1 Combined Wind/Pumped Hydro Energy System in WNY As An
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Combined Wind/Pumped Hydro Energy System in WNY as an Alternative to Peak Oil Induced NY State Socioeconomic Disaster Derek Bateman [email protected] David Bradley [email protected] Submitted to the ESSCCA Conference, Buffalo, NY on April 1, 2001 1 Abstract The economy on which our civilization is based is both environmentally and economically unsustainable. Two obvious examples are the pending economic dislocation that will inevitably take place as a result of “Peak Oil” and Global Climate Change. For huge sectors of the economy many or most business models will no longer work when we are paying $5.00 to $20.00 a gallon for transportation fuel. What examples from social science research are available to prepare our society to avoid economic depression if not societal collapse? This paper will show how “Renewable Energy Feed-In Laws” (REFILs) can offer an approach to addressing Peak Oil and fossil fuel induced Global Climate Change, as well as Peak Oil induced economic damage. It also will focus on how wind turbines along with pumped hydroelectric energy storage and biomass for WNY/NY State can help address energy shortages that will result from Peak Oil while providing jobs and maximizing social cohesion. Summary • Global Warming and Peak Oil are related items • Oil combustion and oil consumption related infrastructure (e.g. cars, sub- urbs, car-centric shopping centers/malls, etc) are major emitters and/or causes of CO2 pollution, the major cause of Global Warming • Global Warming and Peak Oil have different time scales for noticeable effects and the timing of their impacts will often differ • Global Warming is mostly a weather, climate, rainfall, and ocean level phenomena, plus the effects of those on humans and their societies • Peak Oil is mostly an economic phenomena, and transportation (of goods and people) related • Peak Oil is a liquid fuels problem – liquid fuels have unique properties • Peak Oil is really a Peak World Oil Export problem for the U.S. • World Oil Exports have been declining since 2006, despite significant price increases for exportable oil (world oil price(s)) • The Export Land Model predicts a rapid decline in the oil to be exported to the U.S./importable by the U.S. in the next decade • World crude oil production is more or less presently at maximum levels; world oil production rates can only decline from this peak from now on • Increases in oil prices will NOT lead to significant (or any) increases in world oil production rates, contrary to conventional economic theory • Increases in oil prices will NOT stop the decline in the available quantities of oil available for export, and can only slightly influence it • Countries now importing oil face significant economic and societal challenges varying from quality of life to survival issues unless they cut back/eventually eliminate their imports of crude oil/refined crude oil • In the next decade, countries with fewer to no oil imports will tend to do better than those with significant and continuing oil importation needs • Life (and especially a civilized life) in the U.S. can go on without oil importation, but changes will be needed in how we transport people and 2 goods for a civilized standard of living and a high population density (i.e. near present population levels) to continue. • Changing our country’s energy sourcing/usage to stabilize our climate/minimize CO2 pollution is a major economic growth opportunity • Changing our transportation system (of goods and people) to one compatible with initially no oil importation and eventually no crude oil usage is also a major economic growth opportunity • Renewable energy costs/required real prices for that energy (electricity, fuels, heat) vary with type and location, and mostly will be higher than are present pricing levels for pollution based approaches (coal, oil, natural gas, nuclear), often because the external costs for polluting energy are largely not presently incorporated into present prices • Renewable energy prices need to be based on the cost to produce this energy and (often) some reasonable profit (return on the investment of these renewable approaches) to be and become economically viable • “Carbon Prices”, alias forms of CO2 pollution taxes/fees, are unlikely to be significantly effective at stimulating renewable energy development via rising the prices of pollution sourced energy to the required extent • To be effective, CO2 pollution taxes must be raised significantly before some renewable energy sources become lower cost; the resulting much higher energy prices will induce adverse economic consequences and will collapse the political viability of “carbon prices”, even when price rebates are given to individual consumers (cap and dividend system) • Basing renewable energy prices on the present (and usually highly subsidized) prices for polluting energy will lead to minimal installation rates of renewable energy