Stockholm, district heating and Warren Buffett

In Stockholm, even the guards at the palace are looking cold, and there is still ice floating down the river.

Guard at the Royal Palace in Stockholm.

The plane arrived this morning through low clouds and into a light spatter of snow and rain. The formalities were relatively easily dealt with and there is a fast and comfortable commuter train that took 20 minutes to get into the city, and then into the hotel, which is still pleasantly quiet, and comfortably warm. Though like most European hotel rooms it is small. Passing through the airport we missed a coming attraction, which is going to be one of the largest ground-source heat pump establishments. In essence the airport, which plans on being carbon neutral by 2012, has to find a way to control an energy demand that is equivalent to that of a city of 25,000 folk (though there aren’t nearly that many around). The plan is therefore, as with most ground-source heat pumps (English) (International) (FAQ ), to drill pipes down into a large undergound aquifer and draw the cool water out of that storage in the summer, returning it as a slightly warmer source that builds up heat, that can then be used in the winter for melting the snow from runways and similar energy intensive operations. It is expected, when it is finished later this year, to save 4 GWh of energy directly, and an additional 15 GWh will be provided for district heating.

Source Arlanda


There were not a lot of folk on the streets for a Saturday, but then I was wandering around above ground, so it wasn’t until I got into the Old Town (the Gamla Stan) that the streets became full of tourists, and the café’s and restaurants busy. There was something going at the art galleries, which were serving wine to willing patrons, but I missed why. And it was only on the way back, that I found where folks were. Because, like many other Northern Cities, there is an under-layer to the city, with large, well lit, shop lined concourses between the mall-like stores that lie around the center of the city. Anyone with any sense could have wandered around in comfort, beneath the streets, instead of having to duck into the Royal Shop to buy a scarf.

Stockholm, as with many of the Nordic Cities uses district heating. As this is explained

District heating meets the diverse thermal energy needs of residential, commercial and industrial users. Thermal energy needs or demands include space heating for maintaining human comfort, domestic hot water requirements, manufacturing plant process heating, etc.
District heating can be combined with electricity generation to create a more efficient total energy utility. Conventional condensing power stations generally utilize less than 40% of the fuel they burn for electricity generation (over 60% is lost in flue gases and in cooling tower or cooling water). Much of this waste energy can be reclaimed by recirculating hot water or steam to buildings, for space heating or industrial processes giving an overall efficiency of about 85%. Waste heat can also be used to drive chillers for cooling.

The difference in fuel efficiency between combined heat and power plants and condensing power plants can be illustrated with the following example:
For each EIGHT "barrels of energy" consumed in a combustion plant:
ONE "barrel of energy" is lost through the chimney or in the plant.
THREE "barrels of energy" are converted to useful electricity.
FOUR "barrels of energy" are wasted in cooling systems 
OR 
FOUR "barrels of energy" is converted to useful district heating.

Because Stokholm is build on a series of islands it is more practical to have more “districts” for the heating than a single source, and this city of 1.9 million folk started with district heat in 1953. Because of where it is, it has problems with lack of sun, and not a huge amount of wind, and so is limited in what it can use. The country gets slightly more than half its power from nuclear and hydro-electricity but also uses a lot of biofuels, with pellets being one of the domestic resources. It has become one of the largest systems that combine district heating with power generation in this part of the world, with new power plants focusing to use 70% biofuel, and with a current user demand of 12 GWh/yr. They are also using the biomass to provide biogas, which is being introduced as a fuel for buses, with a target of 130 bio-fueled buses this year. They are also using ethanol to drive some 380 buses out of their total fleet of 1,800. They also found that imposing a congestion charge for downtown worked, dropping traffic by 20% while increasing access and lowering pollution.

In short the city would be considered green, apart from the winter plumage it currently wears.

