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| The Peak Oil Crisis: 2010 An Annus Horribilis |  |
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| By Tom Whipple |
| Wednesday, January 06 2010 12:43 |
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For Queen Elizabeth, 1992, the year Windsor Palace caught on fire and several of her kids separated, was a an annus horribilis, for the rest of us the coming year may well turn out to be horrible too. While our leaders and the media continue to tell us that we have turned an economic corner and that all will be well soon, the underlying data, for those willing to look, tell a far different story.Just as climate scientists debate the existence of a "tipping point", beyond which rising global temperatures are uncontrollable, there may exist an economic tipping point beyond which control of the US and global economies is beyond the powers of government. Although another economy-crushing oil price spike in the next 12 months is a possibility, it is the sovereign debt crisis and all that it entails that seems to be a more imminent threat as we enter 2010. Oil prices, however, are back over $80 a barrel, and although few are predicting a price surge in the near future, China, India and several other Asian economies are growing rapidly. There is a good market for the oil that is being produced somewhere and OPEC production has been climbing of late, eating into the cartel's spare capacity to produce more oil. Of immediate concern, however, is the situation surrounding national debts, particularly that of the U.S. which happens to issue the world's reserve currency. For the last nine months, Washington has been engaging in a variety of unprecedented fiscal activities which hopefully will prevent the US economy from sinking into further economic difficulties. The government has bought up nearly a trillion dollars worth of bad assets from the banks in order to free up capital and keep them solvent. To support the policy of keeping federal interest rates close to zero, the U.S. Federal Reserve also has been buying up billions dollars worth of new treasury securities. Thanks to the $1 trillion plus deficit the U.S. is now running, Treasury securities are being issued in quantities that have never been seen before and as government revenues continue to plunge are likely to be issued in ever greater quantities. Amidst the chaos of rising unemployment, spiraling foreclosures, collapsing real estate prices, amazingly enough, the U.S. equity markets have been rising steadily. Some astute observers are beginning to question just what it going on. How can tens of billions of U.S. Treasury securities be auctioned off at such low interest rates each week while many traditional foreign buyers, like China, are backing away from purchasing more U.S. debt as fast as they can without crashing the value of their holdings? How can sensible investors be buying so much stock that prices continue to rise steadily at a time when real unemployment likely is above 20 percent and the prospects for earnings growth by US companies is as bad as it has been in the last 80 years? The answer, of course is that they probably can't, and this is why suspicions about just what is going on are starting to be raised. Close examination of available data suggests to some that traditional buyers of U.S. stocks such as retail investors, hedge and mutual funds and foreigners simply aren't there on a scale needed to support nine months of some of the fastest growth the equity markets have ever seen. There are suspicions about the Treasury's auctions too which are consistently oversubscribed with buyers clamoring to buy massive quantities of debt. Obviously there is only one place that all these billions can be coming from and that is the US Federal Reserve which has the capability of creating unlimited amounts of money simply by typing on a computer - you don't even have to bother to print money anymore. The theory of what is going on is simple - the Federal Reserve creates a trillion or so dollars and sends lots of it to the big investment banks, called primary dealers, in return for stacks of nearly worthless mortgages the banks collected during the recent housing boom. In return for letting them unload nearly a trillion dollars of worthless securities on the taxpayer, the banks oblige the government by using many of those billions to buy Treasury securities from the government at close to zero interest and to buy enough stocks to keep the market steadily rising. Everybody is happy. The great depression has been halted in its tracks, the stock market is soaring, signaling to the unwary that all is well, and Wall Street's multi-million dollar salaries and bonuses are preserved for yet another year. The question of the year is how long this federal effort can continue. The controlling factor will be interest rates and the length of time the government can keep interest rates close to zero as it issues trillions in new and refinanced securities. A few interest points higher and housing becomes unaffordable given the strictures on lending. A few more and the U.S. debt becomes unaffordable. However, this is not our only problem. Some people who follow and understand the intricacies of the U.S. money supply say that it is in contraction. Whenever this has happened in the past, the economic situation has gotten worse - sometimes much worse. Then we have the Chinese who seem likely to use their massive foreign reserves to import more oil and spark another price strike. If this is not enough, there are always the Iranians who have managed to get themselves so wrapped up in theocracy they might just set off another Middle East war threatening much of the world's oil supply. If any of these developments should occur in the next 12 months we are going to see not only an annus horribilis, but many anni horribiles ("dreadful years") too. Tom Whipple is a retired government analyst and has been following the peak oil issue for several years. |
Cutting emissions on the scale required to meet carbon targets means big changes in either how, or how much, we fly. Roger East sees an industry in need of radical innovation and asks, can it go fast and far enough? From Green Futures, part of the Guardian Environment Network
Britain can meet its stretching emissions reduction targets and still keep flying. That, at least, is the view of Ed Miliband, the UK's Energy and climate change secretary, echoed in a report by the Committee on Climate Change. How? By holding aviation emissions no higher than their current level and cutting the carbon from everything else we do by 90%.
