Monday, February 23, 2009

AB 32 and Refinery Audits: Shutting Down Refineries?

The “Industry” economic sector of AB 32, the California Global Warming Solutions Act of 2006, is to receive very light treatment in reduction of greenhouse gases (GHGs) by 2020. Industry is shown in the Scoping Plan to reduce GHGs by only 0.3 MMTCO2/year (million metric tonnes per year). The other sectors combined are to reduce GHGs by 169 MMTCO2/year. The 0.3 is so small compared to the other sectors that one might wonder why the Industry sector gets off so lightly. But, there is more coming, we are assured by ARB.

One manifestation of what is to come is that the major industrial sites in California must undergo a site-wide audit for energy and toxic pollutants, conducted by state-approved, third-party auditors. Presumably, these auditors will be knowledgeable about the industrial site, its processes, energy use patterns, etc. The auditors are intended to discover and report to ARB on the many, perhaps myriad, ways that these industrial plants can and should modify their plants to reduce energy and thus reduce GHGs, and reduce emissions of toxic air pollutants.

One must admire the audacity of ARB, and the skill and knowledge of the auditors. Admiration is due to ARB because these industrial plants, especially the refineries, cement plants, and hydrogen plants, have for many years employed top engineers with decades of experience to acquire plant data, analyze the data, perform cost studies, and report on the feasibility of reducing energy consumption and regulated toxic pollutants. I should know, as I did exactly that during a good portion of my engineering career.

Perhaps ARB’s auditors will discover that there are, indeed, many potential projects to save energy in these plants, with energy reductions measured in the millions of BTUs per hour. That works out to many millions of tonnes CO2 per year. The engineers and management are well aware of such opportunities, and know exactly what they are, and where they occur. What the engineers and management also know is the cost to implement such projects. More importantly, they know how many years it would require to break-even on the capital outlay invested. The vast majority of such projects have break-even periods of 5, 10, 15, 20 years or longer. They remain un-built because a private company, in business to turn a profit, cannot afford to use its scarce and therefore precious capital on such low-return projects.

Typically, a private company in the refining business has only a certain amount of capital annually to allocate amongst many competing projects. This capital I refer to is not for maintenance, not for paying down debt, not for strategic acquisitions of other companies, but solely for spending on existing plants. All those other uses of capital are important, no doubt, but that is not the subject of this piece.

First, is stay-in-business projects. This may include installing equipment mandated by the many and varied state and federal regulations. For refineries, such examples come to mind as higher octane reformers when lead was no longer allowed in gasoline, or expensive hydrotreaters when sulfur was no longer allowed in diesel fuel, at least not more than 15 ppm. Also, aromatics extraction plants were required when benzene was no longer allowed in gasoline. Then, catalytic destruction devices for fired heater exhaust were required to remove or prevent the formation of nitrous oxides. Also, very expensive electrostatic precipitators to remove particulate matter from the exhaust stream of catalytic cracker regenerators were mandated. Another category is replacement of worn-out equipment. To stay in business, the refineries were required to invest in these things, and many others. Such stay-in-business funds spent were of course not available to spend on energy conservation projects.

As a sidebar, some refineries, approximately 150 in the U.S., were shut down over the past 30 years because the required capital infusion to stay in business was just too much. Those refineries were analyzed at length by their owners, who concluded there was no way such funds would ever break-even.

Next, after stay-in-business items, is discretionary spending. A company almost always (in my experience, it is absolutely always) has some capital spending opportunities that will earn a good return on investment. Such projects may break-even in as little as a few months, one year, or two years. Among the many duties of plant engineers is to evaluate the plant and submit to management a list of projects along with the expected break-even period for each project. The funds to build the list of projects invariably exceeds the money available. Therefore, when energy savings projects have break-even periods of 5, 10, 15 years or more, there is no economic justification to spend the scarce capital on those projects. There is rarely enough capital to spend on those projects that break-even in less than 2 years. Sometimes there is no capital for these at all. Therefore, the energy projects remain identified but not realized.

The US Department of Energy, DOE, recently had and may still have a program in which energy experts visited energy-intensive manufacturing sites across the country, audited those plants, and reported how much energy could be saved by investing capital. It is noteworthy that they did not report the capital required to achieve those savings, nor how many years were required to break even on those projects.

ARB's authority to mandate that a GHG-reduction capital project be installed may arise under the cap-and-trade provision, regardless of the break-even period required for that project. It is instructive that in other areas under AB 32, such as the Residential and Commercial sectors, a five percent investment criterion is employed. This likely means that when the net cash flows over 20 years are discounted at 5 percent per annum, then summed to break even with the investment, the project is deemed affordable. In simple terms, this requires an approximately 12 year break-even period. Yet, requiring a private-enterprise company to borrow money to install such projects will burden their company with additional debt. This will adversely affect their cost of borrowing future capital. In the alternative, the company could forego borrowing, and not invest in high-return projects on a dollar-for-dollar basis. This causes future earnings to suffer, placing the economic security of the enterprise in jeopardy. In either case, AB 32 energy audits will not be good for refining companies and other large industrial plants.

One bright spot from investing in GHG reduction projects in a refinery is that reductions beyond the mandatory amount can be sold in the carbon credit markets. The value of such carbon credits is not yet known, but have been trading at around US$30 per metric tonne rather recently.

The refining market in California is ordinarily finely balanced, with virtually no room for any refiner to fail in a business sense. The current economic crisis has decreased demand somewhat, but that will disappear as the economy improves.

Just a few short years ago, a refinery owned by Shell in Bakersfield was to be shut down as no longer economic. Such a hue and cry arose that a U.S. Senator became involved, and anti-trust charges were mentioned. The idea was that a shortage of products would result if the refinery were closed, and rapacious increase in prices paid by the hapless consumer due to a products shortage. The outcome was that Shell did not shut down the refinery, but eventually sold it. That refinery now is in bankruptcy proceedings, indicating that Shell was indeed correct that the refinery could no longer turn a profit. If and when other refiners find it unprofitable to continue with AB 32-mandated energy expenditures, what will the State do? Will California intervene again and forbid the closure of an unprofitable refinery? As to the bankrupt refinery in Bakersfield, will ARB mandate that they, too, install GHG reduction projects? Or, will they make more money in carbon credits simply by shutting down, thereby not emitting any GHGs?

