The Benefit of Increasing Federal Gas Taxes

It is difficult to imagine a situation where anyone on Capitol Hill would think to propose an increase in taxation, yet it seems that many think now is the right time to encourage lawmakers to consider just such a change. Here's why:

Highest average US gas price: $4.114, on 07/14/2008
Current average US gas price: $1.847, on 01/24/2009

In just 6 months, we have seen a 55% drop in prices at the pump. An additional $0.50 in taxation on top of existing prices would be a marginal increase relative to where prices were through most of 2007 and 2008.

Before going any further, I admit that any increase in gas prices, whether market-driven or imposed, is problematic. The cost of goods will increase, as we saw during 2007 and 2008, as a result of higher transportation costs. Those who bought SUVs and can't afford a smaller car could be forced to make difficult decisions about how to budget their money. With increasing joblessness, people who are now unemployed might face inhibited mobility. In many American cities, there may be insufficient public transport infrastructure to provide mobility to those who could no longer afford to drive their cars. Higher gas prices might also affect small businesses already struggling in the current economic climate.

There are, however, many potential benefits to increasing the federal gas tax. An incremental and continuing increase was suggested by the National Surface Transportation Policy and Revenue Study Commission. Evident from the title of the commission, highway infrastructure maintenance was their primary funding concern. In 2007, there was a $105 billion shortfall in funding for such maintenance and that gap is projected to increase each year. Revenue from an increased tax could be used to decrease that deficit.

Despite the obvious importance of highway infrastructure maintenance, I would propose using some of the money raised to expand public transport networks. This will help provide alternatives to those who might be unable to afford gas if prices are increased. It will also reduce the need to expand existing highways, by providing transportation options with smaller carbon footprints.

The increased cost of fuel will also encourage car owners who can afford to continue driving to choose smaller new cars. In the period from January 2007 to November 2008, car sales exceeded truck sales, reversing a trend dating back to 1998. During that period, gas prices reached record highs. As soon as gas prices decreased toward the end of 2008, light truck sales surpassed passenger cars once again. President Obama has identified this pattern of energy cost amnesia as 'shock to trance'. An increase in gas taxes now may help moderate that behavior by encouraging car buyers to always consider buying smaller cars and make all drivers contemplate carefully what driving they must do and what they can avoid to reduce fuel consumption.

Perhaps now is the time to make this change. It is politically risky but will also provide much needed federal income to support mass transit and highway infrastructure while reducing transportation-related GHG emissions. Everyone will feel the pinch but we may be well served by the change.

Georgia and Russia: Intersection of Energy and Foreign Policies

During the Fall 2008 semester, I was part of a group that analyzed US policy options in responding to Russia's invasion of Georgia.  The team members are listed at the end of this post by way of attribution. 

The net-net of the analysis yielded very few reasons for the US to get more involved in what is essentially a regional conflict involving ethnic histories stretching back hundreds of years.

However, we found one fact that led us to recommend that the US maintain a low profile presence in the area: as of mid-2006, Georgia is now home to the only non-Russian pipeline that can get oil or natural gas out of the areas east of the Caspian sea.  This is more than mildly irritating to the Russians.

Here is a link to a map for those not familiar with the area:

www.utexas.edu/maps/commonwealth/caspian_pipelines_2002.pdf

The pipeline is the Baku-Tbilisi-Ceyhan, and it runs through Azerbaijan, Georgia, and Turkey (in order to not run through Iran).  It is a large capacity pipe, capable of transporting up to 1.1 million barrels per day (Dr. Webber, the maps don't use any of the standard units you showed us on Thursday!).

All other routes to get that oil out transit through Russia.  We have seen two situations in the past few weeks demonstrating how willing Russia is to use that logistics dominance to control behaviors of other countries.

We found that British Petroleum is the largest investor, owning a 30% stake in both the pipeline and the reserves in the largest fields under the Caspian.  U.S. oil interests in total were less than 25%.  The rest was held by a variety of countries, with Europe in total having a nearly 2/3 stake in the pipeline and the Caspian region's oil fields.

