Welcome to this series of newsletters on the theme Net Zero by 2050: Technology for a Changing Climate.
In response to the climate crisis, many business and industry leaders have committed their organizations to a ‘Net Zero’ program. By this they mean that their organization will not be emitting greenhouse gases by a specified date — often the year 2050. The purpose of these letters and posts is to help these leaders by providing realistic and practical information to do with net zero technologies. The emphasis is on the word ‘realistic’.
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It’s January 1st — the day when we attempt to predict what the coming year has in store for us. The focus of this site is on how business and industry can use technology to develop practical and realistic net zero programs, so I will confine my thoughts and guesses to that area. These thoughts are not predictions of sudden events — rather they look at existing trends to see how they might play out in the next twelve months.
1. COP26, Government Failure and Industry Leadership
For those concerned about climate change the headline event from the year 2021 was the failure of national governments and international agencies to come up with a meaningful response to the looming climate calamity. 2021 was the year of the 26th Conference of the Parties (COP26). These conferences stretch back to the year 1995. The chart shows how the atmospheric concentration of CO2 has steadily increased since the 1950s. Overlaid on the chart are the dates of some of the COP meetings. They seem to have achieved very little.
Fresh leadership is needed; we are seeing some of that leadership coming from business and industry. The picture shows the CEO of the Ford Motor company, James Farley, standing in front of an electric F-150 pickup truck.
The text associated with the picture reads,
Ford Motor plans to increase its production capacity of electric vehicles to 600,000 units globally by 2023.
That is a very ambitious goal and is indicative of the type of change that companies such as Ford feel that they must undertake in response to climate change, and in order to gain a competitive advantage. Therefore, our first forecast is,
1. Companies and businesses will increasingly lead the response to climate change — not because they want to “do good”, but because they want to be commercially successful. Governments will support but not lead.
2. The Return of Peak Oil
The concept of Peak Oil can be described as follows,
There is only so much oil (and gas) in the ground.
We extract the low cost oil first.
As the costs associated with finding and extracting oil increase so the price of fuel and petrochemical products increases.
Customers cannot afford the higher prices so they cut back on consumption, so the price of oil goes down, thus setting up a long-term price oscillation.
Eventually there comes a point — ‘Peak Oil’ — where it is no longer economical to develop new sources of oil, so the industrial economy goes into decline.
For the last ten years or so we have witnessed unexpected growth in production from tight oil and gas fields in the United States (the “fracking” phenomenon). However, this new supply is declining, and there do not seem to be any immediate replacements. Therefore, the forecast is,
2. Energy will become more expensive and supplies more erratic.
If this forecast turns out to be correct, then responses to climate change will be scrutinized ever more carefully. Good ideas will not be enough — those ideas will have to show that they are also a sound investment. Some suggest that energy constraints could, in and of themselves, lead to a slowing of the rate of climate change.
3. Resource Availability
Oil is not the only resource whose supply will be increasingly constrained in the year 2022. The development of climate change technologies may run into problems to do with the availability of other vital materials. The element lithium is an example.
The United States the Department of Energy (DOE) recently published a report entitled National Blueprint for Lithium Batteries. The date of the report — mid-2021 — indicates that it was written in response to the supply chain crises that became critical in that year. The report provides five goals with regard to critical raw materials. The first of these goals reads,
Secure access to raw and refined materials and discover alternatives for critical minerals for commercial and defense applications.
3. Supplies of materials critical to climate change technology will become erratic or limited due to international tension and competition.
4. Oil Companies
Oil companies will continue to be under pressure from climate activists. Here’s a headline from the last day of the year 2021.
Exxon in Danger of Being Next Blockbuster, Kodak, CalSTRS CIO Says
CalSTRS is the California State Teachers’ Retirement Fund. It continues to challenge the Exxon leadership about the perceived failure to energetically adopt a Net Zero agenda. Are the leaders of CalSTRS being fair? Maybe not — but they have created a perception that the managers of ExxonMobil are dragging their feet.
The CIO of CalSTRS goes on to say,
If these companies want to survive and not be Eastman Kodak or Blockbuster Video, darn it, they better get their act together and become energy companies, not just oil and gas firms.
From an outsider point of view, it seems self-evident that ExxonMobil and the other oil companies are energy companies. Hence, it appears as if all that they need to do is to invest in new forms of energy such as wind, solar and nuclear while simultaneously winding down their oil and gas business.
Of course, it’s not nearly so simple. The oil companies are being asked to maintain revenues and profits from an existing business while simultaneously destroying that business. It’s the challenge that Kodak failed to meet.
But there is a more fundamental difficulty with the call to become energy companies.
The oil companies are not energy companies, they are oil (and gas) companies.
The professionals who work for the oil companies are skilled at finding new sources of oil, extracting that oil, transporting it to a central location, and then refining it. These skills are not readily transferrable to a highly regulated, relatively low risk industry such as electric power supply.
There are, however, two vital areas where oil company skills can be used with relatively little change. The first is to do with the production of liquid fuels. Many crucial sectors of the transportation sector — airplanes, ships and trucks come to mind — will continue to rely on the availability of liquid fuels for the foreseeable future. Hydrogen and ammonia are strong candidates to fill this need. (Compressed gaseous hydrogen may also serve as a “liquid” fuel.)
The second area relates to the first. The overwhelming problem with renewable energy supplies (solar and wind) is that they are both intermittent and non-dispatchable. Intermittent means that they only generate energy for about a third of the time. Dispatchability refers to the fact that even when they do generate energy it may not be at the time when the customers want it. Therefore Net Zero programs create an overwhelming need for systems that can store massive quantities of energy. Batteries are too expensive, so hydrogen (and possibly ammonia) present themselves are plausible candidates.
Hydrogen production and distribution fit the oil company DNA well. The professionals in these companies know how to manufacture, transport and handle hydrogen safety and efficiently. Ditto for ammonia. Currently these companies are investing in “blue” hydrogen. But this only a first step in the road to the production of “green” hydrogen (or its ammonia derivative) that does not use methane or steam reforming.
Therefore, the prediction is,
4. Oil companies will invest in the production and distribution of green hydrogen for both transportation and energy storage.
The final thought at the beginning of this New Year is more of a hope than a prediction or forecast. Climate activists have done a good job highlighting the predicaments that we face. There is far too much complacency and vague denial by people at large. The activists make it clear that, if we continue on our present trajectory, that the consequences will be serious indeed. We need their sense of urgency.
But there comes a point at which it would help if they were to think through the reality of some of their suggestions. For example, if we stop using fossil fuels altogether by the year 2030 the reality is that millions, maybe billions, of people would starve. The cure is worse than the disease.
We often hear that “we need to listen to the scientists”. That’s true, but even more, we need to listen to the engineers and project managers. By making demands that are clearly unrealistic the activists hurt their own cause. Yet we need their voice.
I will frame this hope as a prediction.
5. Climate activists will spend more time working with industrial managers and engineers developing realistic responses to the predicaments that we face.
Well, there you have it: four forecasts and one hope for the year 2022. None of them predict a specific event — they are more on the lines of understanding current trends and determining if they will continue. We will check back twelve months from now to see how they worked out.
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