It sounds ambitious. But such is our addiction to flight that many believe it's more feasible not least politically to make deeper cuts in non-aviation sources than to accept being earthbound. The climate change committee has floated the idea of introducing flying allowances as one way of keeping aviation growth to an acceptable 60% by 2050 (as opposed to the Government's estimate of 200%).
Even so, just keeping emissions static will be a huge challenge to the airline industry. It has always reckoned on rising passenger numbers, and demand reduction isn't really in its lexicon. Hit by a recessionary blip, airlines have been warning business customers off teleconferencing in favour of the virtues of face-to-face meetings. Yet at the same time, they have been trumpeting a commitment to the ten year goal of "carbon neutral growth" announced by the International Air Transport Association (IATA).
On the surface, it's a contradiction in terms. So how might aviation try to square the circle?
The simplest way to cut carbon is to cut fuel use. US commercial airlines alone burn about 50 million gallons of kerosene (the main aviation fuel) every day. Any reduction, of course, kicks right through to the bottom line in cost savings. So the industry has a vested interest in finding ways to cut consumption all the more so, as concerns over 'peak oil' loom.
There'd be a further incentive if governments grasped the nettle and started taxing aviation fuel. It's currently exempt, even for domestic flights. And that, argues the Campaign for Better Transport, gives airlines an unfair subsidy over rail. Clawing this back in Britain alone, they claim, would be enough to pay for a high speed rail line from London to Birmingham. And a fuel tax on domestic flights that increased the price of air travel by 50% could cut carbon emissions by one million tonnes a year.
But there are few votes in taxes. And so it's hardly surprising that the aviation lobby's resistance to anything more than very modest passenger duties or departure taxes cuts more ice with politicians than the call of green groups for tougher action.
However, one thing has changed for good, and that's the assumption that aviation emissions cost nothing. In Europe at least, the industry is preparing itself for the prospect of a market price on its carbon via 'cap and trade'. From 2012, the EU's Emissions Trading Scheme (ETS) will for the first time include aviation. Lobbying continues on how tight the cap should be, and what proportion of permits should be doled out free rather than auctioned but emissions trading in some form is now factored in to the industry's expectations.
In ten years' time, says independent aviation policy analyst Chris Hewett, it might be operating under a single global cap, with operators required to buy their initial permits at auction, then trading between themselves and on the wider carbon market. Carbon offsets could play a role, he believes, so long as controls are strict and the overall global cap sufficiently tight. Indeed, he goes so far as to call them "desirable, likely and feasible" under this kind of system. "We'll end up paying more for flying", says Hewett, "but that investment will go into cutting emissions elsewhere in the economy". Offsets won't replace the need for emission cuts at source, however.
So with kerosene looking like an increasingly expensive option, what alternatives are in the offing? Top of the list are 'carbon neutral' biofuels. Two years ago they were totally untried, but now, says Jonathon Counsell, Head of Environment at British Airways, they've "become a key part of BA's future carbon strategy". Virgin Atlantic scored the 'industry first' in 2008, flying a 747 to Amsterdam with one of its engines using a 20% biofuel mix made from coconut oil and babassu nuts [see Take-off for biofuels?]. Since then, Air New Zealand and Japan Airlines have used biofuels derived from jatropha oil and hardy oilseed-bearing camelina plants as (higher percentages) of the overall fuel mix. And Continental has done an experimental flight around the Gulf of Mexico with one engine running entirely on fuel made from microscopic algae.
Such 'proof of concept' work suggests that biofuels could offer a 60% carbon saving, and has dispelled fears that they were doomed by lack of energy density or a tendency to gel at low temperatures. Existing plane engines, it seems, can use them without modifications in 50/50 blends a recipe which could secure the necessary US Federal Aviation Administration approvals within two years.
So they work. But are supplies sufficient to meet demand? The big issue now, acknowledges Counsell, is taking biofuels to scale. IATA has set a goal of 10% of airline fuel to come from 'alternative sources' which basically means biofuel by 2017. The Sustainable Aviation Fuel Group, an industry consortium, wants planes to use 600 million gallons of biofuel a year by 2015. At this threshold, says Counsell, biofuels can be an economically sustainable part of the supply chain. It would still cost more than kerosene to buy, but that would be balanced by the expected financial value of the carbon saving it delivers.