Our conclusion was that while the US has an interest, we do not possess the largest interest. Therefore, our role should be one of awareness and indirect support.  We trained 2,000 Georgian troops on how to protect the BTC pipeline in 2002-2004.  That is the type of assistance our analysis found we should continue, but not expand.

I found it interesting to see the direct and real-time interaction between our energy policy and our foreign policy.  They constantly interact and impact each other.

We also found it to be yet another reason that alternative energy and other methods to reduce our need for oil coming from unstable regions such as this one needs to be a high priority item for the Obama administration.

Credit and thanks to my team mates on this project: 

Jessie Neufeld (Law)

Kevin Gong (LBJ)

Joe Harvey (MBA)

COL John Kilgallon (Fellow)

Jonathan Witham (MBA)

Becky Taylor (LBJ)

Agricultural Policy and Energy Policy

After listening to President Obama get sworn into office on Tuesday and hearing him talk about the need for change in energy policy, I couldn't help but think about the link between our food system and energy policy. This occurred to me primarily because my fiancee and I are in the midst of reading The Omnivore's Dilemma by Michael Pollan, which is an excellent analysis of the deficiencies in America's food system and how it impacts the country's health, environment, economy, and way of life.

Pollan also contributes to the NY Times Magazine. In an October 2008 open letter to the next President, Pollan cites some striking statistics. For instance:

• 19% of the fossil fuels burned in the US are used by the agricultural sector, making it the 2nd largest category of fossil fuel use (cars are #1)
• One study says that agriculture contributes as much as 37% of the greenhouse gases we put into the atmosphere
• While in 1940, 1 calorie of fossil fuels could produce 2.3 calories of food energy, it now takes 10 calories of fossil fuel to produce 1 calorie of food

This means that while we can talk about electricity generation and hybrids until we are blue in the face, we will be missing a huge piece of the energy picture. While measurements such as yield per acre have gone up tremendously during this transition in agriculture, such a measurement gives a very flawed picture of agricultural efficiency. If efficiency is measured by amount of output for a given amount of input, the more relevant input should be energy. What's worse is that policymakers are making the situation progressively worse, and "organic" agriculture does relatively little to fix the problem. As Pollan points out,

It must be recognized that the current food system — characterized by monocultures of corn and soy in the field and cheap calories of fat, sugar and feedlot meat on the table — is not simply the product of the free market. Rather, it is the product of a specific set of government policies that sponsored a shift from solar (and human) energy on the farm to fossil-fuel energy.

In order to develop any kind of comprehensive energy policy, the agricultural dimension must be considered. Electrical grid operators complain about solar energy because of intermittancy problems, but we could be using solar power even more efficiently to power our food system. Policymakers can hopefully seize this moment to lead us to a more responsible system of agriculture. As for consumers, when people talk about "calls for sacrifice" for the sake of the country, they should keep in mind that changing our food choices as consumers could have an even bigger impact on America's energy security and the environment than many of the other conservation measures that tend to get more attention.

carbon tax and 100% dividend

So while we're moving past the failed Lieberman-Warner climate bill, I've come across another way to get big stationary (and mobile ones too, it looks like) to cut their emissions without making basic needs such as energy unavailable to lower and middle classes. The idea is that you set up a number of credits that allow certain amount of CO₂ to be emitted each year. The number of credits will decrease, and with it the amount of pollution emitted into the atmosphere. Companies will have to purchase these credits.

So far this doesn't sound too different from the standard Cap & Trade system that was in the Lieberman-Warner bill. But where these two ideas differ is what to do with the money collected from the carbon credits. The Dividend idea would return the money to the public. I'm guessing this is to help offset some of the increased costs of energy as a result of a realistic price on carbon.

What sort of bothers me about this idea is that we have to return the money to the public. Don't get me wrong, I wouldn't mind a check coming in every month, but I can think of a ton of other uses for the money. I personally would favor taking the money and investing it in research grants and projects (NSF, DOE, etc...) instead of having some guy go out and buy a new plasma or iPod with it.

Maybe somebody has more info on this idea? I'd love to learn more about it.

Cross-posted at davidwogan.us

Energy production and associated water use in Texas

Don't know how many of you caught this article in the Statesman last week, but Prof. Webber's quoted in it quite a bit.