This is about to get interesting. Very, very interesting, indeed.

Roger E. Sowell, Esq. Legal website is here.

Tuesday, February 17, 2009

Lawsuits to Block AB 32

There are a few lawsuits already filed to challenge some aspects of AB 32, California's Global Warming Solutions Act of 2006.  One that I admire is Tesoro Refining and Marketing Company v. California Air Resources Board, filed in California state court (Sacramento).

Tesoro claims that forcing refiners to produce transportation fuel (gasoline) with 10 percent renewables (e.g. ethanol) is inconsistent with the AB 32 mandate to reduce GHGs because converting bio-mass to ethanol consumes essentially the same amount of energy as the energy contained in the ethanol produced. Stated another way, there is no GHG reduction, as GHGs are just shifted around. The argument is substantiated by studies that considered the agricultural energy requirements to plow, plant, fertilize, water, cultivate, harvest, transport, convert to ethanol, then transport the ethanol (by truck or rail) to gasoline blending locations.  This could also lead to "leakage," whereby GHGs reduced in one geographic area are simply increased in another area.  That would be the case with California gasoline where the crops for ethanol are grown and processed in another state.   AB 32 requires the implementation the Low Carbon Fuel Standard, which includes the 10 percent renewables in transportation fuels. 

That is a valid argument, and it will be quite interesting to watch this one play out.

Some car dealerships also sued the Air Resources Board over the proposed car mileage standards (Pavley standards), claiming the state cannot make rules where the federal EPA has set mileage standards (the pre-emption argument). That argument looked good under President Bush, but President Obama has ordered his EPA to effectively grant California’s request. Those lawsuits will be moot in short order.

Roger E. Sowell, Esq.   Legal website is here

Friday, February 13, 2009

AB 32 and the Electric Power Sector

Under California's AB 32, aka Global Warming Solutions Act of 2006, greenhouse gases must be reduced to 1990 levels by 2020.  The greenhouse gases, GHGs, are primarily emitted by the Transportation sector (38 percent of the total), followed by Industrial (20 percent), then by the Power Generation sector (23 percent), and by Commercial and Residential (9 percent). 

The Power Generation sector is complex, and has several aspects.  Firstly, some power is generated for sale in the state, some is imported from other states, and some is generated and consumed on-site.   Secondly, power imported and generated for sale must be balanced by the customers' demand (Commercial and Residential sector), as there is no practical way to store power (leaving aside for the moment pumped storage hydroelectric). Thirdly, California has imposed strict new laws affecting both imported power and generated power for sale.  Imported power cannot be generated by coal, or natural gas, unless the heat-rate is at least as efficient as a natural-gas-fired combined cycle cogeneration plant.  Fourthly, no new nuclear power plants may be built in California, by state law.  Finally, power generated from renewable sources must comprise 33 percent of the total state-wide power by 2020.  This last is the Renewable Portfolio Standard, RPS.   There is an medium-term requirement for RPS of 20 percent by 12/31/2010.  

Given all this, AB 32's Scoping Plan states that electric power contributions to the GHG reductions shall constitute improvements (reductions) from building and appliances, additions to combined heat/power generation, renewable generation, and One Million Solar Roofs.  The reductions are expressed as Million Tonnes of CO2-equivalent per year, and are as follows:

Buildings/appliances...........................19.6 MMTCO2e
CHP - 30,000 GWh combined heat and power generation at 4000 MW .....6.7
Renewable Portfolio Standard..........21.3
Million Solar Roofs..............................  2.1
Electric Energy Efficiency..................15.2

The High Speed Rail is also to reduce CO2 by 1 MMTCO2e per year, but it will undoubtedly consume electric power to do so.  How much is not stated.   I will leave that to the side.
There is another large amount of CO2 reductions that is not specified as to source or origin, in the amount of 34.4 MMTCO2e, listed as Additional Reductions Necessary to Achieve the Cap.  I believe this means, 'We are not really certain what happens here, but we need this amount to achieve the goal.  Stay tuned, we will make this part up later.  Trust us.'

The task is to unravel all this into discrete actions, and determine who has to do what, and to what extent.  Then, we can determine the costs and benefits, and feasibility of achieving the goals by 2020.  

Electric Energy Efficiency

Electricity efficiency is one discrete action, and it is shown as 15.2 MMTCO2e per year. This measure is implemented by upgrading old appliances and motors to new, high-efficiency appliances and motors.  Appliances include refrigerators, freezers, air conditioners, heater system fans, electric stoves and ovens, dishwashers, clothes washers, and electric clothes dryers.   15.2 MMTCO2 per year equates to roughly 5500 MW of power run full time, 24 hours per day every day.   The problem lies in that none of the appliances runs 24 hours per day, every day.  The intent of AB 32 is to replace old, inefficient appliances with modern, high-efficient appliances such that some MW of electric power is reduced from the power grid.  It is far more likely that the hours per day that the appliances operate is something like 3 or 4 hours per day, but I will use 6 hours per day to illustrate this point.  Using 6 hours each day requires the 5500 MW to be multiplied by 4, and we get 22,000 MW power not needed.  

Knowing that there are approximately 15 million homes and apartments in California, based on a population of 37 million and roughly 2.5 people per dwelling, we can compute the power saved per dwelling and check for reasonableness.    This works out to roughly 270 kwh/month per dwelling, and at $0.12 per kwh, the savings per dwelling is almost $32 per month.   Something does not align here, as the Scoping Plan states that the savings per household will be on the order of $33 per month, and that is after allocating some of the savings to pay for the new appliances.   The net benefit is to be roughly $400 per year ($33.33/month), per household, per the Scoping Plan.   The gross benefit per month must then be approximately $68.00 per month, using $36 to pay a loan for $5000 over 20 years at 6 percent compound interest, and $32 per month to make the net $400 per year.    The $5000 for the loan is a rough estimate to replace a central air conditioning unit. 

