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Information about energysecurity
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Published on February 6, 2008

Author: Donato

Source: authorstream.com

Is it Worthwhile to Fight for Energy Security?:  Is it Worthwhile to Fight for Energy Security? Clinton Andrews Rutgers University Energy Security:  Energy Security Definition of Energy Security Imperfect Markets for Oil & Electricity Rationales for Governmental Intervention The Special Role of Energy Carriers Energy Security as a Policy Driver Focusing on Energy Security:  Focusing on Energy Security Yergin: “The objective of energy security is to assure adequate, reliable supplies of energy at reasonable prices and in ways that do not jeopardize major national values and objectives.” Energy is a modern necessity. Energy security is a polarizing issue in U.S. politics. U.S. Energy Use, 1635-2000 (Quadrillion Btu):  U.S. Energy Use, 1635-2000 (Quadrillion Btu) Energy Security:  Energy Security Definition of Energy Security Imperfect Markets for Oil & Electricity Rationales for Governmental Intervention The Special Role of Energy Carriers Energy Security as a Policy Driver Petroleum:  Petroleum Petroleum market suffers from dramatic and persistent price volatility. Unresponsive demand, lumpy supply, difficult to balance them. Both consumers and producers seek external interventions that improve price stability. 5 Price Stabilization Regimes:  5 Price Stabilization Regimes Standard Oil monopoly (< 1911) Texas Railroad Commission’s internationally influential pro-rationing of production (>1930s) Seven Sisters cartel (Exxon, Shell, British Petroleum, Mobil, Chevron, Texaco, and Gulf) (1920s - 1970s) OPEC (1960 - present) effective only briefly during the 1970s-80s Saudi-American regime (1970s - present) Political Involvement in Oil:  Political Involvement in Oil Political interest in this economic commodity is not merely cynical—it is also prudent Interventions for market transparency, stability WW II: “oil not only determined capabilities, but also defined strategic objectives” Cold War onwards: ballistic missiles and nuclear weapons diminished oil’s military importance Balance of trade, interdependence Security not the only Rationale :  Security not the only Rationale <WW I, Pursuing profits, Standard Oil persuaded U.S. government to intervene in the internal affairs of several Middle Eastern oil states. 1917: UK redrew the map of the Middle East in part for administrative convenience. 1950s-60s: France and USA intervened in oil-rich Viet Nam mostly to slow the spread of communism. 1960s: oilfields nationalized to return control to local decision makers. 1973: Western responses to the Arab oil embargo were also a gesture of solidarity with Israel. 1979: Blockade of Iran in part reflected western disapproval of hostage taking. 1991: Gulf war a direct response to the invasion of one sovereign nation by another. 2003: Iraq war also about deposing a dictator who had threatened to use weapons of mass destruction. U.S. Petroleum Balance 1949-2000:  U.S. Petroleum Balance 1949-2000 Petroleum Balance of Trade 2001:  Petroleum Balance of Trade 2001 Electricity:  Electricity Supply is capital-intensive, storage is minimal, transmission and distribution are intrusive, price signals have been weak Industry sought and received regulated public utility status by 1930s Security = adequate & reliable supply Security also = protect physical & informational elements Energy Security:  Energy Security Definition of Energy Security Imperfect Markets for Oil & Electricity Rationales for Governmental Intervention The Special Role of Energy Carriers Energy Security as a Policy Driver U.S Energy Policy Rationales I:  U.S Energy Policy Rationales I August 30, 1954. President Eisenhower signs the Atomic Energy Act of 1954, opening the way for development of a civilian nuclear power program. July 6, 1962. President Kennedy condones a test in Sedan, Nevada as part of the Plowshare program seeking to develop peaceful uses for nuclear explosives. January 1, 1969. President Johnson signs the National Environmental Policy Act. U.S. Energy Policy Rationales II:  U.S. Energy Policy Rationales II November 7, 1973. President Nixon launches Project Independence, with the goal of achieving