Tax free weekend on Green Products

Just an FYI for those of you looking to purchase big or small green items in the next few weeks. The State of Texas will have a sales tax free weekend on green products purchased during Memorial Day weekend (May 24th - 26th). Qualifying products are as follows:

1. Air conditioners
2. Clothes Washers
3. Ceiling Fans
4. Dehumidifiers
5. Dishwashers
6. Light bulbs (incandescent and fluorescent)
7. Programmable thermostats
8. Refrigerators

All qualifying products will display the Energy Star logo.

KiteGen vs Wind Turbine Feasibility in Texas

Wind turbines are limited by the material requirements and wind speeds. The ability to produce electricity comparable to a coal power plant is not feasible with the implementation of wind farms because of the large use of land and material expenses. KiteGen takes advantage of the wind speeds in the troposphere hundreds of meters high through the use of kites since they maximize lift against drag from the wind (KiteGen, 2007). The motion of the kites is controlled at the base.

Installing three KiteGen plants would produce about 3 GW of electricity which is almost equivalent to the electricity produced by the WA Parish Station, the largest fossil fuel plant in the Texas (EIA, 2008). When a KiteGen plant is working at optimal capacity, the carbon dioxide offset is determined to be 2000 pounds for 1 GWh of electricity (DOE, EPA, 2000).

The founders of KiteGen have built a small scale prototype used to model an estimate cost of a 200 kW scale project.

“With a kite area of 50 m², simulations give about 200 kW power generated with 12 m/s wind speed. A wind turbine of the same power is 40 m high, weighs about 62 t and costs about 900.000,00 Euros (1.4 million U.S. dollars). The expected KiteGen weight and cost are about 8 t and 60.000,00 Euros (93600 U.S. dollars) respectively.” (Canale, Fagiano, & Milanese, 2006)

Currently, the Federal Aviation Administration (FAA) restricts wind turbines to a maximum height of 500 ft. Lighting guidelines have also been set forth for wind turbines which can be applied to KiteGen but height requirements will still have to be altered. The height of the kites can reach over 1,000 meters (m), which is equivalent to 3,280 ft. KiteGen power plants reach altitudes at least 6 times greater than current maximum wind turbine height restrictions in place today. A solution to this dilemma is requesting no fly zone permit. These permits are normally issued to areas such as nuclear power plants, oil refineries, and near the president (KiteGen, 2007).

There are many benefits to installing KiteGen power plants. Wind turbines are affected by wind intermittency unlike KiteGen. The high elevations allow the KiteGen system to provide energy at all times during the day except in the case of rain weather. KiteGen uses much less land than wind turbines due to lack of shading, thus, allowing more plant installations in a given area. The FAA regulations may prevent immediate installation of KiteGen, but as soon as the benefits are witnessed, implementation will not be far away. The KiteGen system proves superior compared to wind turbines after considering the cost, land used, material, velocities reached and ultimate energy generated.

Question: What does constitute in this graph?

Hey does anyone know what the giant other constitutes in this graph that I got from one of Dr. Webber's slides? 32% is the largest percentage by far in the pie chart, so what falls under it?

Distributed Generation using Microturbines

Distributed generation refers to the small scale, on-site, production of electricity. Currently, hundreds of sites in the US operate some type of distributed generation equipment, including: reciprocating engines, combustion turbines, microturbines, and fuel cells. Benefits of these local electricity production units include reduced transmission losses, improved power reliability and energy efficiency, and peak load reduction. All of these distributed generation systems have benefits, but the focus of this blog will now turn toward microturbines.

Microturbines in particular have a few additional benefits. By eliminating the need for a gear box and pump, microturbines reduce the number of moving parts and therefore improve reliability. They are also low maintenance because they need no liquid coolants or lubricants. The modularly designed microturbines are versatile because they can be operated in grid parallel or as stand alone as well as be used in remote locations. Of all the distributed generation systems, microturbines offer the widest fuel flexibility by being able to run on natural gas, propane, flare gas, gasoline, diesel, and kerosene. Capstone, a major manufacturer, also advertises that their microturbines can be easily modified to run on waste gases from landfills, water treatment facilities, or agricultural and food processing facilities. In addition, many microturbine applications will make use of the high temperature exhaust gases to generate hot water or hot air thus being characterized as a combined heat and power unit.

