Overly Simple Energy-Economy Models Give Misleading Answers

Does it make a difference if our models of energy and the economy are overly simple? I would argue that it depends on what we plan to use the models for. If all we want to do is determine approximately how many years in the future energy supplies will turn down, then a simple model is perfectly sufficient. But if we want to determine how we might change the current economy to make it hold up better against the forces it is facing, we need a more complex model that explains the economy’s real problems as we reach limits.We need a model that tells the correct shape of the curve, as well as the approximate timing. I suggest reading my recent post regarding complexity and its effects as background for this post.

The common lay interpretation of simple models is that running out of energy supplies can be expected to be our overwhelming problem in the future. A more complete model suggests that our problems as we approach limits are likely to be quite different: growing wealth disparity, inability to maintain complex infrastructure, and growing debt problems.Energy supplies that look easy to extract will not, in fact, be available because prices will not rise high enough. These problems can be expected to change the shape of the curve of future energy consumption to one with a fairly fast decline, such as the Seneca Cliff.

Source: Overly Simple Energy-Economy Models Give Misleading Answers

Clean Power Plan Seen as Historic Opportunity to Modernize the Electrical Grid

Following the launch of the Clean Power Plan, concerns were raised about how adding renewable energy to the grid would affect reliability. According to a new report […] compliance is unlikely to materially affect reliability.

 

image source:  http://phys.org/news/2010-10-electric-grid.html

Source: domesticfuel.com

>”[…] Report lead author Jurgen Weiss PhD, senior researcher and lead author said that while the North American Electric Reliability Corporation (NERC) focused on concerns about the feasibility of achieving emissions standards with the technologies used to set the standards, they did not address several mitigating factors. These include:

The impact of retiring older, inefficient coal plants, due to current environmental regulations and market trends, on emissions rates of the remaining fleet;Various ways to address natural gas pipeline constraints; andEvidence that that higher levels of variable renewable energy sources can be effectively managed.

“With the tools currently available for managing an electric power system that is already in flux, we think it unlikely that compliance with EPA carbon rules will have a significant impact on reliability,” reported Weiss.

In November 2014, NERC issued an Initial Reliability Review in which it identified elements of the Clean Power Plan that could lead to reliability concerns. Echoed by some grid operators and cited in comments to EPA submitted by states, utilities, and industry groups, the NERC study has made reliability a critical issue in finalizing, and then implementing, the Clean Power Plan. These concerns compelled AEE to respond to the concerns by commissioning the Brattle study.

“We see EPA’s Clean Power Plan as an historic opportunity to modernize the U.S. electric power system,” said Malcolm Woolf, Senior Vice President for Policy and Government Affairs for Advanced Energy Economy, a business association. “We believe that advanced energy technologies, put to work by policies and market rules that we see in action today, will increase the reliability and resiliency of the electric power system, not reduce it.  […]”<

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5 Reasons Oil Prices Are Dropping

Key contributing factors in the fall in oil prices range from surprise production levels in Libya to, in-fighting between OPEC members and EU economic outlook…

Source: oilprice.com

“> […]

1. The U.S. Oil Boom
America’s oil boom is well documented. Shale oil production has grown by roughly 4 million barrels per day (mbpd) since 2008. Imports from OPEC have been cut in half and for the first time in 30 years, the U.S. has stopped importing crude from Nigeria.

2. Libya is Back
Because of internal strife, analysts have until recently assumed that Libya’s output would hover around 150,000-250,000 thousand barrels per day. It turns out that Libya has sorted out their disruptions much quicker than anticipated, producing 810,000 barrels per day in September. […]

3. OPEC Infighting 
There have been numerous reports about the discord between OPEC members, leading many to believe that OPEC will not be able to reign in production like it has done so in the past. The Saudis and Kuwaitis have reportedly been in an oil price war, repeatedly lowering their prices in order to maintain their market share in Asia. […]

4. Negative European Economic Outlook
European Central Bank president Mario Draghi has left investors concerned about the continent’s slow growth. Germany’s exports were down 5.8 percent in August, stoking the fears of anxious investors that the EU’s largest economy had double dipped into recession last quarter. Across the Eurozone, the IMF again lowered its growth forecast to 0.8 percent in 2014 and 1.3 percent in 2015.