energy self-sufficiency by 1980. December 22, 1975. President Ford signs the Energy Policy and Conservation Act, extending oil price controls into 1979, mandating automobile fuel economy standards, and authorizing creation of a strategic petroleum reserve. U.S. Energy Policy Rationales III:  U.S. Energy Policy Rationales III April 20, 1977. President Carter unveils the first National Energy Plan. April 5, 1979. President Carter announces gradual decontrol of oil prices and proposes a windfall profits tax. Subsequently announces a program to increase the nation's use of solar energy, establishes temperature restrictions in nonresidential buildings, proposes an $88 billion decade-long effort to enhance production of synthetic fuels from coal and shale oil reserves. U.S. Energy Policy Rationales IV:  U.S. Energy Policy Rationales IV July 17, 1981. President Reagan sets free market emphasis to reduce government regulations and subsidies, decontrol of natural gas, research, and nuclear licensing reform. April 23, 1985. Beginning Reagan’s second term, he calls for “energy strength” built upon existing “stability and security.” March 17, 1987. President Reagan's Energy Security Report outlines Nation's increasing dependence on foreign oil. U.S. Energy Policy Rationales V:  U.S. Energy Policy Rationales V December 21, 1990. President George H.W. Bush develops strategy and legislation on federal appliance efficiency standards, plus electric and gas utility deregulation. April 1994. President Clinton’s plan focuses on industrial competitiveness, energy resources, national security, environmental quality, and innovation. Acts administratively to continue electricity deregulation, support conservation & renewables. U.S. Energy Policy Rationales VI:  U.S. Energy Policy Rationales VI May 17, 2001. President George W. Bush releases controversial “Cheney” plan, which emphasizes supply-side strategies. October 1, 2002. Revision to DOE’s mission following September 11, 2001: “we share a common overarching mission: national security.” January 28, 2003. President Bush says: “With a new national commitment…the first car driven by a child born today could be powered by hydrogen, and pollution-free.” U.S. Energy Policy Objectives:  U.S. Energy Policy Objectives Security improvements (reliability of supply, self-sufficiency, non-proliferation) Environmental improvements (climate change, air pollution, water pollution, land damage) Economic improvements (reasonable prices, less price volatility, job growth) Classical Rationales for Governmental Action:  Classical Rationales for Governmental Action “above all, do no harm” Improve allocational efficiency (correct market failures like pollution) Improve distributional equity (correct gross unfairnesses like freezeouts) Improve macro stability (correct structural imbalances like trade deficits) Enforce national norms, pursue national objectives, cater to special interests? Energy Security:  Energy Security Definition of Energy Security Imperfect Markets for Oil & Electricity Rationales for Governmental Intervention The Special Role of Energy Carriers Energy Security as a Policy Driver What are energy carriers?:  What are energy carriers? Electricity made from coal, methane, hydro, nuclear, solar, wind…. Gases (Hydrogen, Methane) made from methane, coal, oil, biofuels, electricity… Liquids (Biofuels, Gasoline) made from biostocks, oil… Full System Efficiencies of Alternative Types of Cars:  Full System Efficiencies of Alternative Types of Cars Current technology car with gasoline fueled internal combustion engine Fuel cell car operated on gaseous hydrogen from methane steam reformer Fuel cell car operated on gaseous hydrogen from electrolysis via wind farm Electric car recharged by wind farm Current technology car with gasoline fueled internal combustion engine :  Current technology car with gasoline fueled internal combustion engine 12% losses between oil well and filling station: factor 0.88 38% efficiency of engine: factor 0.38 20% losses in the automatic transmission between engine and wheels: factor 0.80 Full system efficiency = 0.88 x 0.38 x 0.80 = 27% Fuel cell car operated on gaseous hydrogen from methane steam reformer:  Fuel cell car operated on gaseous hydrogen from methane steam reformer 12% losses between gas well and reformer: