in mortarboards

Figure 1 – Brooklyn College graduation at Barclays Center

My summer break started last week. A day after Memorial Day we had our first in-person commencement ceremony since the start of the pandemic. It took place in the local Barclays Center with a capacity of 20,000. The top photograph shows the reaction after the announcements of the new degrees. Attending faculty was required to be vaccinated and to wear masks throughout the ceremony. I have no idea about the requirements for the guests, but we were surrounded by people who didn’t wear masks. The ceremony was the most impressive that can I remember. We had, among some of our very distinguished guests: the US Senate Majority Leader, the Mayor of NYC, the Public Advocate of NYC, and the Brooklyn Borough President. Brooklyn College also gave an honorary degree to Leymah Roberta Gbowee, a Nobel Peace Prize recipient known for her human rights work in Liberia. The day was the warmest of the year so far (93oF) but the atmosphere was exciting, and we were delighted with our students’ achievements. After two years or so of COVID-19 restrictions, it felt like we were finally on our way to “normal.”

As a part of this process toward normalcy, I thought I’d use this blog to help me go full speed in confronting the longer-term threats of climate change. Among other reasons, it would help prepare my classes for the fall semester on the topic. My latest series of blogs focused on the IPAT identity and I had planned to continue this week with an analysis of ESG as a tool for socially and environmentally responsible investment.

Returning home, I had lunch and opened the paper, only to realize that not only are we far from back to normal but it has very little to do with the pandemic. Reality is now changing too fast to have many thinking “long term” (25 years?).

Massive gun violence in the US is consistently at the top of the news (with very little time between each event!). Since the beginning of the year, gun violence has resulted in 261 dead and 1,000 injured, with half the country’s governing body blaming it on “evil” and claiming that nothing can be done apart from praying. The Russian invasion of Ukraine is now 100 days old and is having a major global impact. In spite of the fact that the global pandemic forced many of us to live our lives “remotely,” carbon emissions, temperature, fires, and floods were at their most extreme this past year:

Humans pumped 36 billion tons of the planet-warming gas into the atmosphere in 2021, more than in any previous year. It comes from burning oil, gas and coal.

The amount of planet-warming carbon dioxide in the atmosphere broke a record in May, continuing its relentless climb, scientists said Friday. It is now 50 percent higher than the preindustrial average, before humans began the widespread burning of oil, gas and coal in the late 19th century.

There is more carbon dioxide in the atmosphere now than at anytime in at least 4 million years, National Oceanic and Atmospheric Administration officials said.

The concentration of the gas reached nearly 421 parts per million in May, the peak for the year, as power plants, vehicles, farms and other sources around the world continued to pump huge amounts of carbon dioxide into the atmosphere. Emissions totaled 36.3 billion tons in 2021, the highest level in history.

The Russian invasion of Ukraine was largely financed by petrodollars (See the February 8, 2022 blog). At last, the “West” (mainly Europe) has decided to try to reduce the flow of oil and gas in a major way:

BRUSSELS — The European Union on Friday formally approved an embargo on Russian oil and other sanctions targeting major banks and broadcasters over Moscow’s war on Ukraine.

EU headquarters says Russian crude oil will be phased out over six months, and other refined petroleum products over eight months.

It says that “a temporary exception is foreseen” for landlocked countries – like Hungary, the Czech Republic and Slovakia – that “suffer from a specific dependence on Russian supplies and have no viable alternative options.”

Bulgaria and Croatia will also get “temporary derogations” for certain kinds of oil. EU leaders say the move means that around 90% of Russia’s oil exports to Europe will be blocked by year’s end. The EU imports around 25% of its oil from Russia.

Not surprisingly, this and the preceding expectations that something like it would take place have had a major impression on the global prices of energy. People are complaining. Energy is at the base of the economy and has a major impact on inflation. People seem to be upset with the gun violence, upset with Russia’s invasion, upset with the large fluctuations in the stock markets, trending down, and still upset with the pandemic. Most of all, they seem upset with the national average of almost $5/gallon and the rise in the price of travel. This is the time when voters often vote current lawmakers out of power because they want “changes.” In this way, convenience is prioritized over “future” disasters such as mass shootings, with the hope that “it will not happen here.” There’s a sense that it’s more effective to vote “against” politicians and policies that we don’t like than it is to vote “for” those that we support.