If plant-based biofuels like jatropha really take off, though, they will create a massive demand for land on which to grow them. There is some prospect that significant supplies could be produced from degraded land unsuitable for other uses. But once a flourishing market is in place, it's hard to imagine that we won't see forests being cleared and food crops being displaced to make way for lucrative biofuels which is hardly a sustainable option.
"An algal pond the size of Belgium could meet all aviation's current fuel needs"
Hence the excitement over algae. Algal (often called 'third generation' biofuels), although currently experimental and expensive, could really help on this score, since they have the potential to be grown in waste or even salty water [see 'Algae biofuels race hots up'] and they produce a lot more fuel per hectare. "An algal pond the size of Belgium" could meet all of aviation's current fuel needs, says Sian Foster, Head of Business Sustainability at Virgin Atlantic. By comparison, you'd need "a field the size of the EU" to grow that much from plant-based biofuels.
So is that it problem solved? Far from it, says Rupert Fausset, Forum for the Future's sustainable transport expert. There's still a big climate problem even if you use algal biofuel instead of kerosene to cut the CO2, he says. The 'radiative forcing' effect from emissions such as nitrogen oxides (NOx) and water vapour (contrails) at high altitudes causes at least half a plane's climate change impact, and would remain largely unaffected by a move to biofuels. Even if these succeeded in cutting aviation's climate impact by as much as 30%, as their proponents hope, he adds, "a return to aviation growth could negate that in just five years. Biofuels do not change the game", he concludes. "The industry will have to make many more fundamental changes if it is to grow sustainably."
So what other options are there? More efficient flying would help. In part, that means smarter, more integrated air traffic control systems so planes flying over Europe wouldn't have to follow fuel-sapping zig-zag routes designed to fit in with all the various national systems of the countries below. It would also reduce the amount of time they spend stacking in holding circuits waiting to land. This much is feasible, and could improve efficiency on some routes by 10-20%.
Then there are improvements to engines and aircraft body design. A long series of gradual cuts in fuel use have been achieved by boosting engine efficiency and using lightweight materials for the body, such as in the current generation of 737s. In the next few years, Boeing and Airbus should bring into service new turbofan engines which promise 10-15% better performance. Overall, IATA is confident of meeting its targets for annual efficiency improvements of 1.5% across the world's airline fleets.
But there's only so far that efficiency curve can rise, warns Keith Hayward, Head of Research at the UK's Royal Aeronautical Society. We're reaching the point where further gains in fuel burn economy in current gas turbine engines come up against the basic laws of physics and chemistry, where they're only achievable at the expense of increasing NOx emissions. The new open rotor technology, which could be eight years away, might deliver as much as a 30% step change, but there are big commercial risks with such new departures, and real worries too about how noisy they are the issue which has always attracted by far the most public complaint.
Nor is there much low-hanging fruit left for plucking in the field of aerodynamics and design. Again, says Hayward, we'd need something really radical to make much of a difference. The reconfiguring of plane body shapes, from the current 'tubes with wings' into so-called 'flying wings', comes into that category. Theoretically, says Jonathan Cullen at Cambridge University's Department of Engineering, you could design an aircraft with a 'laminar flying wing' body shape, which, if you optimised everything else to the nth degree, would run on 46% less fuel than today's average plane.
Worth pursuing, perhaps: but what that 46% figure really tells us is that planes aren't half bad at flying already, and the scope for improvement is relatively limited certainly compared to houses and cars, where Cullen calculates that there's room for up to 90% efficiency savings.
In any case, the aviation industry won't want to rush into mass production of anything as way out as the flying wing. It's a business that favours evolution rather than revolution. Planes are expected to last 25 years, and it's hardly cost-effective to replace them sooner. Airports, too, won't welcome all the reconfiguring they'd need to handle 850-seater flying wings as wide as a cinema at least not until the business case is overwhelming.
All of which means that even holding aviation emissions constant over the next few decades is going to be an extremely tough ask. This is perhaps the main industrial sector where it is hard to imagine real breakthrough technologies coming through in the time frame required for making drastic carbon cuts. So either other sectors will have to make even deeper cuts to compensate deeper than Ed Miliband suggested or we will have to place our faith in offsets on a huge scale. Or
we will somehow learn to live with less flying travelling more slowly [see 'At a leisurely lick'], and enjoying digital, rather than face-to-face, contact.