However, work is still being done to try to improve the overall efficiency of microturbine systems. One area of research has been aimed at incorporating an Organic Rankine Cycle as a bottoming cycle to provide waste heat recovery and generate additional electricity. An Organic Rankine Cycle is similar to a regular Rankine cycle in that a fluid is boiled then passed through a turbine to produce power. The difference is that an Organic Rankine Cycle uses an organic working fluid such as a refrigerant or some other complex hydrocarbon. These fluids are able to boil at temperatures as low as 350 Kelvin, meaning that they can utilize the waste heat from other sources to generate more power.

By simulating a Microturbine coupled Organic Rankine Cycle (ORC) system, I found that the overall electrical efficiency was boosted from 30% to 37% by the addition of the ORC, and the ability to be used in a combined heat and power application can still be utilized. The application of such a system has vast benefits including the reduction of peak demand. As more electricity providers move toward real time pricing and smart meters a distributed generation system could be activated during times of peak demand to reduce the grid load. This allows the microturbine user to avoid the peak prices and would also reduce emissions, grid strain, and transmission losses.

Market Benefits of On-Line Coal Analysis

A number of market challenges are associated with continued electricity generation from coal in the US, such as increasing coal consumption and increasing costs of coal as fuel. Commercially viable technology improvements may be leveraged to enable coal-fired power plants to address such challenges. Through strategically planned technology implementation projects, individual power plants can achieve an increase in overall generation and operational efficiency, thereby reducing coal consumption. My paper focuses on a preliminary study of the adoption of one such commercially available technology: Prompt Gamma Neutron Activation Analysis (PGNAA) for on-line coal analysis. Efficiency improvements gained from implementing this technology at the individual plant level can be translated to meeting the associated challenges of the coal-fired electric power sector. The results of my study determine whether a sector-wide cost-benefit analysis of the implementation of on-line coal analyzers should be recommended.

Due to the preliminary nature of the study and confidentiality of plant operations data, the benefits can only be predicted qualitatively. A quantitative benefits analysis is not within the scope of my study.

My preliminary study concludes that the addition of on-line coal analyzers in a coal-fired generation plant’s coal-handling operations results in significant improvements in overall plant operations. Benefits are realized in the areas of supply chain management through contract surveillance, and boiler optimization, emissions control, and coal blending through enhanced coal quality assessment. The resulting optimizations and cost savings contribute directly to overall plant efficiency. The possibility of realizing such benefits across the coal-fired electric power sector as a whole merits further investigation. Therefore, a detailed quantitative cost-benefit analysis and life-cycle cost estimation study is recommended for individual plants, and this sector as a whole.

Municipal Wastewater and Energy

Municipal wastewater treatment is something most people do not give much thought to. You flush and what happens next is out of sight, out of mind. Functional wastewater treatment and collection systems are one of the most important factors in development and protecting the environment. Quality wastewater treatment is one of the things that separates developed countries from developed countries. Municipal wastewater treatment also consumes a significant amount of energy and is often the largest consumer of energy within municipal government. Fortunately, most municipal wastewater treatment plants (POTWs) can significantly reduce their energy consumption by implementing efficiency measures and generating electricity from anaerobic digester biogas, a renewable fuel. Like most other infrastructure in the US, municipal wastewater treatment and collection systems are in a state of disrepair and require large investments. From an energy standpoint, this presents an opportunity to install more efficient equipment and processes that produce biogas, a renewable fuel. Based on my research, if all POTWs implemented efficient pumping and optimized aeration, POTWs could reduce their energy needs 547 – 1,054 million kWh per year, or 3 – 6% annually. If all POTWs utilizing anaerobic digestion generated electricity with the produced biogas, POTWs could reduce their energy needs 2,320 – 3,480 million kWh per year, or 13 – 19% annually. Reducing POTWs energy consumption reduces carbon dioxide (CO₂) emissions from electricity generation. By fully implementing efficiency measures and generating electricity from all existing biogas, POTWs can reduce CO₂ emissions by 1.99 – 2.68 million metric tons annually. POTWs are a hidden source of energy savings and renewable fuel. Any local government or utility wanting to reduce energy use and greenhouse gas emissions should look to their local POTWs and at the least every POTWs in the US should conduct a periodic energy audit to check for potential energy saving and the possibility of energy production.