In terms of energy availability and pricing, there are alternatives. One obvious alternative is to use less energy overall. The idea of postponing vacations or other travel plans is unpleasant—especially after two years of being stranded by the pandemic. However, it seems to me that avoiding “unpleasantry” should be less important than trying to ensure the safety of others.

Other options include amplifying efforts to develop domestically-produced sustainable energy alternatives. As Figure 2 shows, this is already happening, especially in Europe:

In 2021 Russia supplied 40% of Europe’s gas. Since the invasion of Ukraine, the picture has changed rapidly. On May 31st Gazprom, Russia’s state-owned energy giant, announced that it would stop supplying GasTerra, a Dutch firm, and Orsted, a Danish one, after they refused to pay for gas in roubles. Shell’s supply to Germany was also cut off. The decision looked like retaliation: the previous day the EU had announced a ban on Russian oil, covering 75% of imports from the country and 90% by the end of the year. Russia had already cut off gas companies in Bulgaria, Finland and Poland.

 

Figure 2Global increase in use of wind and solar energy in 2021 (Source: Visual Capitalist via Big Think)

This map is already outdated. It shows the U.S. sourcing 13.1% of its electricity from wind and solar in 2021. This April, and for the first month ever, the country generated 20% of its power from those two renewable sources.

The conversion to sustainable and local energy sources is impressive but still too slow. Bloomberg notes:

The invasion of Ukraine has put the US and Europe on a wartime mission to abandon Russian fossil fuels. This series looks at speeding up zero-carbon alternatives by lowering political and financial barriers…

It will cost more than the gross domestic product of the entire world to rewire the global economy to run on clean energy.

Policy makers and campaigners focused on ginning up the estimated $100 trillion needed over the next three decades know that governments alone cannot foot this bill: Wall Street must get on board with the energy transition. The odds of decarbonizing the world depend to a significant extent on bankers being swayed to direct their dollars away from fossil fuels and toward renewables.

The power grid is a weak point in both the US and Europe:

The nation’s power grid is under stress like never before, with regulators warning that the kind of rolling outages that are now familiar to California and Texas could be far more widespread as hot summer weather arrives.

A large swath of the Midwest that has enjoyed stable electricity for decades is now wrestling with forecasts that it lacks the power needed to get through a heat wave. The regional grid is short the amount of energy needed to power 3.7 million homes.

New Mexico’s attorney general is preparing for “worst case scenarios” after a regional utility warned of possible blackouts. North Dakota regulators advised the state to be ready for rolling outages, Arkansas officials are preparing emergency energy conservation measures, and power companies in Arizona are already sounding alarms about next year.

The issue of equity in fighting the prevailing difficulties is important. If not addressed, the reaction will be that the next election will bring down the people that are trying to work toward solutions (voting “for”) and replace them with people that make promises that they will do the job better (voting “against”), (see my December 18, 2018, blog about the Yellow Vests demonstrations in France).

An example of this strategy for voting “against” something can be seen in the new House Republican platform:

  • Republicans this week introduced a road map describing how they would mitigate rising gasoline prices and address climate change if the party wins control of the House in November’s midterm elections.
  • The plan arises from the energy, climate and conservation task force established last year by House Minority Leader Kevin McCarthy, R-Calif., and involves proposals that run counter to the warnings of climate scientists.
  • The strategy provides a broad overview of how the party would address high energy prices but doesn’t set specific greenhouse gas targets.

In other words, the party is relying on voters to choose its platform as an alternative to the status quo (“against”). There are a lot of promises but some of the details are either missing or misleading.

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Electric Utilities Through the Lens of the IPAT Identity

The last two blogs focused on applying the IPAT identity to sub-country organizations. For obvious reasons, I started this analysis with a focus on oil companies and their supposed commitments to net-zero carbon emissions in the “near” (mid-century) future.

One of the main challenges for the oil companies is to balance their reliance on selling fossil fuels with their net-zero commitments. Many think that such a balance doesn’t exist but some of the oil companies are relying on carbon capture and storage (CCS) to prove that it does. Last week’s blog focused on incorporating CCS into the IPAT identity.

Figure 1 – Top 30 GHG emissions per capita by US investor-owned utilities (IOUs)
Numbers in gray circles represent total CO2 metric ton emissions, innermost numbers on bars represent emissions per capita (Source: Visual Capitalist)

In this week’s blog, I will focus on electric utilities. One of my reasons for doing is shown in Figure 1, taken from my favorite infographic site, Visual Capitalist. The figure illustrates the top 30 emissions per capita of the largest investor-owned utilities in the US. I live and work in NYC and we get our electricity from Con Edison. Our utility is doing very well on this chart and once I saw it, I forwarded it to the administrators of my school so they can be proud of being ConEd customers.