There won’t be a Pick Points, tonight, but had there been, then the piece that follows, would have been in it.
“So here I am at Newark Airport with a four-hour layover, and while the airport was relatively quiet when I arrived, the part we are in is where some of the larger aircraft leave, including ours that is heading for Europe, and so, as the afternoon wears on the seats are filling up. Coming to St Louis I subscribed to Newsweek on my Kindle, since I usually pick one up to read on the ‘plane and the Kindle cost for the magazine is a fraction of the paper price. So now, in Newark, I am glancing through the March 9th edition and I come to the letter that Warren Buffett sent to his shareholders this month. It contains the following:

Last year I made a major mistake of commission (and maybe more; this one sticks out). I bought a large amount of ConocoPhilips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year. I still believe the odds are good that oil sells far higher in the future than the current $40 - $50 price. But so far I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars . . . .”

Well at least I wasn’t the only one making mistakes.

And so to dinner.

Stockholm from the Royal Palace

FutureGen, and the Natural Gas Report

Well I was planning on just putting up a quick post today on the natural gas report, and then trotting off, but I noticed that the plans for the FutureGen program in Illinois seem to be gaining legs so herewith a couple of words on that. The program itself is to build a coal-fired power plant at Mattoon and to make it such that is has a near-zero emission level, while producing hydrogen as well as low-cost electric power. Some of the technologies that it will employ have not been demonstrated at this scale before (the plant is a 275 MW unit, that will operate using a variety of different coals initially, to get baseline data, but will possibly use Illinois #6 or similar local coals once in steady operation). The plant is currently planning on using rock that is some 3,000 ft below the surface, and filled with a salt water (the deep-saline reservoir) since this is deep enough that the CO2 can be injected as a liquid (smaller volume) and will remain in this form, and that the reservoirs are big enough to hold the volumes that will be produced. (At these pressures the purists will tell you that the CO2 is a super-critical fluid, rather than a liquid, but for simplicity it can be considered in this discussion to act like one). The plant is going to generate between 1 and 2.5 million metric tons of CO2 each year, and has found several sites that can hold more than 50 million tons apiece. If the sites aren’t on the property, then the fluid will be pumped to the site through pipes that will likely be 10 -16 inches in diameter.

While the plant will produce hydrogen, this will largely be used at the site, rather than becoming a commercial product. The site notes (most of this information is from the FutureGen site) that there are two existing IGCC sites, one at Tampa Electric, and one at Terre Haute.

The combustion technology for these Integrated coal Gasification Combined Cycle (IGCC) plants is a combination of two technologies, and as described at Tampa:

The first technology is called "coal gasification," which uses coal to create a clean-burning gas. The second technology is called "combined-cycle," which is the most efficient method of producing electricity commercially available today.

The plant combines coal with oxygen in the gasifier to produce the gaseous fuel. After processing, the clean coal gas is used in the combustion turbine to produce electricity.Combined-cycle technology increases efficiency because it reuses exhaust heat to produce more electricity.

Combined-cycle design consists of a combustion turbine, a heat recovery steam generator, and a steam turbine. The exhaust heat from the combustion turbine is recovered in the heat recovery steam generator to produce steam. This steam then passes through a steam turbine to produce more electricity. . . . . .

The coal gasification unit provides clean, coal-fueled power, with a minimum removal of 95 percent of the sulfur from the coal gas. This exceeds the performance of today's most advanced coal-fired generating units. Furthermore, nitrogen oxides emissions are also lower than many of today’s most advanced coal-fired generating units. The sulfuric acid and solid byproducts are then sold for industry use. The plant is considered "zero process water discharge.” A brine concentration unit, which produces an effluent that is reused in the process, handles all of the liquid waste.

Wikipedia has a circuit diagram of the process.The Terre Haute plant has changed hands since it was first built.

So we will see how the politics plays out on this, this time around, given that it appears to have the blessing of the Secretary of Energy.

Turning to the Natural Gas Weekly Update the news for gas producers remains unfortunate (though good for customers). While the Henry Hub price remains around $4 per kcf (thousand cubic feet) prices west of the Mississippi have dropped to under $3, with the Opal trading hub in Wyoming seeing a price of $2.53. There has recently been a surplus of gas in the West, and the Rockies Express pipeline was supposed to allow easier passage to the markets of the East. It is already helping in that regard, but it still has a long way to get to the Northeast where demand, and a cold snap put the price up to over $9.13 on the coldest day. Winter is, however, coming to an end, and so it remains unlikely that the trends in the graph that the site updates each week, are going to change soon.