5. Tepid Asian Demand 
Beyond slow economic growth and currency depreciation, a number of Asian countries have begun cutting energy subsidies, resulting in higher fuel costs despite a drop in global oil prices. […]”<

 

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Price of Oil Continues to Drop Due to Oversupply

The price of oil has hit another five-year low as fears of oversupply continue to mount.  Brent crude was down $1.77 at $67.30 a barrel in Monday afternoon trading, having earlier hit $66.77 – its lowest since October 2009.

Source: www.bbc.com

>” […]US crude was down $1.44 at $64.40, after falling as low as $64.14.

Morgan Stanley predicted that Brent would average $70 a barrel in 2015, down $28 from a previous forecast, and be $88 a barrel in 2016.

The investment bank also said that oil prices could fall as low as $43 a barrel next year. Analyst Adam Longson said that markets risked becoming “unbalanced” unless the Opec producers’ cartel decided to intervene.

Saudi Arabia, the cartel’s biggest member, resisted calls at last month’s meeting to cut production despite the slide in prices, which have fallen more than 40% since June.

Kuwait, another Opec member, said that oil prices were likely to remain about $65 a barrel until the middle of next year unless Opec cut output. […]”<

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The petrodollar effect: Just how much is the loonie tied to oil prices?

Financial Post | Business

The recent crash in oil prices has set the stage for the most-anticipated OPEC meeting in years on Thursday. As oil-producing powerbrokers prepare to gather in Vienna, the Financial Post and Calgary Herald this week present Oil Pressure, a look at the forces buffeting, and buffeted by, the new oil world order. Today, the ties that bind Canada’s economic fate to energy prices.

CALGARY – Calling the Canadian dollar a “petrodollar” certainly makes sense if you mean the fact that the latest batch of bank notes are made out of polymer plastic, derived from petroleum products. But more than ever, economists are split on whether or not the term makes sense any longer in describing the correlation between the value of our loonie and the price of oil.

If it is a petrodollar, “it isn’t a very good petrodollar,” said Jack Mintz, director of the University of Calgary’s School of…

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Will Falling oil prices cause oil sands shut-downs in Alberta?

Alberta Premier Jim Prentice says his province’s oil companies are not facing closures, even as prices approach $70 a barrel.

Source: www.ctvnews.ca

>””We don’t see oilsands operations shutting down,” Prentice told CTV’s Question Period in an interview that aired Sunday. “These are massive capital investments that have been built on a 50-year time horizon.”

Crude oil prices have dramatically fallen since June, when prices reached this year’s high of $107.54 USD per barrel of West Texas Intermediate crude oil. On Friday, WTI oil was about $75.70 per barrel.

[…]

The report said falling oil prices have been caused by large supply, low demand, and strong U.S. dollar. In order for the price to stabilize, “further oil price drops would likely be needed for supply to take a hit — or for demand growth to get a lift,” it said.

Analysts suggest that once prices fall below $72 a barrel, companies will begin to face serious financial consequences, and that some may be forced to close. But Prentice said Albertan oilsands companies are expected to survive the continuing drop in prices, even if they reach that $72 threshold.

Conservative Alberta MP Kevin Sorenson, the minister of state for finance, disagrees, saying falling oil prices could hurt employment numbers.

“We know that if oil prices continue to fall … in the long term that’s going to be very difficult,” Sorenson told Question Period. “It’s not so much that $70 is the plateau, but if it continued to fall, we could expect that there would be job losses.”

Though Prentice was more optimistic about the “resilience” of Albertan companies, he also said falling prices are cause for concern.