However, Figure 2 demonstrates the main reasons why we should care about how well the electric utilities are doing in reducing their carbon footprints. This figure, also posted by Visual Capitalist, is the best description that I am familiar with; it shows the importance of carbon-free electricity in the energy transition. It shows that the electricity generation sector takes the largest amount of energy in the US. More than that, as I have repeatedly mentioned throughout this blog, the flexibility of electricity use makes it the most important tool in the energy transition. The second-largest field of energy use is transportation. The shift to electric cars is mostly motivated by the claim that they use carbon-free energy; however, that depends on the availability of decarbonized electricity (examine the situation in China as it shifts to electric cars).

The industrial, commercial, and residential uses of energy are, to an important degree, associated with heating and cooling. Both functions can be accomplished using heat pumps driven by electricity. In other words, our ability to decarbonize our lives depends on our ability to decarbonize our electricity. In addition, one of the main impacts of climate change is water stress. In a world whose surface area is 70% ocean, one of our best ways to mitigate water stress is through desalination. However, the ability to alleviate water stress in this way while not contributing further to climate change is conditional upon decarbonized electricity sources.

In an earlier blog (June 29, 2021), I showed a figure similar to Figure 1, also from Visual Capitalist. However, that figure showed the “targets” of decarbonization by utilities, whereas Figure 1 shows the most recently available data (2020, with one exception of 2019).

Going back to IPAT, the identity (without the CCS term) looks like this:

formula of IPAT identity

We can learn from Figure 1 what the terms mean for companies: The “population” refers to the number of customers. The GDP is equivalent to revenues. The “energy” term applies to the primary energy used and the other two terms that list the kind of energy sources that are used have the same meaning as the original IPAT.

I will focus here on Consolidated Edison (ConEd or Con Edison) as an example.

Figure 2 – Estimated US energy consumption in 2019 (Source: Lawrence Livermore National Laboratory, via Visual Capitalist)

Electricity is a secondary energy source that is produced from primary energy sources. The efficiency of the conversion is around 30%. The remaining 70% is rejected energy: heat (shown here in light gray). Since, as Figure 2 shows, our largest energy use goes toward electricity generation, any effort to decarbonize our energy use has to go through decarbonizing our electricity use.

If we get our electricity from an electrical utility, we must know how to handle the carbon balance of our utility. This form of emission is labeled as Scope 2 emission (June 18, 2019), indicating that we are not directly using the fossil fuel (Scope 1) but, instead, the product (electricity) that another party (electric utility) makes from it.

Since ConEd is my supplier of electricity both at home and at work, and since my state and city mandates now have laws demanding that both must reduce carbon emissions, I had to learn how to do so. Two blogs from exactly a year ago (May 25 and June 1, 2021) explored the procedure. The June 1 blog deals specifically with ConEd. As Wikipedia mentions, ConEd works through subsidiaries. As in that earlier blog, the main two subsidiaries that I will explore here are CECONY, which is regulated for its fuel mix by NYISO, and ConEd’s own subsidiary that is not regulated in terms of its fuel mix. Missing more detailed data, I am assuming that a smaller subsidiary, labeled O & R, which is focused on electricity delivery outside NYC, is included in the CECONY accounting. The fuel composition posted below is from the June 2021 blog:

CECONY [Consolidated Edison Company of New York] Fuel Mix Allocated by NYISO

  • Natural Gas 51.1%
  • Nuclear 37.5%
  • Hydro 7.4%
  • Other 1.3%
  • Oil 1.1%
  • Wind 1%
  • Coal 0.3%
  • Solar 0.2%

Con Edison Owned Generating Capacity (Total 3,463 MW)

  • Solar 64.1%
  • Natural Gas 21.4%
  • Wind 12%
  • Petroleum 2.5%

In its report, the ConEd-owned and generated subsidiary is called Clean Energy Business.

From Figure 1, I learned (not knowing previously which subsidiaries were considered), that the 2020 carbon emissions from ConEd were 6.3 million metric tons and the per capita emissions were 1.6 million metric tons. From that, I  learned that the number of customers that were taken into account reaches nearly 4 million:

6,300,000/1.6 = 3,937,500

ConEd’s own website says they have 3.4 million customers.