Source EIA

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So did we miss the Peak in Oil Production?

Well this week is crystal ball week over at the EIA, with the publication not only of today’s TWIP, but with the Petroleum Production tables also having now been updated and the new Short Term Energy Outlook having also been posted.

Picking off my own thread first, that of gasoline demand, after steadily rising it has now stabilized, but at a level that wasn’t reached until April last year.

Source EIA

Stocks are continuing to deplete a little, so one presumes that this increase is actually being consumed, though if one looks at the stocks around the country, only the East Cost is showing a significant drop.
Source EIA

And while I recognize that weekly data is likely to be inaccurate, yet the trend that I mentioned last time still indicates to me that we will see a rising demand for gas in the next months, as we did, even in the face of rising prices, last year. Whether it will lead to the short peak that we saw last year, is, of course, a different question. (And yes I know that if I plot refinery inputs I would get a different curve).

Gasoline demand last week in February in kbd, by year. Source EIA

The commentary at TWIP today is more concerned with the changing forecasts that the EIA are making as a result of the changing world economy. To quote:

Our assumptions regarding the global economy are based on the IHS Global Insight macroeconomic model. In June 2008, we assumed that the world economy would grow by about 4.2 percent in 2009. In September 2008, that assumption fell to 3.8 percent growth. However, in this month’s Outlook, we assume that the world economy will decline by 0.8 percent. The events of the past several years have only highlighted the strong linkage between economic activity and oil demand growth. . . . . . Our current forecast assumes that a recovery in global economic activity begins sometime in the second half of 2009. If this timing assumption proves to be correct, then world oil prices should begin to rise gradually later this year.

They recognize that it is in the withdrawal of oil from the market, that OPEC is maintaining the price, at the level that it is. However I do not completely agree with the logic that they then apply to the future price.

While the actual path of prices may be volatile, we do not expect to repeat the sharp sustained upward price march that characterized markets from 2004 through mid-2008 given crucial differences between the oil market dynamics of then and now. First, members of the Organization of the Petroleum Exporting Countries (OPEC) currently hold roughly 4.8 million barrels per day (bbl/d) of surplus production capacity, while they held an average of 1.5 million bbl/d from 2004 to the peak of the market in 2008. Second, the lagged impact of high oil prices in recent years will continue to affect oil demand in the short term. During 2007 and 2008, WTI averaged $86 per barrel; these historically-high prices will influence the decisions that individuals and firms make going forward, which will tend to dampen the rise in world oil demand engendered by the return of global economic growth.

Recognizing that, I don’t agree with their following conclusion (given in the Short Term Outlook) on price:

The annual price of West Texas Intermediate (WTI) crude oil averaged $100 per barrel in 2008. The global economic slowdown is projected to cut these prices by more than half, to average $42 per barrel in 2009 and $53 in 2010—forecasts slightly lower than last month’s Outlook.

Given that we are already above that value, of course one could say it was with hindsight (though we have most of 2009 to go). Rather it is because I suspect we have soaked up most of the slack in oil demand with the drop in OPEC production and we are close to a balance. The increase in demand going into the summer will raise prices, because we are moving into the envelope where OPEC can match demand with an increase in supply, but will do so on the prices that they would prefer. And from the evidence to date, I would put that at around $65 a barrel. So that is where I think that we are heading this summer, and when one puts today’s prices with this to get an annual price I would still see it a bit north of $55.

Robert Rapier has been a little more concerned with establishing that the reports show that peak world production was actually in 2008, and not as earlier conjectured in 2005. (You need to download the table 1.1d to get the world totals). In July 2008 world production of crude peaked at 74.8 mbd. Robert feels that with the current downturn in the economy we may not see enough production from OPEC to bring world production back to this level soon, and if it doesn’t happen in three years, he doubts that it ever will. Well, prior to the recession, I had been telling folk for a while that I thought that it would be this year, but Robert’s caveat is sufficient for me to shelter under, so I will second that motion.