factor 0.88 30% losses in reformer from methane to hydrogen: factor 0.70 10% losses for compression of hydrogen: factor 0.90 10% losses for distribution of gaseous hydrogen: factor 0.90 3% losses for hydrogen transfer: factor 0.97 50% for conversion to electricity in fuel cells: factor 0.50 10% parasitic losses for the hydrogen fuel cell system: factor 0.90 10% electric losses in the drive train between battery and wheels: factor 0.90 Full system efficiency = 0.88 x 0.70 x 0.90 x 0.90 x 0.97 x 0.50 x 0.90 x 0.90 = 20% Fuel cell car operated on gaseous hydrogen from electrolysis via wind farm:  Fuel cell car operated on gaseous hydrogen from electrolysis via wind farm 10% losses between power plant and electrolyzer: factor 0.90 30% losses for water make-up and electrolysis: factor 0.70 10% losses for compression of hydrogen: factor 0.90 10% losses for distribution of gaseous hydrogen: factor 0.90 3% losses for hydrogen transfer: factor 0.97 50% for conversion to electricity in fuel cells: factor 0.50 10% parasitic losses for the hydrogen fuel cell system: factor 0.90 10% electric losses in the drive train between battery and wheels: factor 0.90 Full system efficiency 0.90 x 0.70 x 0.90 x 0.90 x 0.97 x 0.50 x 0.90 x 0.90 = 20% Electric car recharged by wind farm:  Electric car recharged by wind farm 10% losses between power plant and homes: factor 0.90 8% losses in small home-based AC/DC battery chargers: factor 0.92 20% losses for battery charging and discharging: factor 0.80 10% losses in the drive train between battery and wheels: factor 0.90 10% bonus for regenerative braking: factor 1.10 Full system efficiency = 0.90 x 0.92 x 0.80 x 0.90 x 1.10 = 66% Full System Efficiencies of Alternative Types of Cars:  Full System Efficiencies of Alternative Types of Cars Current technology car with gasoline fueled internal combustion engine = 27% Fuel cell car operated on gaseous hydrogen from methane steam reformer = 20% Fuel cell car operated on gaseous hydrogen from electrolysis via wind farm = 20% Electric car recharged by wind farm = 66% But energy carriers improve economic efficiency Valuing H2 Enerrgy Carrier:  Valuing H2 Enerrgy Carrier Hydrogen costs must drop >50% to become competitive Cost of avoided oil war? Cost of Iraq war is $100 - $2000 billion, say $200 billion Suppose 50% of war rationale was energy security Suppose one war per decade Decadal cost of U.S. Persian Gulf oil imports is $210 billion So 50% markup on Persian Gulf oil needed to internalize security costs Add in avoided health problems from air pollution, say $30 billion per decade, adding about 3% to national oil bill Suddenly hydrogen sounds more competitive! Increased Use of Energy Carriers -- Fit with U.S. Policy Objectives:  Increased Use of Energy Carriers -- Fit with U.S. Policy Objectives Increased Use of Energy Carriers -- Fit with U.S. Policy Objectives:  Increased Use of Energy Carriers -- Fit with U.S. Policy Objectives Increased Use of Energy Sources -- Fit with U.S. Policy Objectives:  Increased Use of Energy Sources -- Fit with U.S. Policy Objectives Energy Security:  Energy Security Definition of Energy Security Imperfect Markets for Oil & Electricity Rationales for Governmental Intervention The Special Role of Energy Carriers Energy Security as a Policy Driver So is it worthwhile to fight for energy security?:  So is it worthwhile to fight for energy security? Energy security is worth something but not everything. Back to Yergin: “The objective of energy security is to assure adequate, reliable supplies of energy at reasonable prices and in ways that do not jeopardize major national values and objectives.” In conclusion….:  In conclusion…. Security rationale is valid but not very helpful in guiding policy makers to specific choices. More important are degree of trust in market mechanisms, preferences regarding painful tradeoffs between environmental protection and diversity of energy supplies, and desire for concentrated control over the energy economy. Needed are energy policies that explicitly balance security, economic, and environmental objectives. For more information:  For more information http://policy.rutgers.edu/andrews References:  References U.S. Department of Energy, Energy Information Administration, Energy in the United States: 1635 – 2000. Downloaded May 22, 