ConEd is not only an electricity supplier; it delivers other services such as gas supply and grid services. I don’t have enough data to fine-tune the analysis.

The total electricity production for full-service customers and the total revenue are available in the annual 2021 report.

The company’s total 2021 revenue was listed as $13.7 billion, with a total energy of 20.7 billion kWh from CECONY and 7.52 million kWh from the Clean Energy Business. These numbers indicate that the actual energy delivered by the Clean Energy Business can be neglected compared to the CECONY delivery. So now we are in the position to calculate the carbon footprint of ConEd through the IPAT and compare it with the one calculated in Figure 1.

In the June 1, 2021 blog, we directly calculated the carbon intensity of ConEd based on their fuel composition. The result was that for every kWh delivered we must use 8000Btu of primary energy. If we neglect the contributions of the 1.1% oil and the 0.3% coal, putting all these numbers into the IPAT formula gives us 20 billion kWh. In this configuration, the only fossil fuel that ConEd uses to produce its electricity is natural gas, which accounts for 8×1013Btu of primary energy. If 1Btu of natural gas heat produces 0.063g of carbon dioxide, we can calculate the total carbon footprint of ConEd at 5 million tons of carbon dioxide, which roughly agrees with the value in Figure 1 (6.3 million tons).

For people who hate numbers, this is very complicated. To add to the complication, the reports that contain all this data are far from accessible. They are directed at investors, not students or readers who feel a need to follow the progress of the energy transition that we are forced to go through. As I mentioned in the last blog, ESG was designed to be a step toward allowing investors to consider social benefits as part of their investment considerations. In future blogs, I will try to correlate the IPAT perspective with ESG calculations.

However, there should be little argument about the importance of such analysis.  A few days ago, the G7 (United States, Canada, France, Germany, Italy, Japan, and the United Kingdom, as well as the European Union) made a decision to “fully” decarbonize electricity by 2035, only allowing for fossil fuels based on the extent of available carbon capture

The G7, which represents the world’s biggest advanced economies, agreed on Friday to achieve “predominantly decarbonized” electricity sectors by 2035, a goal that experts say is a major step in helping the world avert catastrophic climate change.

G7 climate, energy and environment ministers made the new pledge in a 40-page communiqué at the conclusion of their meeting in Berlin, in which they also committed to an eventual phase-out of coal power generation, but gave no deadline for when they would do so.

The decision on decarbonization does, however, leave countries open to continue using fossil fuels if their greenhouse gases are “abated,” which means they emit less when burned, or “captured.” Current technology cannot capture 100% of greenhouse gases emitted by the burning of fossil fuels.

A fully decarbonized electric sector is the necessary condition for a fully decarbonized economy because, as I have mentioned often, almost all of our energy use comes from our use of convenient electricity.

I neglected the energy contribution of the Clean Energy Business of ConEd in the total energy analysis above because it is much smaller than that of CECONY. However, ConEd lists its capacity as 3,463 MW (million watts). This totals to 3.5GW (billion watts). If this capacity is available for energy delivery over a full year, it amounts to 30 billion kWh (3.5×109x360x24 = 3×1010kWh). This amount of energy is 50% higher than CECONY is delivering now. True, the Clean Energy Business sources of energy include 21.4% gas and 2.5% petroleum. However, electricity delivery has to include safety considerations (look at Europe in light of the Russian invasion) and price. ConEd has 13 years to eliminate these sources to serve as a working example for the rest of the utilities.

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Incorporating Carbon Capture into the IPAT Identity

Figure 1An artist’s depiction of carbon capture (Credit: Walter Newton)

Last week, I opened the discussion about what it takes for oil companies to change their business model and fulfill the commitments that some of them are making for “net-zero” carbon emissions toward mid-century. I opened that blog by citing a commonly shared opinion that instead of focusing on new, unproven, technology for carbon capture and storage (CCS), oil companies who wish to reach this goal should simply stop drilling.

Most of the blog was dedicated to the IPCC-supported argument that toward mid-century, most of our energy should be shifted to zero-carbon sources. I mentioned that fossil fuels should have some room in the mix providing that their use is accompanied by CCS to capture the carbon dioxide that they generate. I reopened the IPAT identity as the framework for the discussion of our future energy needs. As I showed in last week’s blog, all that the IPAT identity is doing is isolating some of the main driving forces behind the emission of carbon dioxide through our energy use. Equation 1 summarizes this identity:

The problem is that Equation 1 doesn’t include an entry for CCS.