(And for those of you confused by the difference between this number, which is lower than the numbers in the 82 to 86 mbd range that are also quoted, Robert answers that ) in his comments:

It's the difference between 'all liquids', which ends up double-counting some fuels and just crude oil production. In the all-liquids category you may have diesel counted that was then used in the process of making ethanol (for example) and both are counted. This category also includes things like orimulsion, which is an emulsion of 70 percent bitumen and water.

As I mentioned earlier in the week, I am off to Sweden (and apparently the hotel with the noisy nightclub) this Friday and so from now on posts are going to be a little sparser on the ground since I will be working through the weekend, but I will add the usual odd comment as time permits).

P52. Pick Points

Half-a-dozen or so stories of interest:

With OPEC coming up on their next meeting this Sunday, I suppose it is time to guess whether or not they will make another production cut. The latest thought seems to be that they won’t. Though not all agree, and prices did dip a little Tuesday, back to $45.71. The EIA have forecast a decline in demand of almost 1.4 mbd, down around 200,000 bd over earlier forecasts. They see global demand dropping to 82.47 mbd, but they also see prices remaining lower, at slightly below today’s prices. They project natural gas at around $4.70 per kcf. We’ll just have to wait for the TWIP tomorrow to give us a little help to make up our minds. But these seem low.

To try and encourage demand Russia is dropping their export duty from $15.73 per barrel to $14.73 or more (depending on grade). Troubles in their oil patch are such, however, that the head of the oil-rich Bashkortostan region may be in trouble, and soon out of a job. The do have an agreement to run the Hungarian section of the South Stream pipeline, with a gas storage facility also being provided by the time it comes on line in 2015. (That date keeps slipping). Croatia is hoping to put a pipeline in place that would allow it to get its supplies through Hungary. Croatia uses 113 billion cu.ft. a year, but produces 60% of that in country. The rest comes from Russia.

There is talk of an LNG terminal in the Adriatic to help, and it is on the list that Exxon Mobil is anticipating for this year. The other is at South Hook in West Wales, and that is within weeks of completion. Meanwhile the new terminal in Rio de Janeiro will receive its first cargo today (March 11). It is coming from Trinidad and Tobago. The roughly 5 million cu ft tanker is on a test run to ensure that everything works well, before settling into production later in the year. While the terminal can produce up to 700 mcf of natural gas a day, the current thought is that may not be needed as much this year, as the water levels are relatively high, and Brazil uses a lot of hydro power. GDF Suez just brought one new plant at 241 MW on line last month. Brazil is one of more dependent countries on hydro-electricity with over 600 dams. and is pressing ahead with two more projects. Having seen power cuts in 2001, the government is determined that won’t happen again.

It isn’t quite that moist in the Middle East, where sandstorms have shut down ports in Kuwait and Saudi Arabia, they should end today. Not that this helps Japan, since Saudi Aramco continue to cut the volumes that will be shipped there in April. Because of sluggish demand, there was some thought that there might be another 15% cut in supply, but the Japanese think this unlikely.

There has been a bit of talk about coal reserves over at The Oil Drum, and Euan has just put up a post on Carbon Capture and Storage (that’s CO2). Some of the past debate has been about reserves and resources, and that was part of the reason for my Sunday post, since technology can change resource to reserve. Well so, apparently can state government. Some W. Va. Landowners got a shock in January when the coal under their property was reclassified from resource to reserve. This added some 3.7 million acres of reserve over last year, and with a tax bill of $100 an acre, both appeared to give the state a windfall, and unsuspecting homeowners sticker shock. The reassessments are being reviewed.

Well while the rest of the world waits to see how demand for more conventional fuel is going, up in Alaska the Iditarod is underway. And our trees are in bud, and crocuses came up in the year last week. Spring is a coming!!

More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.

