Friday, January 29, 2010

Orinoco Oil Sands

While everyone is jumping up and down about the Athabasca Tar Sands, few people are making much fuss about the Orinoco Oil Sands in Venezuela. The estimates of how much oil could be recovered at today's prices and technologies is between 235 billion barrels to 513 billion barrels. This is significantly more than the Athabasca Tar Sands

At the moment there is about 600,000 barrels a day coming from this source and at a cost that is much lower than the cost of the Canadian tar sands. This about half of what is produced in Canada. I find that fact interesting because of the gap between Canadian per capita CO2 emissions and those in Venezuela. I think that the numbers for Venezuela are not correct because on a per capita basis the Canadian tar sands are only 55% larger than the Venezuelan oil sands.

The problem is that this oil source is in Venezuela and therefore under a government that is immune to local or global public opinion. Further complicating this will happen if the Chinese express an interest in getting oil from this source. Without a free press or a public that is allowed to speak out, it is very likely that we will see a huge environmental disaster happen in Venezuela as these oil sands are developed. Odds are we will not find out about this till long after it has happened.

Canada has serious first world environmental standards. Venezuela has the environmental standards of a dictatorship, which is to say there is nothing that will be enforced if they had anything on the books to start with.

Venezuela claims to have 35% protected areas, but these areas are logged and mined. Hugo Chavez should be the global poster child for environmental disaster.

Wednesday, January 27, 2010

Canada and the environment: A fresh start for a fresh decade by Preston Manning

This is an interesting opinion piece from Preston Manning about the environment from a conservative perspective. When I was young, he was one of the barbarians at the gate, but as time goes by there are few people in Canada as thoughtful and open minded as he is.

This is quote from the piece:

Grounds for more productive dialogue and action on the environment do exist among those Canadians who share the following convictions: (1) That it is a good idea to reduce the negative environmental consequences associated with the production and burning of hydrocarbons, regardless of whether you consider global warming to be one of or the most serious of those consequences; and (2) That the choices required to address our environmental challenges are not polarizing and divisive “either/or” choices – either regulatory action by government or market based initiatives by business – but unifying and consensus-building “both/and” choices.

His seven points on routes on the way forward are a good reflection of the different options towards solutions, but he is correct to say no one route will be the answer and that all of them need to be embraced

  1. Full Cost Accounting
  2. Science, Technology, and Innovation
  3. Market mechanisms
  4. Government Policy and Regulation.
  5. Demand-Side Transformation.
  6. New Eco-Partnerships.
  7. Political Leadership at the National Level
Having Preston Manning come forward on this issue in this manner will make the environment a more palatable issue for the right in Canada

Friday, January 22, 2010

Non-Storage Hydro aka Run of the River

Non storage hydro is also referred to as run of the river and micro hydro. It is the best term to describe how the power is generated. The main aspect of non storage hydro is not size of the project but the fact there is no way to store water for production of power. The use of the term microhydro is not an accurate term and neither is run of the river.

Storage hydro facilities work on the idea that a large reservoir can store water for year round consistent power production on a large scale. The spring run off will take the reservoir to full pool and then the level is drawn down over the year as needed. The reservoir acts as a system to store the power until it is needed.

Non storage hydro has no capacity to retain water for later dates, it has no capacity to store power. This means that at the moment non storage hydro can not by the sole source of electrical power as the amount of power that can be generated varies during the year. When looked at in isolation, a specific project could have periods when it can not produce energy and therefore can not be considered firm supply on an ongoing basis. This all changes once there are a large number of sites throughout different parts of BC.

Non-Storage Hydro is the Internet of Electrical Production
The internet functions well not because any one part of this global network can carry all of the traffic all of the time, but because it is a system with thousands and millions of different nodes and routes and thereby allowing the internet to function well even if parts of it are down. This is the analogy one needs to think of when considering non storage hydro in BC. The overall generating capacity of non storage hydro in BC evens out as the number of generating sites operating increases. With more generating sites the electrical system can rely on more non storage hydro as firm capacity over the whole year.

BC has an abundance of locations on the coast for non storage hydro and the consistent year round rain fall to ensure year round generation in the vast majority of locations. Spring run off can occur from late March through to mid July in different areas of the province. Some people are concerned that non storage hydro sites can only provide power for part of the year. The data does not back this up.

Non Storage Hydro has very low CO2 Emissions
Non storage hydro has a very low carbon footprint, the lowest of any of the electrical production options available. The ongoing production of power from the facility has a very low CO2 output, mostly to do with the movement of people to and from the facility resources needed to maintain it. In some cases increased plant growth around the head pond may be enough to offset the ongoing CO2 contributions. The largest contribution of CO2 emissions comes from the construction of the facility.

The nature of the coast of BC and the needs of non storage hydro are well suited. Non storage hydro needs a decent year round water flow and steep inclines to provide a good head for the turbines. By their nature, the best sites for non storage hydro projects are in locations that are of lower values for wildlife and fish. In many cases, there are no fish near the project locations and the impact of the facility is not measurable downstream.

Energy Payback - Nothing is Better than Hydro
An important aspect of all energy production to be considered is the energy payback ratio – how much energy is generated for each unit of input energy. All hydro has a very high energy return rate, by far the best of any electrical generation. For a large scale storage hydro system the energy payback ratio is about 240 times as much energy is produced as was used to build and operate the facility. For non storage hydro this ratio is about 220 times. For fossil fuels it is only 1 to 7 times as much energy is produced as what is needed to build and operate. After hydro, the next best energy source is wind power at about 20 times the output when compared to the input. These numbers come from a July 2005 Hydro Quebec report by Luc Gagnon, there are other sources out there that confirm these numbers.