In an earlier blog (June 29, 2016), I mentioned that the IPAT identity was formulated by Commoner, Ehrlich, and Holden in 1972 to apply to most environmental impacts—not only to the greenhouse gases that result from energy use. Since its original formulation, the literature is rich with attempts to analyze and expand this identity and to test it against actual environmental threats. Two of the reports that I find most useful are from the Proceedings of the National Academy of Sciences. One is by Waggoner et al. and the other is by Dietz et al.

IPAT is an identity, meaning that the right-hand side is the same as the left-hand side; the denominators on the right-hand side cancel all the numerators there except the one specified on the left-hand side of Equation 1. This is obviously only true if we are consistent with the units throughout. In addition, for this equation to remain an identity, all the parameters must apply to the same entity at the same time (usually a certain year). The only indicator in IPAT that suggests an entity is the one that we term Affluence, marked in Equation 1 as GDP/Capita. The term GDP is specific to a country, but equivalent terms can be used when the identity is applied to different organizations.

In Equation 2, I have added to the Technology term, dividing the carbon dioxide captured (net) by the total carbon dioxide emitted (gross). All the conditions that apply to Equation 1 apply to Equation 2 as well. If we take the time interval to be any standard such as a year, natural carbon capture (photosynthesis) will have to be evaluated since the balance between photosynthesis and respiration varies with plant growth and the age of growth. Only anthropogenic contributions will be included. Tree cutting and burning will have to be counted twice (emissions from burning and prevention of further carbon capture). While interest in CCS is now expanding well beyond oil companies, the oil companies remain one of the biggest beneficiaries. Effective CCS will allow them to be “net-zero” and still make money by selling fossil fuels. However, they would rather that the government (all of us) carry most of the risk and expenses of the new capturing technologies. Bloomberg gives a summary of where we stand and the author appeals to governments to do their part:

Fitfully, fretfully, the world is beginning to decarbonize. Fossil-fuel demand is likely to peak in the next few years. Solar and wind energy are growing ever cheaper. Related technology, such as battery storage, has improved dramatically. In its most recent report, the Intergovernmental Panel on Climate Change cited “signs of progress” — by its standards, an expression of effusive optimism.

Unfortunately, this progress won’t be enough on its own. Averting the worst-case climate scenarios will likely require not just reducing emissions but also removing huge quantities of carbon from the atmosphere — some 21.5 billion tons of it by 2050, according to BloombergNEF. As things stand, carbon removal is costly, inefficient and difficult to scale. Yet promising new technologies provide reason for optimism. Governments can do more to help them succeed.

New technologies and new ideas are playing an important role:

In this case, the Hawai’i-based company Heimdal is taking advantage of the 50th state’s desalination plants on the Big Island. Once seawater is pumped up into the Heimdal V1, it uses electrolysis to separate hydrogen and oxygen from the carbon-based acids that are warming the sea.

The purified seawater is returned to the ocean sans carbon, and the separated acids are sold as hydrochloric acid—a common manufacturing and laboratory compound that’s produced in factories to satisfy a 20-million-tons-per-year world market.

“When the excess acidity is removed from the ocean, it shifts how CO2 exists back to how it was pre-Industrial Revolution” …

The IPAT identity is obviously not the only way to quantify anthropogenic environmental damage. Broader measures such as ESG (Environmental, Social, and Governance) have now entered investors’ vocabularies. These are “non-financial factors investors use to measure an investment or company’s sustainability.”

Figure 2Some of the issues addressed by ESG (Source: Nerdwallet)

Many companies’ transparent rankings have an impact on the price of their stocks. I described some aspects of it in previous blogs (January 8, 2019, and March 10, 2020). This has gained prominence in recent days and the S&P 500 ESG even removed Tesla from its index earlier this month, which is especially important because one of the main selling points of Tesla is its environmental benefits. Below is a short description of the event:

S&P Dow Jones Indices says that Tesla Inc.’s score on environmental, social and governance standards has remained “fairly stable” over the past year, but that it has slipped down the ranks against improving global peers.

The index provider also cited concerns related to working conditions and the firm’s handling of an investigation into deaths and injuries linked to its driver-assistance systems. A lack of low-carbon strategy and codes of business conduct also counted against Elon Musk’s company, it said.

There is now some academic literature about connections between IPAT and ESG. I will return to this issue in future blogs, as well as discuss how we deal with the population term in the IPAT identity when trying to analyze something other than global and national performances.