Blind Spot - a film review

Almost four years ago I went to my second Energy Conference. It was hosted by Nate Hagens at George Washington University in D.C. , and I wrote about it, at the time on The Oil Drum. The posts ran consecutively through the conference (two, three four five and my review (I like to give folks a chance to see the comments while I am still around). I remember Nate coming over to un-mask me as “Heading Out” (it was in the time when Kyle and I had not yet revealed who we were) and a bystander coming over to me afterwards and asking if I knew who it was that I had been talking to. I mention this because, at that forum, there were a couple of camera crews that I thought were from local news organizations, but which were in fact making documentaries. One of these “Blind Spot” has just made it to my mailbox.

It is the most beautiful of the “Peak Oil” films that I have seen to date. Amanda Zachem, who produced it, relies on the statements of those interviewed to provide the narrative to the film. But rather than remain with them in their office or hotel, plays their comments over different, and appropriate images, filmed by Adolfo Doring. And making the operation of a magnetic grab in a junk yard strangely beautiful in a couple of shots required work.

If you are not familiar with the message that we are running out of not only oil, but other commodities that are finite within the earth’s crust, then this is a very good introduction. It is built with a number of interviews from speakers at Nate’s Washington meeting (officially Peak Oil and the Environment) , since many of the commentators were at that meeting. These included Bill McKibben; Matt Savinar; Richard Heinberg; James Hansen; Ken Deffeyes; and David Pimental who were speakers, as well as some additional contributors such as Joseph Tainter; Dr Albert Bartlett, Congressman Roscoe Bartlett; and Lester Brown. The film allowed me to see Jason Bradford, with whom I have exchanged the occasional argumentative e-mail, for the first time; and backdropped the mountaintop coal removal in Virginia on Mary Anne Hitt’s remarks.

The essay that reviews the film at its Website is by Kemp Scales, who watched it six times. Somehow I don’t think I will be that tempted, but I will certainly watch it again, both for the photography, and to make sure that I caught all the remarks. The reveal a little more of the background to some of the players in the Peak Oil debate than are always known. David Pimental, for example, talks about how he got into the study of ethanol, and his realization that the amount of fuel that it produces is less that that required to manufacture it.

Because there are a lot of facets to the problem that the peaking of oil production will generate, individual aspects of the story did not get a large amount of time in the film, which tried to cover the whole picture of what we face, while remaining entertaining. And for that reason it may not be the best initial film to see, since if you don’t know who the players are, and their reputations, it is difficult to give proper weight to the comments that they make. But, that having been said, getting this cast of commentators to contribute, and combine in building this presentation is to be commended. There were no overly radical statements, rather the film is a steady building of a picture that we are heading into trouble, without the need to be "in your face".

Perhaps that is the point of the picture. We are still living a relatively comfortable existence (transient financial exigencies aside) and have therefore a blind spot for the problems that are looming in our future. The day-to-day existence with its beauty conceals, and distracts from the difficulties of tomorrow, and these can too often therefore be put off, or go unrecognized.

If I were to have a gripe, and this is common to many presentations and conferences that cover the subject of peak oil, and other commodities, it is that there is no hope for redemption given. Those of us who are trying in some way to find a path that does not lead to the doom that is foreseen did not get any significant recognition (only the disparagement of ethanol). This is not that I feel slighted (I only rarely offer to talk at these meetings, being more comfortable as a recorder) , but rather just to point out that there are some efforts ongoing to ameliorate what will otherwise be a difficult time and that they should be given at least a little air time.

I almost never watch documentaries a second time, this time I am probably going to make an exception, and will watch it again, so you also might find it worthwhile to give it a look. (And in case you were wondering I did buy my copy- grin).

P51. Pick Points

Half-a-dozen or so stories of interest:

The energy lobby is not thrilled about the latest plans to increase taxes on the industry and is now forming a group to speak up for the industry. As an alternative North Dakota is thinking about putting 25% of the oil generated income into a trust fund. While Ecuador is going after some unpaid taxes that it claims Perenco, a French oil company, owes due to the “extraordinary profits” the company has made. Michigan’s Governor is asking for a gas tax to fix the crumbling roads in the state. The intent is to shift the rate from a per gallon, to a percentage of the price. Because state and federal revenues from existing taxes are no longer enough the Congress is also looking at ways to restructure the system to raise more revenue, one of the thoughts being considered is a mileage charge. Massachusetts has a similar problem, and are considering a 25% increase in the state gas tax (which would bring in about $650 million), as is Oregon.