An energy payback of less than 1.5 means the system uses almost as much energy as it generates. Conventional coal fired power plants with CO2 capture and sequestration can be as low as this. This fact alone makes the idea that there will be a move to CO2 capture and storage by the coal fired power plants in North America unrealistic in the next 15 years.

BC has an Abundance of Sites
In 2007 there was a report by Kerr Wood Leidal on potential non storage hydro locations in BC. The report identified numerous ones with a combined annual generation of 50,000 GWh/yr. The report is a a useful ballpark to allow us to see what may be possible but it should not be taken as the final word on what is out there. The report missed out on many sites that are currently either in the planning stage or under development, the biggest example of this is the Plutonic Power Bute Inlet project.

The report was an overview of the province and made some assumptions that have not are not realistic, chief among them being that projects would not cluster and share infrastructure costs. The report was not able to make detailed and through design plans for each location and thereby missed many potential sites that are now under consideration.

As an example, Hawkeye Energy Corporation has identified and applied for 350 MW worth of sites for non storage hydro in less than one year. These sites have a potential for 1310 GW/h of generation. Many of their sites are located close to the Plutonic Power Bute Inlet project. As more projects are built and more infrastructure is there for them, the easier it is for smaller projects to piggy back on the infrastructure.

What we can take from the report and other sources is that BC has the capacity to develop more than 50,000 GWh/yr of non storage hydro over the next 15 years.

Non storage hydro has one more major advantage over almost all other green electrical generation technologies. Non storage hydro is economically viable now without any sort of market distorting government subsidies.

Tuesday, January 5, 2010

Our low electrical rates cause more CO2 emissions

The power we generate in BC is low in CO2 emissions, but the grid we are part of, the Western Interconnection, is not. As long as we have electrical rates that are artificially low, we will use more power than we need. In recent years BC has normally used more electricity than we generate. The extra power we need comes from gas or coal fired power from elsewhere in the west.

Building more capacity is one way to reach electrical self sufficiency by 2016, but reducing demand would achieve this as well. Once we produce more electrical power than we consume we can export the excess green power to others in the west.

If BC were to charge higher rates for power, the public will be much more motivated to conserve power. Higher rates will also mean that more green energy sources will become economically viable without needed market distorting government subsidies.

The current price BC Hydro residential customers pay is $0.0591 per KWh for the first 1350 KWh in a two month period and then rising to $0.0827 for any power used over that amount. This is an average cost for a suburban home of about $0.065 a KWh. People in the BCFortis service area pay $0.07627 per KWh. These rates are the lowest any residential customers pay in the Western Interconnection.

BC should have a policy that the price of electricity in BC reflect rates in neighbouring markets. A mix of rates from Washington, Alberta, Idaho and Montana would make for a good basket
  • Washington – $0.086
  • Alberta – $0.089 average
  • Idaho – $0.086
  • Montana – $0.099

Average of the four = $0.09 per KWh

It is not unreasonable for BC to want to retain a competitive advantage, so reducing the cost by 10% of the average makes sense. Doing this gives us a price of $0.081 cents per KWh. This is still the cheapest power in the Western Interconnection but significantly higher than what we pay now. This higher price will quickly make conservation measures economical by making pay back times for the work less than three years.

The higher price should actually reduce demand for power in BC over a period of several years as people adjust to the higher price and change their habits to save money. We should see a leveling of total provincial demand for several years and then see a slower rate of increase than what has occurred in the last twenty years.

If we consume less power in BC there is more green power available for the rest of the Western Interconnection. By 2025, this should allow for BC to be using 10,000 to 15,000 GWh/yr less than it would without the price increase. That is enough power for between 750,000 and 1,250,000 people in California

Monday, January 4, 2010

The Carbon Tax should be a CO2 Emission Fee

Carbon tax is not really a good term, in reality this should be referred to as a CO2 emission fee. There is a need to connect the value of the revenue raised to the purpose for which it is used. If we shift to a CO2 Emission Fee and base the fee on the cost to capture and store the CO2 emissions, then there is a clear benchmark for the price that should be set for the fee.

The correct level to set a carbon tax at is one that reflects the cost of mechanical removal of CO2 from the atmosphere. Only mechanical removal makes any sense because it is can be empirically measured and verified. Many carbon offsets are for projects that would happen anyway or are in locations where it is impossible to verify compliance.

BC has the start of an agency that could capture and store CO2 - the Pacific Carbon Trust. With enough resources, the Pacific Carbon Trust could be a major player early on in co2 capture and storage.

What is the cost of capturing CO2? At this time it seems that the cost is about $65 per tonne to capture and store CO2. This price would indicate that BC should be aiming for a carbon tax of about $70 per tonne to ensure enough taxes are recovered to pay for capture and storage of all the CO2 emitted by fuels in BC. This would mean a carbon tax of close to 17 cents a litre on gasoline.

17 cents a litre is a significant rise from where the tax is now, but adding two more years of phase in to the carbon tax BC could be at 17 cents a litre by 2014. This level of fee could fall over time as the price to capture and store carbon falls. As an industry develops and innovates, it is realistic to expect the price to capture and store CO2 falling to $40 per tonne by 2025.

Linking the fee to the amount of CO2 emissions means the government could set up an opt out system for companies or people that capture and store their own CO2. The Pacific Carbon Trust would monitor the opt outs. Allowing the opt out will encourage even more innovation in CO2 capture and storage and bring down the costs faster.