My value from above of $32 per month is just under one-half the required value of $69 per month.   To make this work, one is required to adjust one or more of the assumptions that led to the $32 per month.  One such assumption is that the utility company will throttle back a form of power generation that has a thermal efficiency of around 40 percent, that is, one of their most inefficient power plants.   A Rankine-cycle gas-fired steam plant is  such a plant.   It would not make sense to throttle back the CCC, or combined cycle cogeneration plants, because their thermal efficiency is higher than 40 percent at around 57 percent.   One could also adjust the power price that was used in the calculations, instead of 12 cents per kwh, use 24 cents per kwh. 

It just does not make sense. 

Million Solar Roofs

Now, turning to the Million Solar Roofs, and trying to verify that those save 2.1 MMTCO2 per year.  The Scoping Plan gives the power saved as 3000 MW, running at an average of 6 hours per year per the California Energy Commission figures.  Using a power plant efficiency of 57 percent, the savings does indeed equal 2.1 MMTCO2 per year.   That 57 percent efficiency implies that ARB has in mind to throttle back the most efficient gas-fired plants, as stated above, the CCC plants.  Or, to avoid building those plants.  

Further investigation of the million solar roofs idea, from published data, reveals how much roof area is required for the average household.  Using 1 million households, we obtain roughly 330 square feet per roof, an area approximately 11 feet wide by 30 feet long.   This is based on one currently available offering for solar panels that produce 224 watts each, and are 3.5 feet wide and 5.5 feet long.  The roof array would be three panels wide, and five panels long. 

Another area where the Scoping Plan fails is for households that do not presently have an air conditioner.  Many such homes exist in coastal areas, and are cooled by the ocean breezes.  They will have little to no opportunity to purchase a new more efficient air conditioner, yet their price for power will go up along with everyone else.  Where such homes have electric kitchens, water heaters, and heating systems, there is very little they can do.  Perhaps they can install an electric heat pump for their home heating system, but the electric range, stove, and water heater will continue to consume the more expensive power.   They may be able to install a solar water heating system with the electric heater as a backup. 

Combined Heat and Power, CHP

CHP systems and the GHG savings for them under the Scoping Plan just do not make any sense.  The annual savings in GHGs is given as 6.7 MMTCO2/year.  The power generated by these systems is also stated as 30 GWh per year, with peak rating of 4000 MW.  One can then calculate that these are to run 7,500 hours per year, or roughly 20 hours per day every day of the year.   Or, it could be that these require 15 percent of every year shut down for maintenance.  It is certain that some maintenance time is required.  The CHP systems are likely to be natural-gas fired engines coupled directly to a generator, with the exhaust heat captured and converted to hot water.   These systems are useful in businesses and hotels where power and hot water are needed in fairly large amounts.  

Where the figures do not make sense is thusly:  6.7 MMTCO2/year is the amount of CO2 the CHP plants place into the atmosphere, using 7500 hours per year and a thermal efficiency of 80 percent.   What should be used by ARB is the net reduction in CO2 in the atmosphere, i.e. the amount of CO2 that would be emitted by the power utilities, less the CO2 emitted by the CHP plants.  Using the 57 percent efficiency from earlier for power plants avoided or not built, we obtain 9.5 MMTCO2/year.  Subtracting the 6.7 emitted by the CHP plants, we obtain a net savings of 2.8 MMTCO2/year.  Once again, the Scoping Plan figures do not make sense.  This is a bust.  

Renewable Portfolio Standard

The RPS has 33 percent renewable energy by 2020, and is to reduce GHGs by 21.3 MMTCO2/year.   This represents approximately 11,500 MW if running an average of 67 percent, or 16 hours per day.  This is the current average for all renewables in California, which comprises geothermal at nearly 100 percent, biomass at nearly 100 percent, and wind at approximately 25 percent.  No solar is producing significant power according to the California Energy Commission data for 2007 and 2008.    Some solar plants have been approved, and more wind plants have been approved, but the approved projects will likely fall far short of the required 33 percent by 2020.  

It is also a problem in that the new renewable power plants are likely to be wind and solar, with few new geothermal sources, plus some biomass plants.  The average generating rate is therefore likely to be much less than 67 percent, requiring more MW of installed power.  


This category is to reduce GHGs by 19.6 MMTCO2/year.  This category includes new buildings with better energy designs and with high-efficiency appliances, and retrofitting existing buildings.   This works out to approximately 14,000 MW running 12 hours per day, at the 57 percent efficiency for avoided power plants.  

If we use an average of 10 times the square footage for a building compared to a home with one of the million solar roofs, we can obtain a rough value for how many MW per building, and thus how many buildings are contemplated to be retrofitted by this.  This works out to roughly 470,000 buildings.  Or, if the buildings are smaller, perhaps only 5 times the size of a home, then there are nearly one million buildings to be modified.   The energy savings per building is approximately 30 kw.  


The Electrical Energy Efficiency does not make sense unless one uses 24 cents per kwh for avoided power cost.  Similarly, the CHP area does not make sense because it appears ARB made a flawed calculation for the net GHG reductions.   There are inequities in the Scoping Plan, as mentioned, that impact all-electric coastal homes.    Another inequity is for rental units, where only the landlord can install more efficient appliances, but the renter pays the utility bills.  The landlord must increase the rent to justify this, and that may be difficult in rent-controlled properties. 

Roger E. Sowell, Esq. 

Thursday, February 12, 2009

AB 32 and Diesel Consumption by 2020

This is the second in a series of postings on AB 32, the California Global Warming Solutions Act of 2006. The first was dedicated to gasoline usage; this one zeroes in on diesel fuel. The gasoline posting concluded that there is no way to reduce gasoline usage to 1990 levels by 2020, unless some very high-mileage cars are introduced very quickly, and at a price where consumers can afford them.