Ugo Bardi has his post on “Fire and Ice” up on the main TOD board, (it was on TOD Europe before) and just for the historical record, it was I (not some guy from the USGS) who disagreed with Dave Rutledge down at ASPO 2007 – which did not stop the pair of us, with a group of others, adjourning to the bar to discuss the topic thereafter.

Speaking of conferences the MIT student Energy Club just held their conference at which the Swedish company Vattenfall said that they would be carbon neutral by 2050. Sweden has previously said that it will wean itself from oil within the next fifteen years . Sweden gets most of its electricity from nuclear and from hydro, so that the major use of fossil fuels is in transportation. I should be in Sweden this weekend (there will be a slight hiatus since it is a long flight and I am going to work) so I will post on what I hear.

At the start of an Energy Conference in Qatar the Exxon CEO has used their success with Qatar (they will have doubled the LNG production to 62 million tonnes this year, leading to the establishment of fourth and fifth LNG trains). Half the vessels for the 4th train are now delivered, and 5 of the 6 for the 5th train. The LNG is coming into a market that is currently seeing (outside of South Asia) a surplus of natural gas (hence all the rig closures in the US) and the LNG entry is likely to soften the market further. However if the predictions of a drop in US well production hold up, then the LNG will be coming on market just as it would otherwise tighten. China, which currently uses 13 million tonnes of LNG , with imports from Russia and Kazakhstan, is also aiming for a target of 60 million tonnes a year by 2020, with some of that to come from Qatar. A local shortage of natural gas is also causing Saudi Arabia to fast-track the development of two off-shore gas fields.

Development of the Arabiyah and Hisbah gas fields, which are not associated with oil production, would supply around 1.8 billion cubic feet per day, MEES reported. The projects were included in Aramco's expansion plan through 2014, it said.

"Bringing these fields on line would make sense," one industry source in the kingdom told Reuters yesterday. "They really need the gas."

Success offshore has not been matched with equivalent searches for natural gas on land, and particularly in the Empty Quarter.

Utility operators in the United States continue to be concerned over the future of coal, and are scrapping even more plans for expansion, part of the problem lies in the uncertainty over future regulation. Just this past week a utility in Montana has given up on the fight with local environmentalists and will now be installing a gas-fired plant, even though the costs may be higher. There are still, however, some 28 coal-fired plants under construction. To prevent more ash dam failures, EPA is seeking the necessary information on the sites where such impoundments exist. There may be as many as 300. Idaho Power, having seen the writing on the wall, has also changed its mind, and instead of a coal-fired plant will be installing a 300 MW plant in Payette county. The site is close to an existing gas pipeline, and an existing 230-kV transmission line. Now all they need to worry about is the long-term availability of the fuel.

A small note, it appears that having not had them built for very long, China has already filled the current round of tanks for their Strategic Petroleum Reserve and is thinking of adding more storage using tankers. (Which suggests they don’t think prices will stay down much longer, either). They currently have 34 days of supply in storage., but this may not count the 100 million barrels in the reserve. China is actively chasing after oil, and trying to ensure supplies when the price is right. And there are still those who think that the floor of the market has not yet arrived and that prices can sink some more.

And Pakistan has decided to go ahead with a gas pipeline from Iran, without having Indian participation.

More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.

Why we really need Cap and Trade

In President Obama’s interview with the NYT he said “We have proposed a cap and trade system, which could create some additional costs, but the vast majority of that we want to give back in the form of tax breaks to the 95 percent of working families.” Now I would like to turn that around, and look at the situation from the other side.