"Burning fuel is not the only way to fly"
For some, though, the dream of zero-emission aviation should not be abandoned so easily. Burning fuel, they argue, is far from the only conceivable way to fly [see panel]. Take Cranfield Professor Ian Poll, who gave an interview in 2008 propounding a nuclear powered airliner ΰ la Thunderbirds. Was he just flying a kite, thinking the unthinkable? He is, after all, the chair of the research group Omega, whose recent competition at Sheffield University asked students to sketch out truly novel ideas for powering commercial passenger planes. Both solar power and hydrogen fuel cells have their devotees, and can certainly lift demonstrator aircraft off the ground though in both cases the main application seems likely to be powering auxiliary systems rather than aircraft engines. Then there are lighter-than-air airships at present only niche players, but in the eyes of some, aviation's best long-term bet, capable of offering spacious facilities, comfort and train-like speeds for the leisure and business travel market of the future.
Innovations in aviation have a mixed track record, to say the least, but confounding the sceptics has been part of it from the start.
How it works: Rigid or semi-rigid compartment lifted and held aloft by lighter-than-air gas (hydrogen, helium, hot air), driven usually by gas-burning engine, steered by rudder
State of play: Technology with a (mixed) history, once considered defunct, now enjoying major R&D revival, various prototypes in development, first actual passenger-carrying flights underway
Latest action: Modern small airships developed by a German company (Zeppelin NT, no less) and others offer sightseeing tours for small groups in London, San Francisco, Switzerland and Tokyo weather permitting
Downsides: Image overshadowed by the Hindenburg fire and other 1930s disasters; relatively slow speed, especially into headwind; stability issues, unusable in bad weather; still burns fuel
Likeliest prospects: Advertising and tourism (already demonstrated), observation, heavy lifting, eg for military equipment, short-haul travel competing with ferries
Long-term vision? Big airships doing London-New York in 35 hours with lots of room to work, play and sleep
What the advocates say: "It's the game-changing technology", Roger Monk, Developer of the SkyCat at Bedfordshire-based Hybrid Air Vehicles
How it works: Extensive arrays of photovoltaic cells mounted on large, light aircraft with massive wingspans, providing electric power to motors, with (limited) lithium battery storage
State of play: Experimental research, development of demonstrators
Latest action: Flights by ultra-light sailplanes, unveiling of Solar Impulse prototype aiming for a round-the-world bid.
Downsides: Insufficient power to carry weight; slow speed; needs power surge for take-off and power storage for night flying
Likeliest prospects: As unmanned aerial vehicles (UAVs) for observation, high-altitude scientific research and communications relaying; as auxiliary power source for lighting, computers, etc on commercial aircraft
Long-term vision? Limited: an inspirational exemplar rather than practical as primary power source
What the advocates say: "A paradox, almost a provocation", Bertrand Piccard, inventor of the Solar Impulse
How it works: Hydrogen is converted in a fuel cell stack into electric power; this drives the motor of a lightweight plane, as in stationary or land vehicle fuel cell engines, with only pure water as its 'exhaust'
State of play: Experimental development, first test flights (UAVs and piloted planes)
Latest action: Boeing's two-seater demonstrator flew level over Spain for 20 minutes on fuel cell power in early 2008, having climbed to altitude on lithium-ion batteries; the German Aerospace Centre's Antares DLR H2 motorised glider took off and flew over Hamburg in July 2009 on fuel cell power alone; and the US Navy's Ion Tiger set a 23-hour endurance record for a fuel cell UAV in October 2009
Downsides: Weight of the fuel cell (and any backup battery); low power density; onboard hydrogen storage issues; greenhouse gas impact via water vapour at high altitudes
Likeliest prospects: Stealthy long-flying surveillance UAVs; fuel cells for auxiliary on-board power
The vision? A transatlantic UAV flight within five years, according to researchers at the Georgia Institute of Technology
What the advocates say: "Still a long way from being the primary energy source for the propulsion of commercial aircraft", DLR (the German Aerospace Centre)
How it works: Small onboard nuclear reactor delivers power to engines
State of play: Provocative suggestion as post-2050 solution for powering commercial airliners
Latest action: Idea floated by Cranfield Professor Ian Poll in October 2008; previously researched by US and Soviet sides during the Cold War in the hope of keeping bombers airborne without refuelling, and featured on fictional nuclear airliner in the cult 1965 TV animation Thunderbirds
Downsides: Practicality, image, radioactive shielding, accident risk, vulnerability to terrorism, nuclear proliferation
Likeliest prospects: Idea that refuses to die
The vision? Nightmare
What the advocates say: "We need to be looking for a solution to aviation emissions which will allow flying to continue in perpetuity with zero impact on the environment. I think nuclear-powered aeroplanes are the answer beyond 2050. The idea was proved 50 years ago, but I accept it would take about 30 years to persuade the public of the need to fly on them", Professor Ian Poll.
This article was shared by our content partner, Green Futures, part of Guardian Environment Network