The short version for diesel fuel is: there is no way diesel fuel will be cut back to 1990 levels by 2020. A snowcone has a better chance of staying frozen in a volcano next to the magma. Picture the movie Lord of The Rings: The Return of The King where The Ring falls into the river of flowing lava.

First, some raw numbers for diesel. Diesel consumption in California for 2008 was roughly 18.5 million gallons per day. But, in 1990, diesel consumption was 12.6 million gallons per day. That is roughly a 2.1 percent increase per year over 18 years. Projecting that growth rate into the future, we have then in 2020 a diesel demand of 23.7 million gallons per day. This is roughly double the amount consumed in 1990.

How then, is diesel fuel consumption to be cut in half by 2020? Cut in half means miles per gallon must double, if miles driven remains the same. Hybrid technology for trucks will account for some increase in mpg, without a doubt. Aerodynamic efficiency improvements will help on long-haul trucks, but the U.S. EPA's SmartWay program only improves mpg by approximately 15 percent. Hybrid does not work well for long-haul trucks; it is more suitable for short-run delivery trucks that make lots of stops.

Bio-diesel is mandated by AB 32, with increasing amounts up to 10 percent of the fuel. This will help some, no doubt.

It appears that hybrid technology must take up the lion's share of the mpg doubling.

Following the same analysis that was used for gasoline and cars, how efficient must the hybrid delivery trucks be, and how many must be sold each year to achieve the goal by 2020?

If 10 percent of the existing fleet is replaced each year with new vehicles, and 7 percent of the existing fleet is retired from service each year, the fleet turnover is complete within 12 years at a 2 percent growth rate per year in fleet size. But, the hybrid trucks must be ready today, and must achieve the high mpg of almost double compared to the existing fleet's fuel economy. Eaton Corp. has a hybrid truck for delivery service, based on hydraulic motors instead of electric motors with batteries. However, the fuel improvement was announced as 45 to 50 percent in the tests, which EPA estimates would result in approximately 30 percent improvement in actual use.

In summary, using a delivery truck that achieves 4 mpg in 2007, we must achieve 8 mpg by 2020. The hybrid drive will improve the mileage to 5.2 (if the 30 percent is achieved) or 6 (if the 50 percent improvement is achieved). Using 10 percent biofuel reduces the target from 8 to 7.2 mpg, leaving a gap of 7.2 - 6 mpg, or 1.2 mpg.

Perhaps lighter materials will help, or allow wheel rims, or lighter tires using low-porosity rubber. But, none of these are on the market today. And, hybrids just do not work well for long-haul trucks.

Back to long-haul trucks, the Rocky Mountain Institute has a paper in which better mileage for trucks is discussed. Their suggested improvements include reducing wind resistance (drag) by more aerodynamic tractors, closing the gap between the cab and the trailer, side fairings along the trailer, a duck tail to reduce tail-end drag, alloy wheel rims, single fat tires instead of dual tires, smaller wheels and lowering the trailer. Their stated claim is that a long-haul truck can be made that achieves at least double the current mpg. But, again, none of these are on the market today.

As was the case with gasoline, there appears to be no way that diesel consumption will be reduced to 1990 levels by 2020. I wonder if there is a Plan B?

Per the ARB's scoping plan, the transportation sector is the single largest contributor to GHGs at 41 percent of the total. Having shown the futility of reducing gasoline and diesel consumption to 1990 levels by 2020, a larger burden must therefore fall on the other sectors, such as electric power generation, industry, and agriculture/forestry.

I will analyze these sectors in future installments.

Addendum 2/13/09:  The analysis was flawed using 10 percent new vehicles per year, and 7 percent retired.  It appears that roughly 5 to 7 percent new vehicles are added, and retirements are 2 to 4 percent.  The conclusion remains valid, though, that there is no way the 1990 consumption will be achieved by 2020. 

Roger E. Sowell, Esq.

Mr. Sowell's law office website is found here.

Wednesday, February 11, 2009

AB 32 and Gasoline Consumption by 2020

One goal of California's Global Warming Solutions Act of 2006, aka AB 32, is to reduce greenhouse gases, GHGs, to 1990 levels by 2020. In the automotive sector, this is not difficult to pin down, as gasoline usage data are available through EIA (Energy Information Agency).

But, what will it take in practice to achieve this goal? What type of new-car miles per gallon will be required, and what ratio of new cars to existing cars? Put more simply, how many new cars per year must be sold, and what will their mpg be? I put some thought into this, along with my trusty spreadsheet. If others see where this is in error, please leave a comment and correct me.

Another factor is how many older cars are retired each year, and what is the average mpg for those retired cars?

We start with the basics, how many cars are on the road in California. This seems like a zillion, but it really is about 30 million in 2008. Roughly 8 cars for every 10 Californians. Gasoline production and consumption is about 42 million gallons per day in 2008, and at 12,000 miles driven per year per car, that works out to about 22 miles per gallon on average. Hybrid-type cars get a lot better than that, but some older cars are getting around 16.   For 1990, California gasoline demand was approximately 29 million gallons per day. 

If population grows at around 2 percent per year, and the cars/person ratio holds, then we will have roughly 38 million cars on the road in 2020. If each car continues to drive an average of 12,000 miles per year in 2020, then the fleet of cars must achieve an average of 42 mpg by 2020 to reduce gasoline consumption back to 1990 levels. Is this even possible? What is required?

If the state adds new cars at the rate of 10 percent per year of total cars on the road, and retires roughly 7 percent of the cars each year, this could work. But, the average mpg of all new cars sold must be 42 mpg from now until 2020. Is that possible? Even if cars are offered for sale with that mpg, will consumers buy them?

Another part of AB 32 is the Low Carbon Fuel Standard, which requires transportation fuels to include 10 percent renewable fuel -- bio-fuel. The above analysis with 42 mpg average for new cars includes the 10 percent bio-fuel.