2004 from http://www.eia.doe.gov/emeu/aer/eh/frame.html. D. Yergin, “Energy Security in the 1990s,” Foreign Affairs, vol. 67, no. 1, Fall 1988. K. Gillespie and C.M. Henry, Introduction, Pp. 1-17 in K. Gillespie and C.M. Henry, eds., Oil in the New World Order. Gainesville, FL: University Press of Florida, 1995. D.A. Yergin, The Prize: The Epic Quest for Oil, Money and Power. New York: Simon and Schuster, 1991. U.S. Department of Energy, Energy Information Administration, Energy in the United States: 1635 - 2000, Washington, DC, October 2002, http://www.eia.doe.gov/emeu/aer/eh/frame.html. U.S. Department of Energy, Energy Information Administration, Country Analysis Brief: United States, Washington, DC, April 2004, http://www.eia.doe.gov/emeu/cabs/usa.html. U.S. Department of Energy, Energy Information Administration, Monthly Energy Review, Table 1.5: Merchandise Trade Value, Washington, DC, June 2004, http://www.eia.doe.gov/emeu/international/petroleu.html#IntlTrade. U.S. Department of Energy, Energy Information Administration, Country Analysis Brief: China, Washington, DC, June 2003, http://www.eia.doe.gov/emeu/cabs/china.html. U.S. Department of Energy, Energy Information Administration, International Energy Annual 2001, Washington, DC, April 2004. U.S. Department of State, Background Notes for Venezuela, Norway, Iran, Saudi Arabia, Nigeria, Vietnam, 2004 http://www.state.gov/r/pa/ei/bgn/ Natural Resources Canada, Energy Indicators for Sustainable Development, Indicator 1.3 Value of Energy Exports, 2004 http://www2.nrcan.gc.ca/es/es/sdi/English/ National Statistics, Canada, General Summary of Trade: Trade in Goods, 2004 www.statistics.gov.uk/StatBase D. O’Brien, “Mightier than the Sword,” Harvard International Review, vol. 19, no.. 3, Summer 1997. U.S. Department of Energy, Energy Information Administration, Monthly Energy Review, Washington, DC, April 2004. K.S. Deffeyes, Hubbert’s Peak: The Impending World Oil Shortage. Princeton, NJ: Princeton University Press, 2001. H. Amirahmadi, “World Oil and Geopolitics to the Year 2010,” Journal of Energy and Development, vol. 21, no. 1, 1996. H. Amirahmadi, personal communication on May 4, 2004. L.S. Hyman, America’s Electric Utilities: Past, Present and Future, 4th ed. Arlington, VA: Public Utilities Reports, 1992. R.F. Hirsh, Technology and Transformation in the American Electric Utility Industry. Cambridge: Cambridge University Press, 1989. T.J. Brennan, K.L. Palmer, R.J. Kopp, A.J. Krupnick, V. Stagliano and D. Burtraw, A Shock to the System: Restructuring America’s Electricity Industry. Washington, DC: Resources for the Future,1996. U.S. Department of Energy, Energy Information Administration, Renewable Resources in the U.S. Electricity Supply, Washington, DC, February 1993, http://tonto.eia.doe.gov/FTPROOT/renewables/056192.pdf. U.S. Department of Energy, Energy Information Administration, Renewable Energy Annual 2002, Washington, DC, November 2003, http://www.eia.doe.gov/cneaf/solar.renewables/page/rea_data/rea_sum.html. R.L. Garwin and G. Charpak, Megawatts and Megatons: A Turning Point in the Nuclear Age. New York: Alfred A. Knopf, 2001. M.H. Cooper, “Energy Security: How Vulnerable is America’s Energy System?,” CQ Researcher, vol. 12, no. 4, February 2002. J. Bielecki, “Energy Security: Is the Wolf at the Door?,” Quarterly Review of Economics and Finance, vol. 42, pp. 235-250, 2002. H. Harvey, “America and the Global Energy Challenge,” Aspen Institute, June 2002. U.S. Department of Energy, Departmental History Website, downloaded on May 2, 2004 from http://ma.mbe.doe.gov/me70/history/1971-1980.htm. D.A. Yergin and J. Stanislaw, The Commanding Heights. New York: Simon and Scguster, 1998. M.A. Walls, “U.S. Energy and Environmental Policies: Problems of Federalism and Conflicting Goals,” Pp. 95 – 130 in H.H. Landsberg, ed., Making National Energy Policy. Washington, DC: Resources for the Future, 1993. P. Lemaitre, “Energy Policy: EU Must Take Charge of its Own Fate,” European Politics, Spring 2002. A.B. Lovins, Soft Energy Paths: Toward a Durable Peace. Cambridge, MA: Ballinger, 1977. A.B. Lovins and L.H. Lovins, Brittle Power: Energy Strategy for National Security. Andover, MA: Brick House Publishers, 1982. D.R. Bohi, “Searching for Consensus on Energy Security Policy,” Pp. 41 – 59 in H.H. Landsberg, ed., Making