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The Role of Oil Companies in the Energy Transition

In last week’s blog, I included a citation from Nicholas Kusnetz’s article, “What Does Net Zero Emissions Mean for Big Oil?” which pointed out:

Most glaring is that none of the companies has committed to cut its oil and gas output over the next decade, the simplest and most reliable way—one might say the only way—to cut emissions, and a must if the world is to avoid dangerous warming … They rely instead either partly or largely on capturing or canceling out these emissions with unproven technologies and reforestation at a questionable scale.

Is Mr. Kusnetz right? The underlying question here is a remnant of an ongoing dilemma in environmental movements: can we find less damaging alternatives to our current modes of working or should we just go “back to the cave”? This dilemma is described in the IPAT identity (See June 29, 2016 blog) in the form of

Impact = Population x Affluence x Technology

For climate change triggered by fossil fuels, the impact is the yearly emissions of carbon dioxide, the affluence is the GDP/capita, and the technology is equal to the product of three terms: energy intensity of GDP (energy/GDP), fossil intensity of energy (fossil/energy), and carbon intensity of fossil (carbon/fossil).

According to Mr. Kusnetz, the oil companies’ commitments to net-zero carbon emissions resemble the reasoning of putting bioenergy (burning of shrubs and wood) into the sustainable category: they produce carbon dioxide when we burn them, but they sequester carbon dioxide when they grow—usually within a short time (yearly for annuals and roughly the length of a human generation for many of the trees). For plants, this is the only life cycle. In this and subsequent blogs, we will try to explore if this is really the only “net-zero” life cycle available for the oil companies.

When we follow the practice of oil companies selling oil field properties, it is easy to find horror stories that we certainly want to avoid.

Mr. Kuznetz pooh-poohs carbon capture and storage (CCS) and advocates for oil companies to just stop drilling for new fossils.

Before the signing of the Paris agreement toward the end of 2015, the IPCC issued a report on the scenarios that could allow the world to limit climate change to 1.5oC warming by mid-century. Figure 1, taken from that IPCC report, summarizes the global energy transition that is required by pathways (top figure/panel a) and fuel type (bottom figure/panel b).

Primary energy supply for the four illustrative pathway archetypes plus the IEA’s Faster Transition Scenario (OECD/IEA and IRENA, 2017) 371 (panel a), and their relative location in the ranges for pathways limiting warming to 1.5°C with no or limited overshoot (panel b).

Figure 1 – Electricity generation by fuel type for a 1.5oC transition.

The IPCC explains that in the bottom box plot, the dots inside the quantities are different scenarios to achieve the 1.5oC. Panel a of Figure 1 demonstrates that, without CCS, there is no room for any fossil fuel usage. With CCS, there is room for fossil fuels, albeit in small amounts compared to sustainable sources.

Even so, the use of fossil fuels will need to continue—to a limited degree—for now. For security considerations, in emergencies such as the one now affecting Europe (a result of the Russian invasion of Ukraine), they offer some of the best flexibility. In regulating the amounts of fossil fuels, their price can be connected to the sequestration of emissions.

The state of the US efforts, both government and oil companies, to develop CCS is summarized on the Oil Price site.

As I mentioned in last week’s blog, there’s a recent 3-part PBS Frontline television series that looks at the history of the federal legislation tracking records of dealing with climate change. According to Frontline, 2008-2010 were the “golden years” of federal attempts to confront climate change. The House passed a Cap-and-Trade policy, and the Senate was ready to follow. Even oil companies started a series of discussions on how to adapt while remaining productive and profitable. This progress lasted until the Koch brothers found a “better” way: they succeeded in converting the discussion by emphasizing the “uncertainty” of the science and changing the political landscape to freeze federal legislative action. This pushback against the needed energy transition was amplified with the election of President Trump and his MAGA shift. We lost an important decade in the fight.

It seems that now, as many countries urgently confront their dependence on Russia for their energy needs, we have an opportunity to revisit the issue on a global scale.

However, the announcement of many of the oil companies to convert themselves to “net-zero” companies is justifiably meeting with serious skepticism. Figure 2 shows the main reason: they may be talking big but their capital investments in the needed technologies for the development of the alternative energy sources shown in Figure 1, are minuscule. According to Wikipedia, capex (capital expenditure) is “the money an organization or corporate entity spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land.” These companies’ total capital expenditures are in the billions of dollars. In 2018, for instance, BP spent over $25bn for capex; according to Figure 2, within the 3rd quarter, they only put 2.3% of that budget toward low-carbon technology. Interestingly, BP spent the most of all of the companies listed here, even though Chevron, Shell, and ExxonMobil are much larger.