There are a lot of SUVs sold in California, or at least, there were before June 2008 when gasoline prices spiked then a few months later the economic crisis struck and nobody is buying cars, or at least it seems that way. I suspect that few of the SUV's will achieve 42 mpg off the showroom floor, so there had better be a lot of hybrids sold at 50 to 75 mpg to make up the difference. In reality, the only 2009 cars that achieve 42 mpg or better are the Honda Civic, Volkswagen Jetta, and Toyota Prius.

For reference, here is a list of some SUV offerings for the 2009 model year, with city/highway mpg:

Ford Escape Hybrid FWD automatic 34/31  (city/highway mpg)
Mazda Tribute Hybrid 2WD automatic 34/31
Mercury Mariner Hybrid FWD automatic 34/31
Jeep Compass 2WD manual 23/28
Jeep Compass 4WD manual 23/28
Jeep Patriot 2WD manual 23/28
Jeep Patriot 4WD manual 23/28

In short, it appears that there is no way that the population can grow 2 percent per year, people can drive 12,000 miles per year, purchase 10 percent new cars every year, retire 7 percent of the vehicle fleet each year, and meet the AB 32 goal of 1990 fuel consumption by 2020. No way, at least that is how it appears to me.

Now, to put on my optimist's hat: Some gas-sipping vehicles are about to be introduced. If AFSTrinity can get moving, their cars and SUVs will achieve better than 100 mpg, but most of that is due to electric power from plug-in hybrid. The Chinese-built BYD plug-in hybrid car is supposed to get better than 170 miles per battery charge, which will effectively mean zero gasoline usage for many months for the average driver. But, these cars are not yet in showroom floors.

I plan to analyze other parts of AB 32 in the next few days and weeks. So far, the gasoline plan looks doomed. I wonder if there is a Plan B?


I was informed by one of my sons that my analysis was full of errors.  He had run the numbers, and offered these comments:  First, the 1990 gasoline consumption was not in my first effort, and it should be.  That number is now in place above, at 29 million gallons per day.  Second, the average car's mpg must therefore be increased to 42 mpg, not 35 as originally stated.  That correction is now in place, also.  This makes the problem much worse, as there are even fewer cars around that achieve 42 mpg.  

His third point, and a most excellent one, is that automobile companies do not make enough cars for California to purchase 3 million cars per year.  It turns out that in a good year, only about 15 to 17 million new cars and light trucks are sold in the U.S.  Fewer than that were sold in 2008, but that is an unusual year due to high gasoline prices and the economic crisis.  

Therefore, the fleet turnover in California will not be completed in 12 years, but will take much longer, perhaps 15 to 18 years, depending on how many new cars/trucks are actually sold each year.   Therefore, we must either greatly increase the new-car mpg, or drive much less per vehicle to achieve the gasoline reduction targets required.  Neither of those seems likely, as explained above.  

The conclusion remains valid, that there is no way the reduction in gasoline consumption to 1990 levels will occur by 2020. 

However, there is another aspect to all this.  Under AB 32, the Pavley standards require 43 mpg by 2016, and 49 mpg by 2020.   Pavley standards are the California alternative to the federal CAFE mileage standards, designed to cut CO2 from the California skies.  These are not yet law, pending a ruling from the federal EPA.  With Obama as president, a favorable ruling is expected any day now. 

The key point is that CAFE standards, and the Pavley standards, apply to NEW car sales, not to existing fleet on the road.  Therefore, it is impossible to achieve the 1990 gasoline consumption by 2020, as there is a graduated or sliding scale of increased mpg for each year between 2008 and 2020.  The above analysis was based on having the high-mpg cars available in 2009 and every year after that.  Clearly, that is impossible. 

The implications for this are large.  For one, refineries will be required to sell gasoline to meet the demand, so by 2020 they will likely be selling much more gasoline than the 29 million gallons per day sold in 1990.  Will the state penalize them for excessive energy consumption as they run their processes to churn out that much gasoline?   This will be addressed more fully in the post dedicated to the Industry sector.

The more one digs into the AB 32, Global Warming Solutions Act of 2006, the more problems surface. 

Addendum II Feb 14, 2009 

The Pavley standard is to reduce CO2 by 31.7 million Tonnes CO2 per year by 2020.  Using the EPA figure of 19.4 lbs CO2 produced for each gallon of gasoline burned (which is not a bad number, I checked it using average carbon-number for gasoline of 9), the gasoline reduction works out to just over 20 percent from the Business-As-Usual case.  It does not achieve a reduction to 1990 levels, but would achieve a reduction to 2008 levels of gasoline consumption.  

Therefore, as before, it is shown that transportation fuels do not reach 1990 levels.  Other segments of CO2 producers must therefore step up their contribution.  Which will it be: Industry, Power Generation, Commericial Buildings, Residential Buildings, Agriculture, Forestry, or Other?

Roger E. Sowell, Esq. may be contacted via his  website here.

Tuesday, February 10, 2009

My Letter To Air Resources Board re AB 32 Scoping Plan

Below is the letter I wrote to the California Air Resources Board, in which I stated my views in opposition to the ARB adopting the Scoping Plan for AB 32, California's Global Warming Solutions Act of 2006. The ARB dutifully accepted my letter along with hundreds of others, and posted it as letter number 390 on its website here. Below the letter, I have added more comments.

December 9, 2008
Ms. Mary Nichols, Chair
California Air Resources Board
1001 I Street
Sacramento, California 95814

Subject: Comments on Climate Change Proposed Scoping Plan, October 2008

Dear Ms. Nichols,

I am a California attorney who has worked for two decades in chemical engineering world-wide for petroleum refineries, chemical plants, and petrochemical plants. I have substantial experience in the engineering and economics of such facilities and their complex energy systems. The views expressed herein are my own, and in no way reflect the opinions or views of any other person or entity.

I have two main points, first, that the Business As Usual case in the Scoping Plan dramatically overstates the level of greenhouse gas emissions in 2020, and second, that even if one were to accept that global warming is a result of greenhouse gases in the atmosphere, California can do nothing to stop it.