and minimal replacement rates of polluting energy production/fossil fuel consuming facilities for the next decade • Without major capital investments/job creation in the U.S., the present “jobless economy” will soon collapse as a result of more frequent and more intense oil price shocks and/or Global Warming induced weather/climate changes/disasters often in confluence with banking and other financial “panics” • Job creation investments that result in greater oil/pollution based energy usage are outrageously wasteful forms of investment – in effect, they really represent consumption, not investment • The present “jobless recovery”, with the 25 million unemployed and/or underemployed citizens in the U.S. is really a “meta-stable, sub-optimal economic equilibrium” of the kind predicted by John Maynard Keynes when “gambling bubbles” pop and an inadequate government stimulus is employed to counteract the collapse in the private sector economic activity (demand); such arrangements can exist for considerable lengths of time • Significant investments in renewable energy and in ways to minimize and/or eliminate oil usage may be the ONLY way for the U.S. to climb out of the current “jobless recovery”; so far, these efforts have been fairly insignificant and impressively sub-optimal 3 • Failure to institute sensible pricing policies such as Feed-In Laws will lead to insignificant Green Energy investments/Green Job creation, with dire future economic and societal prospects for the vast majority of people in this country • Failure appears to be the present “default option” with respect to Green Energy/Green Jobs, and to avoid failure on epic (i.e. 1930’s Great Depression and worse) scales will require changes to renewable energy pricing systems/investment policies • Our present governmental, economic, political, media and societal leaders tend to live comfortably and/or extravagantly under the present “future failure regime”, and they appear to be well insulated against poverty and deprivation; their personal motivation to change such an arrangement is minimal, as they are “doing fine” under the present arrangement • Whether and how our societal leaders will allow change (to a Green Energy and Green Jobs based one) to occur that may diminish their status or the status of their “tribe” and their grasp on economic/political power is of key importance to our collective future well being; just because it is the logical thing to do for the vast majority of people does not mean that it will occur, as the prime decisions are apparently being done by a tiny minority of our population Economic Introduction The Great Recession of 2007 to 2010 (and for most people in this country, still going) has been widely viewed as the worst economic contraction/disaster since the Great Depression of 1929 to 1933 (and which really extended to WWII). In March of 2008, while all eyes were on the spectacles of the financial fraud in the U.S. and the associated securitization and world-wide sale of defective mortgage backed securities (the Bear Stearns bank run), world oil prices had almost doubled in less than a one year period. In addition to or as a result of the oil price spike, huge price increases in natural gas, coal, ammonia and corn (for ethanol, and related to oil price) also were observed. These price increases contributed to increasing rates of home mortgage defaults, because the combination of rising widespread unemployment as well as prices for goods (commodities) and services (including health care insurance, college expenses, loans and loan rates) diverted money away from home mortgage payments. In turn, this led to more of the securitized mortgage bonds going into default, accelerating the process of the system-wide financial “Black Swan” event. As it turned out, the major money making opportunity of the year became betting on mortgage bond defaults (shorting the bonds) and betting on defaults of various banks/financial entities, as well as companies like GM (shorting their stocks and bonds), as was done in 1929. Rising oil prices acted like a tax increase on poor and middle income people (especially the bottom 90% of the U.S. income distribution), and this helped collapse the economic demand for goods and services in the rest of the economy. After oil prices peaked at $147/bbl, oil prices crashed when the excess oil inventory could not be sold at the rate needed to pay off loans used to buy oil futures contracts, and prices rapidly dropped back to near $35/bbl. The Great Recession was now “on” for all to see; in less than a year, over 7 million people became 4 unemployed just in the U.S., and many times that throughout the world. And for good measure, 18 months later, world oil prices were once again hovering near $100/bbl, having averaged $78/bbl for all of 2010. In the Great Depression, one of the worst things that President Hoover and Treasury Secretary Mellon did after the 1929 Stock Market Crash was to get taxes raised, while slashing government spending at the same time.