“I don’t want to underestimate the importance of this. The low-price environment has a significant implication for all of us,” Prentice said.

The premier said new projects may need to be postponed, and that the Albertan government must be prepared to control spending and budgeting.

According to the Alberta government’s budget website, if oil prices drop even $1 per barrel over 12 months, it can result in more than $200 million less in revenue for the province.

[…]

But Alberta’s provincial government factors all these variables into their economic forecasts.

“People need to be aware it’s a time for fiscal prudence. It’s a time for caution,” Prentice said Sunday. “And it’s a time to control what we can control, which is our public expenditures.” “<

Read more: http://www.ctvnews.ca/politics/falling-oil-prices-won-t-cause-shut-downs-in-alberta-prentice-1.2104374#ixzz3JXBPxTA3

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Intelligent Efficiency: Evolution of the Energy Efficiency Market

In the past, energy efficiency was seen as a discrete improvement in devices,” says Skip Laitner, an economist who specializes in energy efficiency. “But information technology is taking it to the next level, where we are thinking dynamically, holistically, and system-wide.

Source: www.greentechmedia.com

>” […] This emerging approach to energy efficiency is information-driven. It is granular. And it is empowering consumers and businesses to turn energy from a cost into an asset. We call this new paradigm “intelligent efficiency.”

That term, which was originally used by the American Council for an Energy-Efficient Economy in a 2012 report, accurately conveys the information technology shift underway in the efficiency sector.

The IT revolution has already dramatically improved the quality of information that is available about how products are delivered and consumed. Companies can granularly track their shipping fleets as they move across the country; runners can use sensors and web-based programs to monitor every step and heartbeat throughout their training; and online services allow travelers to track the price of airfare in real time.

Remarkably, these web-based information management tools are only now coming to the built environment in a big way. But with integration increasing and new tools evolving, they are starting to change the game for energy efficiency.

Although adoption has been slow compared to other sectors, many of these same technologies and applications are driving informational awareness about energy in the built environment. Cheaper sensors are enabling granular monitoring of every piece of equipment in a facility; web-based monitoring platforms are making energy consumption engaging and actionable; and analytic capabilities are allowing companies to find and predict hidden trends amidst the reams of data in their facilities and in the energy markets.

This intelligence is turning energy efficiency from a static, reactive process into a dynamic, proactive strategy.

We interviewed more than 30 analysts and companies in the building controls, equipment, energy management, software and utility sectors about the state of the efficiency market. Every person we spoke to pointed to this emerging intelligence as one of the most important drivers of energy efficiency.

“We are hitting an inflection point,” says Greg Turner, vice president of global offerings at Honeywell Building Solutions. “The interchange of information is creating a new paradigm for the energy efficiency market.”

Based on our conversations with a wide range of energy efficiency professionals, we have identified the five key ways intelligent efficiency is shaping the market in the commercial and industrial (C&I) sector:

The decreased cost of real-time monitoring and verification is improving project performance, helping build trust among customers and creating new opportunities for projects;Virtual energy assessments are bringing more building data to the market, leveraging new lead opportunities for energy service professionals;Web-based energy monitoring tools are linking the energy efficiency and energy management markets, making efficiency a far more dynamic offering;Big data analytics are creating new ways to find trends amidst the “noise” of information, allowing companies to be predictive and proactive in efficiency;Open access to information is strengthening the relationship between utilities and their customers, helping improve choices about efficiency and setting the foundation for the smart grid.

 

[…]”<

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UK Renewable Energy Subsidy Underwrites Development

Energy secretary, Ed Davey, says new subsidy scheme will help underwrite green energy and reduce reliance on imported gas

Source: www.theguardian.com

>”[…] “Solar has been the rising star in the coalition’s renewable energy programme and has been championed recently by the Prime Minister at the UN and by Ministers at conference,” said Paul Barwell, chief executive of the STA.