I. The Business As Usual Scenario Overstates Greenhouse Gas Emissions in 2020

Firstly, the Draft Scoping Plan under AB 32 has serious flaws, as has been repeatedly reported to you by others. One serious flaw that I have not yet seen brought to your attention is the assumptions under the Business As Usual scenario for greenhouse gas emissions in 2020. The amount of greenhouse gases in 2020 are overstated because the Business As Usual case does not account for 1) the federal CAFÉ standards of 35 miles per gallon, and 2) innovations that have already occurred even without AB 32 implementation. Below are just four such innovations for your consideration. There are many, many others.

The Pavley standards are only slightly more restrictive than the federal CAFÉ standards, yet the Scoping Plan treats the Business As Usual case as if cars will not attain the federal CAFÉ standards.

The first innovation is improved batteries suitable for hybrid vehicles, and is based on the very recent membrane technology of ExxonMobil. This technology is licensed to EnerDel, a division of Ener1, who manufactures high-technology batteries. Their batteries allow more energy storage in less volume and less weight. Such batteries will greatly decrease the quantities of transportation fuels consumed, and thus the greenhouse gases emitted due to transportation.

The second innovation also applies to transportation, and is a novel material for ultracapacitors. As reported on 9/17/08 in ScienceDaily, “Engineers and scientists at The University of Texas at Austin have achieved a breakthrough in the use of a one-atom thick structure called "graphene" as a new carbon-based material for storing electrical charge in ultracapacitor devices, perhaps paving the way for the massive installation of renewable energies such as wind and solar power.”

The third innovation uses both hybrid batteries and ultracapacitors, and is the patent-pending drive system developed by AFS Trinity that achieves 150 miles per gallon in a sports utility vehicle, the Saturn Vue. Their technology was demonstrated and showcased in January 2008 at the Detroit auto show.
The fourth and final innovation is a process to produce hydrogen from water and sunshine through synthetic photosynthesis, developed in 2004 by scientists at Imperial College, London. This one has some more development work ahead, but the fundamental breakthrough is complete. We will soon see abundant hydrogen from sunny areas, with the hydrogen used as fuel for power generation plants. This power will be as green as hydroelectric power.

It is important to note that none of these innovations were made in California, and none required incentives from AB 32. Yet, all are vitally important in reducing energy consumption and the greenhouse gases from producing energy. Each of these innovations, and many others not mentioned, will independently meet stated AB 32 goals by contributing substantially to economic growth, improving energy efficiency, creating jobs, and reducing greenhouse gases.

II. California’s AB 32 Cannot Stop Global Warming – California is Too Small

Secondly, the ARB cannot ignore the mandate to produce regulations as required under AB 32, even when there is much evidence that the world is not warming, but is cooling instead. However, the ARB should seriously consider the comments made at the December 5th, 2008 meeting of the Economics and Technology Advancement Advisory Committee, especially those regarding relocatable manufacturing leaving the state to escape higher energy prices, renewable energy infeasibility due to non-existent power transmission lines, and the utter failure of the economic models to produce sensible results. Another key comment was the unintended and unforeseen consequences of earlier legislative action on sulfur oxides emissions.

I spoke with Dr. Michael Hanemann, the eminent professor and economist, and he admitted to me that the model cannot be used to predict future behavior, nor is it sensitive to time, nor is it dis-aggregated. Given that the model is highly uncertain, and independent experts recently expressed grave doubts about its results, and many manufacturers will leave California, I urge the ARB to proceed cautiously. It is highly likely that petroleum refineries will find it more attractive to produce California-quality gasoline and diesel in other states and ship the products to California via pipeline. The gentleman from the GM/Toyota venture also made it very clear that cars can be assembled in other states, too, where the regulatory burdens are lighter. California has already seen an exodus of talent and industry over the past few decades, and many more will inevitably follow with AB 32 requirements.

The facts are clear. California consumes approximately ten percent of all the petroleum consumed in the U.S., and approximately five percent of all the electric power produced in the U.S. On a global scale, these values are much smaller, with California’s petroleum consumption representing approximately two and one-half percent of the world’s consumption, and less than two percent of all the power produced in the world. Therefore, even if California were to stop using all energy today, the effect on the world’s greenhouse gases emissions would be negligible. Cutting back to 1990 levels by 2020 will be even less noticeable.

Another dubious statement made in the ETAAC meeting on December 5th asserted that there is a link between lower energy consumption per capita and jobs growth in California. The example given was that household money not spent on energy is spent on latte coffees, thereby creating jobs in coffee shops. More generally, the assertion was that money saved on energy is spent on discretionary items. Such a link is tenuous at best, and more likely non-existent. Any household or commercial savings due to lower energy consumption in California is offset at least partially, and more likely more than offset, by higher energy prices, higher gasoline taxes, higher rents or real estate prices, and high state income taxes. As has been amply demonstrated in 2008, the price of petroleum and its products are far beyond the control of any country, any state, or any company. To a certain extent, the same is true for electric power from gas-fueled plants.

The unintended and unforeseen consequences of regulations aimed at reducing sulfur oxide emissions from combustion of petroleum fuels was that few, if any, facilities installed sulfur scrubbers on smoke stacks. Instead, most industries found it far more attractive to remove sulfur before the petroleum product is burned. It is very likely that, in spite of the ARB’s best intentions and superb team of talented and dedicated experts, AB 32 implementation regulations will also result in some unintended and unforeseen consequences. It is instructive to note that other countries have not succeeded in reducing their greenhouse gas emissions.

III. Conclusion

Innovations and federal regulations already exist that will substantially reduce greenhouse gases and should have been included in the Business as Usual case. The ARB should recognize that severe additional regulations that hobble industry, commerce, and households will lead to high unemployment, mass relocations of energy-intensive businesses to other states, and yet do virtually nothing to accomplish the stated goal of reducing world-wide atmospheric greenhouse gases. The idea that others will follow California’s regulatory example in this area is speculative, at best. The market is already providing hybrid and other low-emission vehicles to buyers, which will amply reduce transportation-sector greenhouse gases emissions. Clean electric power is only a few years away, produced with hydrogen from synthetic photosynthesis.