PHEVs vs. Ethanol

My research paper focused on determining how the cars of the future will be powered: electricity or ethanol from algae. Our economy has become so dependent on cheap transportation that increasing fuel prices are driving up the cost of every other good on the market. With that in mind, it's time we focus on transportation in a future in which oil is neither as available nor inexpensive as it is has been.

I found that PHEVs are not that far off, and that their progress depends greatly on improvements in battery technology. Once batteries have longer lives and are more dense in terms of energy storage, the PHEV age will soon begin. We are going to need more power plants, but aside from those capital costs, the infrastructure will not need dramatic changes to help usher in PHEV technology as our main means of transportation. The downfall is that essentially every car on the road would have to be replaced or adapted. However, as battery technology improves, the costs associated with PHEVs would be expected to drop considerably.

Ethanol has been much maligned recently as well all know. The current ethanol production industry in America relies greatly on government subsidies, but those subsidies won't last forever. Algae-based ethanol has a very promising future when evaluated on its environmental advantages. Right now, the technology is very expensive (~$20/gal), but those costs will come down as more research is done. Every car on the road today is capable of converting its fuel system to accept ethanol on a scale of $100s, but filling stations are not so flexible. It will cost about $34 trillion to convert existing stations to pump ethanol, and an infrastructure that large would be needed to support ethanol as the main transportation fuel. This bill would fall on the shoulders of private station owners as Big Oil has refused to even talk about the conversion costs on several occasions. Ethanol would still require the use of gasoline (the other 15% in E85) and emissions would only be improved slightly over gasoline usage.

When both technologies are compared, it seems that PHEVs are going to be the long-term (~50 years) winner. There will still be a need for an energy-dense liquid-fuel in the future, and algae-based ethanol could help fill that role. PHEVs scale much better than algae-based ethanol.

The Deficit Reduction Act of 2005

Current U.S. Population Estimate: 303,945,000

Estimated # of TV’s in America: 284,948,438
Average # of hours Americans spend watching TV: 6 hrs. 47 mins.
Total viewing time per day: 644 million hours of television in America

The Deficit Reduction Act of 2005 was a seemingly innocuous bill made law in 2006 which on the exterior seemed like a bill touting Healthcare Directed Budget Reform. Upon reading the bill, I found that of the 181 pages that make up the document, 7 pages near the center focus on a $10.5 billion dollar money making scheme under the heading: Digital Television and Public Safety.

This bill mandates a transition to digital television which will require each U.S. household to pay an average of about $114 to continue watching television in 2009. This rider bill was important to Congress because it allowed them to offset spending without having to curb the budget and it should be important to American's because it represents $114 in unconventional taxation in 2009 hidden in a bill with a blatantly dubious title.

Looking at the numbers above, you can see that television matters in America, it matters because it represents a captive audience of more than 300 million people. Congress can't let the freedom of sharing sparked by the internet sway that hold. HDTV made possible through DTV technology is a way to insure that Americans continue to watch (and with all of the exciting colors they'll watch with renewed vigor).

Want to find out more? Read the bill yourself. Click the link above and check out my podcast on iTunes.

Armenia: Foreign Relations, Energy, Environment, and Future Security

My podcast was on Armenia's foreign relations and how it has affected its energy status and subsequently its environmental situation.

Armenia is a landlocked country with no fossil fuels (at least none that have been explored due to economic and environmental concerns). For most of its energy- oil and natural gas- it relies on imports from nearby countries.