Figure 2 – Total investment in renewables by oil companies, Q3 2018 (Source: S&P Global)

President Trump was a great supporter of one avenue toward capturing carbon dioxide: planting more trees. The “trillion trees” movement gained a serious global following, seemingly an easy way to save the planet, as the following paragraph summarizes:

The idea that trees can help limit global warming is enshrined in the 2015 Paris climate agreement, with most countries including forest expansion as part of their plans to reduce emissions. Reports and studies from the Intergovernmental Panel on Climate Change estimate that nature-based solutions, including healthy forests, could provide up to one-third of the emissions reductions required by 2030 to meet the Paris Agreement targets.

However, trees require land and water, and they are prone to fire, as we observe now on an almost daily basis. They will never be able to compensate for all the carbon dioxide we emit. CCS can be viewed as a useful technological alternative but the technology itself still needs investment and work.

Next week’s blog will continue to explore the IPAT identity for other avenues that oil companies can take to both fulfill their net-zero carbon commitments and remain viable businesses.

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Confusions: From Ukraine to Oil Companies

Last week’s blog focused on globalization. Per definition, we are part of the global picture and from this perspective, we have a direct interest in whatever global conflict emerges. Two of our present global conflicts can serve as guides: the Russian invasion of Ukraine and climate change. Almost all of us are directly involved in both, albeit in different ways.

Russia and Ukraine are obviously the most directly involved in the war. Their soldiers are killing and wounding each other, and the Russian army is directly involved in the slaughter of Ukrainian citizens and destruction of the country. Yesterday, Russia celebrated Russian Victory Day, following the signing of the German Instrument of Surrender late in the evening on May 8, 1945 (after midnight). Almost everybody expected an announcement focused on the war in Ukraine. President Putin defended the Russian activity but didn’t offer any guidance. How believable an announcement would have been depends on the perspective of the listeners. Misinformation during wars is common. It’s one of the most important tools that armies use. Recently, the New York Times tried to follow the different information on common events that Russians, the Ukrainians, and the rest of the world follow on the state of this war. Below are two short paragraphs from that piece:

To Western audiences, Russia’s invasion of Ukraine has unfolded as a series of brutal attacks punctuated by strategic blunders. But on Russian television, those same events were spun as positive developments, an interpretation aided by a rapid jumble of opinion and falsehoods.

Much of Russian news media is tightly controlled by the Kremlin, with state-run television working as a mouthpiece for the government. Critical reporting about the war has been criminalized.

The rest of us follow much more competitive sources of information.

Significant parts of the world (many of which I included in the label “the West” in previous blogs) strongly support Ukraine in this conflict. However, most refuse to get directly involved in a war with Russia because they fear uncontrolled escalation and possible existential consequences. Instead, they have decided to support Ukraine through economic sanctions on Russia and military equipment delivery to Ukraine. However, our knowledge of the impacts of these sanctions on Russia depends to a large degree on the information coming from Russia, making it difficult to judge the truth. The Economist believes that Russia is doing well:

In early April we pointed to preliminary evidence that the Russian economy was defying predictions of collapse, even as Western countries introduced unprecedented sanctions. Recent data further support this view. Helped along by capital controls and high interest rates, the ruble is now as valuable as it was before Russia’s invasion of Ukraine in late February (see top chart). Russia appears to be keeping up with payments of its foreign-currency bonds.

Al Jazeera has a different perspective:

The ongoing geo-economic conflict between Russia and the West is a complicated one, surrounded by nearly as much disinformation and misinformation as the war in Ukraine itself. As such, both parties are confidently claiming to have the upper hand. But looking at the evidence at hand objectively, it becomes clear that the Kremlin is in retreat.

As to climate change, all of us are directly involved and our future generations are going to be even more so. It has long been understood by many that one cannot solve the climate change threat without addressing the issue of misinformation that drives deniers (see my “Three Shades of Deniers” blog from September 3, 2012). Science News published an article about this last summer:

Over the last four decades, a highly organized, well-funded campaign powered by the fossil fuel industry has sought to discredit the science that links global climate change to human emissions of carbon dioxide and other greenhouse gases. These disinformation efforts have sown confusion over data, questioned the integrity of climate scientists and denied the scientific consensus on the role of humans.