Roger E. Sowell, Esq.
Law Offices of Roger E. Sowell

California's stated goal in AB 32 is not to eliminate global warming, as my point about California being too small to accomplish that is admitted by the California legislature and ARB. Rather, the AB 32 proponents wish to serve as a leader in reducing GHGs to draconian levels, while growing a robust economy. What is buried deep inside the legislation and studies in support, is that one reason California has less energy consumption per capita is long-standing laws mandating the sale of high-efficiency appliances. Such ordinary items as dishwashers, refrigerators, freezers, and air conditioners are on that list. California's research shows that this is a primary reason that Californians use only 60 percent as much electric power as the average across the U.S. This was accomplished by providing rebates and other incentives to the consumer to purchase the new appliances.

While there is some room to expand the efficient-appliance program, there is not much more room for improvement. Thus, further reductions in energy consumed in households will be rather more difficult. With an expanding population, it is likely that new homes will be built, or new apartments or other dwelling places. These homes/apartments will be built according to the new laws, and use much less energy than existing homes. But that still leaves the problem of the approximately 15 million existing homes/apartments: how will their energy consumption be reduced 30 percent by 2020, and an additional 80 percent by 2050?

One of ARB's answers is through solar panels on rooftops, financed by state programs so that property taxes are increased to pay for the installation. The monthly energy savings are supposed to be more than enough to pay the increased property tax.

When I worked for 25 years or so as an engineer, I studied similar problems of energy efficiency, heat loss, economics of installing energy reduction projects, and related issues. What we found was that insulation is a very good investment, converting single-phase motors to three-phase power is expensive and not a good investment for small motors, and home-generation must be subsidized to be affordable.

But, the state has other ideas. State financing programs will be for 15 to 20 years, and interest rates are likely to be around 5 percent per year. This likely will create incentives for many to install the better appliances and solar panels.

But, renters face a different problem. The building owner must pay to install the new air conditioners, dishwashers, and washing machines. But, the tenant will be the one receiving the lower electric bill. The building owner could increase his rents, but that may be a problem in a rent-controlled building.

I suspect I will have more to write on this later.

Roger E. Sowell, Esq.

To contact Mr. Sowell, see his website here.

Monday, February 9, 2009

Chemical Engineer Takes on Global Warming

As my two regular readers will know, I have lately become a regular reader and infrequent commenter on, a blog mostly dedicated to searching out the veracity of claims that man's activities are the cause of global warming.

I am also one who has a BS in chemical engineering, and therefore follow the doings in that rather esoteric world. That reminds me of a true story that happened to your blogger, in my senior year of undergraduate engineering school. It was a fine Spring day in Austin, and a rather cute and shapely co-ed walked with me to class. She asked what was my major, and I told her. She then asked what does a chemical engineer do? So I explained briefly that we design and operate chemical plants. She thought about that for a bit, then asked me, "What kind of leaves do those chemical plants have?" Honestly, she did, and she was serious! It was a fine moment, and I believe I answered her by describing refineries and chemical manufacturing facilities.

Back to the global warming and engineers: I receive my e-copy of Hydrocarbon Processing magazine each month, and in the January 2009 edition was pleased to see that Dr. Pierre R. Latour had written a letter to the editor. Dr. Latour (more on him in a moment) had replied to another fellow on the subject of controlling CO2 in the atmosphere as a means of stopping global warming. Dr. Latour gave several reasons why it is impossible to control the global temperature by changing the amount of CO2 in the atmosphere.

Below is a brief bio of Dr. Pierre Latour, excerpted from an article found here.

Pierre R. Latour is “a recognized authority in process automation technology and successful entrepreneur in several process control ventures. Latour began his career in the early 1960s with DuPont and Shell Oil after receiving a PhD in Chemical Engineering at Purdue.

He worked on the first Shell computer control project (FCC–Deer Park Refinery 1966). A two-year tour as a captain in the U.S. Army followed at NASA’s Manned Space Flight Center managing the Apollo Docking Simulator development.

After mustering out, Latour co-founded Biles & Associates (later acquired by Invensys) and Setpoint (later acquired by Aspen Technology). Latour served in a business development capacity as Vice President at Aspen prior to launching his current consultancy–CLIFFTENT, Inc.”

Dr. Latour, world-renowned PhD and professional licensed chemical engineer, offered this scathing analysis of the entire matter. To see his letter, scroll down to "Author's Reply."

A brief excerpt from Dr. Latour's letter follows. He writes that "Mr. Temple's (the writer of the other letter to editor),counter-claim against my comment about measurable, observable, controllable, stable and robust characteristics of the dynamic, multivariable nonlinear atmospheric temperature control system under design by Kyoto Protocols misunderstands my meaning. These mathematical concepts are part of the foundation of control systems engineering18 recorded in AIChE Journal, ACS I&EC Journal, IEEE Transactions, ASME Transactions and annual JACC conferences since 1960. They provide exact necessary and sufficient conditions for these characteristics for all linear systems and some nonlinear systems. I employed some of these for the Apollo command and lunar modules roll-pitch-yaw digital autopilots and lunar rendezvous trajectory designs11 when I was simulation branch manager, GS-14, Manned Spacecraft Center, NASA, Houston, in 1968 (I was 29 and James E. Hansen19 was 28). This was when President John F. Kennedy charged competent control engineers rather than lawyers to design national control systems. All competent refinery control system engineers and thermostat closers should assure themselves these criteria are met before embarking on designing, implementing and closing feedback control systems. Not to mention assessing the possible performance, merit and value of such systems. I did this when I closed one of the first computer loops on a commercial oil refinery fluid catalytic cracker regenerator temperature in 1967, aware of the consequences if the regenerator catalyst slide valve pressure drop approached zero. Now I am merely trying to acquaint climate change scientists, physicists, lawyers and politicians promoting such things as Kyoto Protocols that chemical process control system engineering has a useful voice, weak as it is, in climate control engineering." [emphasis my addition - RESowell]

Dr. Latour goes on to write: "The tenuous link between CO2 greenhouse effects and the Earth's temperature indicates humanity has no effective manipulated variable to control temperature; the steady-state gain dT/dCO2 is almost zero. If so, the system is uncontrollable. Kyoto will fail no matter what the political consensus may be."