“Why is the UK government putting this industry’s incredible achievements on solar power at risk? To curtail its growth now is just perverse and unjustified on budgetary grounds – solar has only consumed around 1% of the renewables obligation budget,” he added.

He was supported by Friends of the Earth, whose renewable energy campaigner, Alasdair Cameron, argued the government move would be bad news for jobs, the climate and people wanting to plug into clean power.

“Solar could be cheaper than fossil fuels in just a few years, but it needs a little more help from government to get it there. Failure to invest now will mean a huge missed opportunity for the UK economy,” he said.

The raised budget to £300m has been welcomed by the wider renewable power sector but industry officials said the complex structure and cost would unfairly benefit large utilities at the expense of smaller and medium-sized enterprises (SMEs). […]”<

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Department of Energy – Energy Efficiency Standards Cost Less than Estimated

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Washington, D.C.—A new report released today by the American Council for an Energy-Efficient Economy (ACEEE) and the Appliance Standards Awareness Project (ASAP) finds that the U.S. Department of Energy (DOE) has been overestimating the impact that energy efficiency standards for appliances and other products have on their price tags.

Duane Tilden‘s insight:

>Today’s study, entitled Appliance Standards: Comparing Predicted and Observed Prices, looks at nine appliance standards that took effect over the 1998-2010 period and found that DOE overestimated price impacts in every case, usually by a wide margin. ACEEE and ASAP found that across the nine rulemakings, DOE estimated an average increase in manufacturer’s selling price of $148. On average the actual change in price was a decrease in manufacturer’s selling price of $12.

Estimates of the overall benefits of energy efficiency standards for consumers will likely have to be revised as well. In 2012, ACEEE and ASAP released a study estimating that standards for appliances and other equipment would save consumers more than $1 trillion cumulatively by 2035, even after subtracting estimated increases in product prices.

“Energy efficiency standards are proving to be an economic powerhouse, driving even more consumer savings than we realized,” said report co-author and ASAP Executive Director Andrew deLaski.<

See on www.aceee.org

Honey bees under threat: a political pollinator crisis

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Daniel Lee Kleinman and Sainath Suryanarayanan: Recent controversies over honey bees remind us of their environmental and economic importance, but should also prompt us to reflect upon the structures of expertise we rely upon…

Duane Tilden‘s insight:

>Despite the conclusion of beekeepers across the globe, based on their field research, that neonicotinoid insecticides were likely contributing to increased bee mortality, some chemical company representatives, scientists and government regulators dismissed or disparaged their findings. Our view is that commercial beekeepers have real-time observational knowledge of the crisis facing honey bee pollinators and that we should take their research seriously (see our Social Studies of Science paper for more). Our point is not to say that commercial beekeepers always know best. Rather, it is to argue for more genuinely participatory research that brings beekeepers’ knowledge and scientists’ knowledge into a creative and egalitarian dialogue toward a fuller understanding of why honey bees are dying.

[…]

The US government has opposed taking neonicotinoid pesticides off the market in the absence of conclusive evidence of their adverse effects on honey bees. The UK has taken broadly the same position. This is a classic dilemma in science. But it is not simply a matter of data. The US and UK governments share a value-based preference for false negatives over false positives. A false negative amounts to incorrectly concluding that neonicotinoid pesticides are safe when they might not be. Advocates of the precautionary principle share a preference for the reverse. They have supported taking the neonicotinoid pesticides off the market in the face of suggestive evidence based on scientific laboratory and field studies, and beekeepers’ observations. Given what is at stake here, we are on the side of those who prefer to err on the side of caution. And as policymakers and citizens increasingly confront complex challenges fraught with tremendous risk, we may want to make a precautionary orientation our default position.

We all eat and so we should all be concerned about the alarming uptick of honey bee deaths, but the current crisis can also be an opportunity to consider how to do things differently.<

See on www.guardian.co.uk