Such disinformation efforts are outlined in internal documents from fossil fuel giants such as Shell and Exxon. As early as the 1980s, oil companies knew that burning fossil fuels was altering the climate, according to industry documents reviewed at a 2019 U.S. House of Representatives Committee on Oversight and Reform hearing. Yet these companies, aided by some scientists, set out to mislead the public, deny well-established science and forestall efforts to regulate emissions.

A recent PBS short series emphasizes the connection focusing on the role that oil companies—specifically the American Petroleum Institute, Exxon-Mobile, and the Koch brothers—have played in emphasizing uncertainty (“scientists don’t agree”) so as to negate any attempts at policy changes.

Recently, some oil companies have claimed a change of heart and made promises of net-zero emissions but it’s always good to look at the details:

What Does Net Zero Emissions Mean for Big Oil? Not What You’d Think

BP, Shell, and other companies say they’ll address climate change. But their pledges fall far short of what’s needed to meet global climate goals. By Nicholas Kusnetz

Bernard Looney, BP’s new chief executive, stood behind the podium in a London hotel in February and announced that the company would dramatically shift the way it did business.

Framed by a multi-hued green background, Looney described a transformation of BP’s structure and operations that would steer the oil giant to spend more on clean energy and less on fossil fuels. By 2050, he said, BP would achieve net-zero greenhouse gas emissions, joining a growing list of governments and corporations committed to tackling climate change.

Looney’s speech launched a rapid-fire game of one-upmanship among Europe’s largest oil and gas companies. Within three months, Total and Royal Dutch Shell had announced their own plans to reach net-zero emissions by 2050, building on previous pledges to increase spending on low-carbon energy sources like wind, solar and biofuels.

Two of their American counterparts, ExxonMobil and Chevron, have also announced goals to reduce climate-warming pollution, although much more modest ones.

But many of the pledges are misleading, and misrepresent how much the oil giants are changing. Most glaring is that none of the companies has committed to cut its oil and gas output over the next decade, the simplest and most reliable way—one might say the only way—to cut emissions, and a must if the world is to avoid dangerous warming. In fact, the stated net-zero “ambitions,” as the companies generally call them, do not require that greenhouse gas emissions fall to zero at all. They rely instead either partly or largely on capturing or canceling out these emissions with unproven technologies and reforestation at a questionable scale.

Meanwhile, through industry associations the companies have continued to lobby against policies that would hasten a shift away from oil and gas: All the companies, for example, retain membership in the American Petroleum Institute (API), which has lobbied against incentives for electric vehicles, supported the Trump administration’s rollback of methane regulations and backed expanded drilling in the Arctic.

In other words, “net-zero” does not actually mean cutting down on fossil fuel emissions. It’s based on finding emission sinks to balance the damage.

We can tell from their stock prices that—overall, oil companies aren’t doing well with their present policies. Figure 1 shows the performance of a few large oil companies over the last 5 years, compared to the performance of the S&P 500. Maybe these numbers will prompt change in the form of an energy transition, even if just for a better bottom line.

Figure 1Stock performance over major oil companies compared to S&P 500

Last year, before the Russian-Ukrainian war changed power balances in oil, the Institute for Energy Economics and Financial Analysis (IEEFA.Org) warned about the continuing business as usual for oil companies:

Rising prices may give new life to outdated strategies. Each oil uptick has prompted ExxonMobil and like-minded companies to double down on the failed strategy of heavy capital spending on new oil and gas supplies. But until prices rise dramatically and persistently, the oil industry can’t find a sustainable business model in simply depleting and replacing reserves. In 2018, global oil prices stood at $71 per barrel, almost $30 more than in 2020, yet the energy sector still finished in last place in the S&P 500.

Rising prices could lull investors into complacency. The oil and gas industry’s financial woes have galvanized investors into pressing for changes in oil industry governance and strategy. Some companies have responded by diversifying their business models—shifts that were healthy for the companies and rewarded by shareholders. But rising prices could derail this investor pressure, discouraging healthy scrutiny, weakening transparency, and dissipating the momentum of the energy transition.

Unsurprisingly, the Russian invasion of Ukraine and the coming decisions by the European Union to accelerate their “independence” from Russian oil have caused a sharp increase in the international oil price. This has resulted in some improvements in the performance (increase in profits) of the oil companies, as shown in Figure 2.

Figure 2 – Recent ExxonMobil stock price

Next week, I will discuss where I see the oil companies’ net-zero commitments going.

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