Here's a brief overview of Armenia-Neighbor relations:
East- Azerbaijan: Nagorno Karabakh War. Doesn't like Armenia. The feeling is mutual. Result: Blockade.
West- Turkey: Armenian Genocide, Nagorno Karabakh War. Doesn't like Armenia. The feeling is mutual. Result: Blockade.
North- Georgia: Break-away territories, internally unstable. Decent relations with Armenia, but likes to pick fights with the Big Guy, Russia. Result: Gas pipeline explosions- gas doesn't reach Armenia (especially hard during the cold winters.)
South- Iran: Ironically, our friendliest neighbor! Result: Gas pipelines, investments in border hydro-plants, electricity sold back from Armenia to Iran, potential crude oil processing plants. Here you are: a seldom heard, "Thanks, Ahmadinejad!"
North of Georgia- Russia: Thinks Armenia needs it more than it needs Armenia. Result: "Helps" out its former Soviet Republic, but can cut its assistance at whim (Gazprom, anyone?). Those problems with Georgia don't help, either.

Needless to say, Armenia is in quite a tough spot. It's energy comes from a few, and instable, sources. It's made it this far, though. (This far being millennia, past conquests and genocide and natural disasters.) But, it's made some sacrifices along the way at the expense of its environment. The 6.8 earthquake in 1988 did a number on Armenia. Its inhabitants cut down a significant portion of its trees for energy use (see previous post, "Yerevan: City or Desert"). The fall of the Soviet Union also left Armenia in shambles. Government officially reluctantly had to restart Metzamor, a nuclear power plant on a fault line. Improper use of Armenia's major renewable energy source, the Sevan-Hrazdan Cascade hydro power plant, significantly dropped Lake Sevan's water level, affecting the fauna and flora of the area, along with the economy which is highly focused on tourism.

Seeing as its relationships with the aforementioned countries are not likely to improve in the near future (many of the issues are out of Armenia's hands, or it doesn't have much leverage yet), Armenia must secure stable and sustainable energy sources. Its capital city, Yerevan, is in the midst of a construction boom and cars are being imported at record rates, making energy increasingly important.

There are options, though. Armenia can work to improve relations with Western countries and organizations to increase investments in renewable technologies (so far, most are going to Georgia because it's not officially in a "war" and investors look at the Caucuses as a whole for investment purposes.) Armenia can also capitalize on its high literacy rate and information technology potential for renewable energy purposes.

Armenia has to take control of its own future. It can't let the fact its neighbors happen to live in areas with oil and natural gas determine its energy, environmental, economic and living standards. Armenia can turn its "disadvantage" into real security and prosperity. Renewable energy offers hope and strength to Armenia, allowing it to take control of its direction through the innovation and creativity it has used for centuries.

Natural Gas Vehicles: Using Argentina as a Roadmap for Success

include I wrote my research paper on natural gas vehicles and their potential for success here in the United States. Natural gas vehicles are vehicles that run on compressed natural gas (CNG) . Although technically vehicles could also run on liquid natural gas (LNG), this is impractical based on the energy required to remove the heat in order to condense the gas. Operating a vehicle on compressed natural gas has the benefits of running a much cleaner fuel (less CO2 emissions, generally less NOx emissions), a fuel that is not dependent on the whims of OPEC, and a fuel that is available for fill up using the gas lines in our own homes. The disadvantages of CNGdecreases engine power/torque and gas mileage. However, I found that the gas mileage between the Civic GX (runs on CNG) and a regular 4-door Civic is only 1 mpg in favor of the gasoline vehicle. The power decrease is about 15% for a Natural gas vehicle (NGV). The price of natural gas is cheap enough that you could fill your car up at home with your gas line for $1.30 per gallon of equivalent gasoline.

In Argentina, the government has been heavily promoting the natural gas sector since the 1980s. However, this promotion does not include tax incentives or big rebates. The government began by splitting up the state-run company that originally had a monopoly on the natural gas sector. This split injected competition into the market. The government also helped build the first refueling stations. Local manufacturerers also worked to build the parts necessary to retrofit a vehicle to run on CNG. Now, Argentina has the largest NGV fleet at about 15% of personal vehicles.

I believe that we can replicate Argentina's success in the United States with the proper measures. First, we need the government to provide support like the Argentine government. Giving rebates on home-fueling systems is a way that the US government can lend its support. Being the first users of NGV's, the government can make an example of the technology. Supporting the technology in the taxi fleets of large cities is the next step. Finally, exanding the present natural gas infrastructure to include refueling stations can make this technology truly successful.