As it may be that some readers might have some misunderstanding of Dr. Latour's statements, I will attempt here to translate these into more every-day language. First, the required characteristics of variables in a successful control system are what Dr. Latour refers to as "measurable, observable, controllable, stable and robust."

First, some basic control issues should be explained, and I will. A control system is necessary, and indeed these exist all around us, to maintain some quality at a desired point. One everyday example is the temperature dial on the kitchen oven. On mine, one turns a dial from OFF to BAKE position, then turns another dial until the mark is opposite to the desired temperature. When I want to roast a chicken, I set the dial to 325 degrees. The dial adjusts the setpoint in the oven to 325. There is a controller in my electric oven, connected to a temperature sensor at one end, and to an off-on switch that allows electric power to flow through the heating element. When the temperature sensor shows a temperature less than 325, the switch is automatically set to ON and power flows, heating up the heating element, and increasing the oven's temperature. When the temperature sensor shows the oven is at 325, the switch is automatically set to OFF, and the oven begins to slowly cool. When the temperature in the oven drops to about 320, the switch automatically sets to ON again, and the cycle repeats.

In control terminology, the controlled variable is the temperature inside the oven. The manipulated variable is the power flow into the heating element. And here is the key to Dr. Latour's argument: There must be a direct relationship between a change in the manipulated variable (power to the heating element) and the controlled variable (temperature in the oven). In this case, there is, as more power to the heating element results in a greater temperature. An example of no relationship would be when I light a candle in the next room, say the living room. Then, I watch the temperature in the oven, but that does not change. I can blow out the candle, and the oven still does not change. Or, I can turn on the oven, adjust the dial to 325, and light the candle in the living room. As the oven warms up, I can claim that the candle is heating the oven! But, when the candle burns out or is snuffed out, the oven still heats and seems not to be affected by the candle.

Back to Dr. Latour's first requirement: measurable. Measurable means that whatever we are to control, we must be able to somehow measure that, so we know where we started, where we are at any point in time, and when we have reached our desired goal. If we cannot measure it, we cannot control it. This is a fundamental requirement of control theory and is not subject to debate. Period. It does not matter how many Nobel prizes one has, or PhD's in any number of subjects, that point is not open to debate, consensus, or argument. Dr. Latour makes the point that nobody knows the temperature of the globe, as it cannot be measured due to the large size of the globe. It can only be estimated, and that estimation procedure is inaccurate.

Next, observable. This is closely related to measureable. One must be able to observe the variable, typically by measurement or by some other means such as inference.

Next, controllable. Controllable means that a change in the manipulated variable has an observable, measurable, and consistent effect on the control variable. Stated another way, and using the kitchen oven as the example, when the power flows to the heating element, the oven temperature increases. Not only does it increase, it always increases, each and every time. This is one point on which CO2 fails as a means to control global temperature. Dr. Latour refers to the dT/dCO2 is almost zero. This simply means that the amount of change in CO2 (dCO2) produces some amount of change in global temperature (dT). For the change in temperature over time, during the recent warming period, Dr. Latour wrote: "To quantify the chemical engineering perspective situation, the data for 1975 to 1998, show a barely perceptible rise of 0.6°C/33 years = 0.0182°C/yr before it stabilized from 1998–2008."

Next, stable. Stable means that the variables do not change over time, that is, the amount of temperature rise in the oven is the same each time one turns on the oven. Stated another way, it takes the oven the same amount of time to reach the desired temperature. It would be difficult to control if the oven heated up in only 10 minutes one time, but took an hour the next time. Or, using the gas pedal in a car as the example, one expects the car to respond in the same fashion with a certain amount of foot pressure on the gas pedal.

Finally, robust. This means that the control system will perform satisfactorily even when the actual system does not perfectly match the control design.

Putting this all together, one can easily see that CO2 in the atmosphere is not the way to control global temperature. What one can also see from the CO2 estimations and temperature estimations throughout history is that CO2 remained relatively stable, while global temperatures went up during the Roman Warming, the Medieval Warming, and decreased dramatically during the Little Ice Age. More recently, while CO2 perhaps was fairly constant or even rising a bit due to industrial activity, the globe warmed from 1900 to 1940, then cooled from 1940 to 1970. Clearly, CO2 is not a good control variable because it does not seem to matter what the CO2 level is, as temperatures go up, and go down.

This last point was made in an even more compelling manner by Frank Lansner in a guest post on Mr. Lansner shows that the Antarctic ice core data shows temperature rising, and temperature falling, at the same level of CO2 in the atmosphere. This happened consistently over four consecutive ice ages and inter-glacial warm periods. From basic control theory, this could not happen if CO2 were a control variable for global temperature.

This has gotten rather long, but I believe the point is made. The global warming scientists have some more thinking to do, and they really should consult with the experts in controls: the chemical engineers.

UPDATE 1, (November 3, 2009) Dr. Latour and Mr. Temple had another exchange of letters on the control aspects of CO2 and global warming, in the February 2009 issue of Hydrocarbon Processing, which may be found here.

UPDATE 2, (December 4, 2009) This post is the number one most visited posting on SLB, per my recently-installed tracking software. This post receives approximately 7 percent of all visits. Please, continue to spread the word.

UPDATE 3, (March 15, 2010) Dr. Latour has another article, this one an editorial in Hydrocarbon Processing, February 2010, on CO2 and Earth's temperature. I wrote on this here, with a link to his HP editorial here. This post (Chemical Engineer Takes on Global Warming) now receives approximately 10 percent of all visits to SLB.

Roger E. Sowell, Esq.