Seeking Alpha
Commodities, energy, alternative energy
Profile| Send Message|
( followers)  

eurekaWhen Dave O’Reilly of Chevron (NYSE:CVX) recently debated Carl Pope of the Sierra Club at The Commonwealth Club of San Francisco, I was assuming some attention would be paid to the real, actual problems that confront the state of California. What I had not expected was a broader, and slightly nostalgic resurrection of the Oil vs. the Environment debate that frankly hearkens back to a time 40 years ago.

I characterize that more antiquated, historic framing as having taken place in an era of energy plenty. An era when the world’s oil companies oversaw a greater portion of conventional oil reserves, and were much more of a lever for policy and policy changes. Now, however, the world’s free-market oil companies are both marginalized and are generally in liquidation–which is to say they are barely capable or simply unable to replace their reserves. Big Oil is dying. And if big oil is dying, then I wonder that this particular debate would have more aptly pitted the Sierra Club against the Coal industry. Power generation, not liquid fuel use, was really much more central to the discussion.

Carl Pope was excellent in this debate, largely preferring to go the teaching route rather than the path of confrontation. While I have some moderate criticism of the Sierra Club’s solution-set to the energy problem, (again, because it’s oriented towards power generation without enough attention paid to the liquid fuels problem), Pope’s mastery of the issues and his versatility with energy facts and figures was impressive. Generally, I find favor with the Sierra Club’s Energy Resources Policy. However, in the same way that oil depletion and the problem of liquid fuels was barely touched upon in the Commonwealth Club debate, it’s my view that the Sierra Club–based in the West– should be much more focused on the problem of cars and highways.

And it is. However, the Sierra Club handles the automobile problem largely by a call for more fuel efficient cars, and then, a roll-out of electric cars. As for public transport, maybe not so much? While the club does advocate rail, it appears they see–as others do–the greatest opportunity for energy gains in fuel efficiency of the fleet. I note the club is also favorable towards biofuels–on a case by case basis–depending on feedstock. In this way, I see the Sierra Club’s energy resources policy as lining up in similar fashion to the Google Clean Energy 2030 Plan–which also is much more weighted towards transformation of the power grid, and seeks gains also in the fuel efficiency and electrification–of cars.

In the world of energy mitigation there is a kind of fault line, between those advocates for massive build-out of public transport–and those whose plans attempt to keep the cars running. Having seen a number of mitigation studies/plans over the years, from Bezdek, Wendling and Hirsch: Economic Impacts of Liquid Fuel Mitigation Options to the work of Amory Lovins at the Rocky Mountain Insitute and now the later Shai Agassi’s Better Place (also covered here at gregor.us) I take the side of public transport. Yes, there are many variables. The US fleet of 300 million vehicles over the next 20 years may very well migrate in a multi-directional pattern with the adoption of electric, high mileage petrol, and then CNG (compressed natural gas). However, when you get down to the nitty gritty of torque to the wheel, and you are measuring efficiency of BTU, none of these are going to ever beat the low rolling resistance of rail.

bike-on-railBut it’s not an either/or proposition. We simply need to wipe out enough of the existing fleet of vehicles with light, commuter, and then highspeed rail to clear our roads so that the cars and vehicles that remain can proceed under greatly reduced congestion. The problem of fuel efficiency in our transport sector, therefore, offers the promise of dynamic gains should we go with a solution-set that really attacks our cities primarily with rail. The potential gains in both time and energy efficiency, across any city’s total transport system, are massive.

I would encourage the Sierra Club and also the designers of Google 2030 to use California as a kind of base case or a lens through which to see the problem of United States. To this point, Google 2030 (NASDAQ:GOOG) is uniquely aggressive in its plan to create enormous new power-generation capacity from Wind and Solar. That is very likely the solution that will have to come for California, despite the nostalgia of current Senators for the preservation of deserts. However, because Google 2030 pretty much sticks with cars and vehicles as primary forms of transport, it should be pointed out that all that new very expensive power generation would be more efficiency used on electrified rail. It should also be noted that the Google 2030 plan assumes US power demand could be held flat until 2030. That’s just not realistic.

It’s likely that all of these plans are works-in-progress. I would expect to see the Sierra Club change some of their positions should certain facts change, just as I expect Shai Agassi’s Better Place will also have to make modifications as we progress.

One of the built in success features of the Google 2030 plan is that so much new power generation is created that a mid-stream switch to add massive buildout of rail would not be disruptive to that plan. That said, I remain wary of and probably negative on any plan that attempts to maintain the nation’s vehicle fleet at current size. The maintenance and construction of auto infrastructure is too costly. And in California, the highway system very likely now decays in a burdensome state of diminishing returns.

It is astonishing, for example, that on the federal level the new administration’s total investment in auto companies, biofuels (for vehicles), new auto purchases (Cash for Clunkers) and future auto company investment positively dwarfs their intended commitment to public transport. It’s telling that among the Administration’s team, and also in Congress, the lopsided weighting towards vehicles continues apace. Eureka? They have not found it.

Source: What's the Opposite of Eureka?