Here we have an Administration coming into one of the worst financial messes of modern times. In order to get things moving again money has to be generated into the system, and the one available entity that can do this is government. And governments around the world are stepping up to the plate to lubricate the path to restore economic health. But one cannot spend money blithely and forever run up deficits, despite the opinion of our last Vice President. So, what to do? Where to find a source that can be tapped for money at the levels that are going to be needed to come close to the amounts that are going to be expended? Where can we look for companies that generate the billions of dollars that are needed, and where adding billions will not be seen as an excruciating tax?

Well the ones that got all the negative publicity last year were in the energy field – lots of money there (at least there was). But the problem is that if we raise the money as a tax, then there are all sorts of advocates that will come out of the woodwork talking about how regressive a gas tax is, how negatively it will influence the economy, etc. etc. But consider, if instead of selling it as a tax, let us adopt the arguments of the Global Warming crowd. Let us garb ourselves in the mantle of the need to collect and sequester carbon dioxide. We put that to industry, and say that all generators of carbon dioxide must pay a fee for the amount of carbon dioxide they generate, say, for the sake of discussion $50 a ton.

Now we don’t sell this as a tax. No it is an incentive for industry to change to non-polluting forms of energy generation. The fact that the solar and wind energy contributions to the current US Energy economy equate to about the energy output of a medium sized coal mine means that it will take years (according to the Hirsch Report at least a couple of decades) before industry can switch over, and renewable energy sources can produce the majority of the energy needs of the United States.

In the interim consider that one ton of coal produces 2.86 tons of carbon dioxide on average – it depends somewhat on the carbon content of the coal, a function of its rank, but we’ll work with the average for now. The United States had around 1,374 mines in 2007, which produced 1.14 billion tons of coal. Let us for the sake of simplicity assume that this all goes into generating power in the United States (as most of it does) and you can see that the coal generates some 3.26 billion tons of carbon dioxide. If the charge-out rate for the CO2 is $50 a ton, then this will generate some $163 billion in revenue per year.

Given that it will take say 20 years to move the industry into other fuels that gives a total income to the Federal Government of $3.26 trillion. Now that does go some considerable way towards repaying all the vast expenditures that are going to be incurred in the next couple of years in getting the economy back onto the right track. Particularly if you recognize that coal is not the only fuel that generates carbon dioxide when it burns, all the fossil fuels do. For example if the United States consumes 21 million barrels of oil a day, this is equivalent to some 1.045 billion tons of oil a year. However, because oil is refined into different products (roughly 44% gasoline; 21% distillate; 9% Kerosine and 5% residual fuel oil) one must calculate the CO2 generated for the different fractions and add. Turns out that doing that will take some 3.15 barrels of crude to make 1 metric ton of CO2. Or that our billion tons of crude will transform to 2.4 billion tons of CO2 per year. So. Over the same time frame, that is a revenue stream that totals some $2.4 trillion.

(Let’s give natural gas a pass, for the moment). Now we are looking at a serious answer to the expenditures that we are in the process of starting to make. In fact we have generated a revenue stream that covers half the national debt.

But think of the benefits to the government, outside of just the money. They are not generating a new tax, no it is an incentive to change to a new form of energy. It appears to punish the energy companies, who have been seen to be making “obscene profits.” And it is not immediately seen as being applied to individuals. Now of course the latter is not true. In the end, the companies, whether the coal company, the oil company, or the utility company that converts the fuel into energy, will pass on the cost. Coal that used to cost say $50 a ton, is now going to cost the utility almost four times that amount when the CO2 cost is factored in. And so electric bills will go up, dramatically. But it will be the power company imposing the increase, and the feds standing there promising regulation to make sure that no fees are improperly charged, and thereby looking (potentially) like heroes.

So does it matter whether climate change is real or not? We can’t get into that debate! The issue is settled! (It has to be otherwise we won’t be able to use this path to getting the money). And so the hymn book is passed out to the Administration spokesmen, and they will all sing dutifully from it. Just don’t expect them to be very credulous to dissenting voices. They can’t afford to listen.

It was ex-Vice President Gore who quoted Upton Sinclair "it is difficult to convince someone of something when his paycheck depends on his not understanding it." (for paycheck read success).
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