National Energy Policy. Washington, DC: Resources for the Future, 1993. M. Friedman, Capitalism and Freedom. Chicago: University of Chicago Press, 1962/1982. R.A. Musgrave, The Theory of Public Finance. New York: McGraw Hill, 1959. J.M. Keynes, General Theory of Employment, Interest, and Money. New York: Harcourt Brace, 1936. B.F. Skinner, Walden Two. New York: Macmillan, 1962. J.K. Galbraith, Economics and the Public Purpose. New York: Signet, 1973. C.E. Cochran, L.C. Mayer, T.R. Carr and N.J. Cayer, American Public Policy: An Introduction, 3rd ed. New York: St. Martin’s Press, 1990. J.M. Ogden, “Prospects for Building a Hydrogen Energy Infrastructure,” Annual Review of Energy and Environment, vol. 24, pp. 227-79, 1999. National Research Council, Committee on Alternatives and Strategies for Future Hydrogen Production and Use, The Hydrogen Economy: Opportunities, Costs, Barriers, and R&D Needs. Washington, DC: National Academies Press, 2004. U. Bossel, “The Hydrogen Illusion: Why Electrons Are a Better Energy Carrier,” working paper available from European Fuel Cell Forum, Morgenstrasse 2F, CH-5452 Oberrohrdorf, Switzerland, 2004a. Connors, S.R., and C.J. Andrews, “System-wide evaluation of efficiency improvements: Reducing local, regional, and global environmental impacts,” Pp. 775-788 in J. Tester, D. Wood and N. Ferrari, eds., Energy and the Environment in the 21st Century, Cambridge, MA, MIT Press, 1991. Andrews, C.J., and S.R. Connors, S.R., "Existing capacity - The key to reducing emissions," Energy Systems and Policy, 1992, 15: 211-235. Spotts, P.N. “Capping carbon,” Christian Science Monitor, December 14, 2000. R. Walker, “Keynote Address—Understanding the Challenge,” IEEE The Hydrogen Economy: Its Impact on the Future of Electricity Conference, Washington, DC, 19 April 2004, www.ieee.org/power/hydrogen. D.W. Keith and A.E. Farrell, “Rethinking Hydrogen Cars,” Science, vol. 301, 18 July 2003. M. Hiltzik, “Hydrogen Highway Plans Riding on Misconceptions,” Los Angeles Times, May 6, 2004. J.J. Romm, “The Hype About Hydrogen,” Issues in Science and Technology, Spring 2004. U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Hydrogen, Fuel Cells, and Infrastructure Technology Program, “National Hydrogen Energy Roadmap,” November 2002, available online at http://www.eere.energy.gov/hydrogenandfuelcells/pubs.html R.B. Shainker, “EPRI Technology Roadmap for the Hydrogen-Electric Economy,” IEEE The Hydrogen Economy: Its Impact on the Future of Electricity Conference, Washington, DC, 20 April 2004, www.ieee.org/power/hydrogen. American Physical Society, Panel on Public Affairs, The Hydrogen Initiative, Discussion Paper, Washington, DC, March 2004, downloaded May 21, 2004 from http://www.aps.org/public_affairs/index.cfm. C. Kaysen, S.E. Miller, M.B. Malin, W.D. Nordhaus and J.D. Steinbruner, War with Iraq: Costs, Consequences, and Alternatives, Cambridge, MA: American Academy of Arts and Sciences, 2002. N. Matsakis and E. Vlanton, Cost of War, June 2004, http://costofwar.com/. U.S. Department of Energy, Energy Information Administration, Annual Energy Review 2002, Washington, DC, 2003. New Jersey Department of Environmental Protection, Final Report of the New Jersey Comparative Risk Project, Trenton, NJ, 2003, http://www.state.nj.us/dep/dsr/njcrp/index.htm J. Rifkin, “The Hydrogen Economy: The Creation of the Worldwide Energy Web and the Redistribution of Power on earth,” IEEE The Hydrogen Economy: Its Impact on the Future of Electricity Conference, Washington, DC, 20 April 2004, www.ieee.org/power/hydrogen. M.A. Weiss, J.B. Heywood, E.M. Drake, A. Schaefer, and F.F. Au Yeung, On the Road in 2020: A Life Cycle Analysis of New Automobile Technologies, Energy Laboratory Report #MIT EL 00-003, Cambridge, MA: Massachusetts Institute of Technology, October 2000. M.A. Weiss, J.B. Heywood, A. Schaefer, and V.K. Natarajan, Comparative Assessment of Fuel Cell Cars, Laboratory for Energy and the Environment Report #MIT LFEE 2003-001 RP, Cambridge, MA: Massachusetts Institute of Technology, February 2003. U. Bossel, “Efficiency of Hydrogen Fuel Cell, Diesel-SOFC-Hybrid and Battery Electric Vehicles,” working paper available from European Fuel Cell Forum, Morgenstrasse 2F, CH-5452 Oberrohrdorf, Switzerland, 2004b.

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