Thursday, 28 February 2013

Was BP Grossly Negligent?

Not all failures are equally inexcusable. The pressure test is employed widely, and is universally respected and understood by engineers. I know of many examples of pushy management, inadequate procedures, bad design and sloppy construction but the Gulf oil catastrophe is a first for ignoring a failed pressure test. The test is meant to catch failures in all other areas, although rectification may be very expensive at such a late stage.

This is a clear case of gross incompetence by all those who knew about and ignored the blindingly obvious pressure test failure. But common sense cannot go from there to gross corporate negligence, unless BP had a policy of deliberately employing idiots. All commercial enterprises are motivated by profit. It is those trying to grab the $billions (effectively from BP's innocent shareholders) who are blinded by greed here, not corporate BP.

Tuesday, 22 May 2012

Saving Greece and the Eurozone

As Greece heads towards probable exit from the euro, I read pages and pages about the dire consequences but little or nothing about the mechanism for exit, which must surely be the key to minimising chaos and global disruption. Below I make a proposal, perhaps not the best, but at least an attempt to make a constructive contribution to our salvation.  Hopefully others will refine it with their comments.

In brief, all euro debts and savings would remain in euros, so no need for Greeks and others to make panic withdrawals. All wages would be denominated and paid in Drachma from end July (or whenever), at the rate of 1 drachma per euro for arithmetic and presentational convenience.  From the same date all prices would be denominated in drachma by law and for a settling in period of perhaps 2 months, payment would be acceptable either in drachma or in euros but not at a euro rate of less than 1 per drachma, otherwise confusion would reign.

There seems to be a view that the drachma would fairly rapidly if not instantly decline in value to about half a euro. I would permit this and allow free exchange between the currencies.  This would slash Greek manpower cost relative to the rest of the Eurozone stimulating export led growth, just in time for the tourist season. It would also encourage shoppers and shopkeepers to hang on to their euros and trade in drachma.

The banks would create a new drachma account alongside every current account and likewise credit card companies etc. so plastic trading could continue seamlessly in the new currency.  Physical paper money could be created quickly by minting euros and defacing them with an overprinted D, and probably some perforations to stop counterfeiters turning them back to euros. The Greek government would then sell these to the banks in exchange for euros (at the going rate), for distribution via existing cash machines etc.

There is also the issue of ongoing euro denominated contracts, commercial and household. I would suggest that contracts with foreign organisations remain in euros but that internal contracts be switched by default to drachma.  During the settling in period the seller would have the option of retaining the euro price so long as the buyer was allowed to renegotiate a drachma price or switch supplier without penalty. Clearly some prices such as fuel and power are largely determined by import prices and will surge in drachma as the currency devalues; so what’s new?

What about the homeowner with a mortgage?  Well, he was in terrible trouble anyway because his interest rate in euros was climbing, his house value was collapsing and he was about to lose his job perhaps.  When he defaults on his loan and is repossessed by the bank they will no doubt only be able to sell at a very much reduced price.  But at least the Greek government can now keep the Greek banks solvent by pumping in drachma.  And perhaps our dispossessed homeowner can buy his own home back at a fraction of what he owed before with a drachma loan, albeit at a high interest rate. Homelessness is ultimately due to a mismatch between the number of households and the number of houses not the finances.

But I hear the squeals of the well-heeled bankers who will still be owed money by Greece and the Greeks and think that German taxpayers should be made liable.  I think it is time they started taking responsibility for their own actions and putting less money in their own pockets.

Saturday, 27 March 2010

Vehicle Carbon Capture

We all hope battery technology will improve enough to make electric cars attractive, but if it does not I for one would pay a very hefty price, perhaps £5/litre of fuel ($3200/tonne of CO2 produced at today’s exchange rate) before I abandoned my car. Fortunately it is possible to capture carbon dioxide from the atmosphere or from vehicles for much less than that.

The options I favour revolve around quicklime (CaO). The average factory gate quicklime cost in the USA is published and was $101/ton in 2009. The material is made by decomposing limestone (CaCO3) in a kiln. When quicklime recombines with carbon dioxide it may form either the carbonate (CaCO3) or, if in solution, the bicarbonate (Ca(HCO3)2). Based on the carbonate, the cost of quicklime per ton of carbon dioxide absorbed would be $129. There are of course other essential costs including the cost of capturing and sequestering the carbon dioxide produced as the quicklime is made.

One way to use quicklime is simply to dump it in the ocean.

Another is to use quicklime to turn sodium or potassium carbonate into the hydroxide by precipitating the insoluble calcium carbonate as in the Kraft paper process. Solutions of sodium or potassium hydroxide can be used to capture carbon dioxide from the air by reforming the carbonate.

Alternatively the hydroxide could be used in a vehicle either in solution or perhaps, as weight is crucial, as the solid or a slurry. At the limit of solubility the range would be 100 miles for 150 kg of potassium carbonate solution in a vehicle doing 30 miles per imperial gallon. This compares favourably with current battery technology and recharging with potassium hydroxide solution at the gas station would be much quicker than recharging a battery. Moreover the vehicle could still be driven for hundreds of miles with the hydroxide exhausted, if necessary.

If quicklime could be used directly as solid particles, 150 kg would give a range of 228 miles but reaction rate might be too low, although the high temperatures available in the exhaust should help. Also carbonate might blanket the quicklime giving poor conversion and to make matters worse the particles might stick together with all the water vapour in the exhaust gases, making discharge very difficult. Quicklime is of course the key component of cement.

Solid lithium hydroxide is used to remove carbon dioxide at ambient temperature in spacecraft, where weight is crucial. In a vehicle 150 kg of lithium carbonate would correspond to a range of 308 miles. But unfortunately regeneration is currently difficult and expensive because of the low solubility of lithium carbonate when using the Kraft process and the relatively low melting point of lithium carbonate combined with the very high decomposition temperatures when emulating quicklime manufacture.

I have not yet worked out whether the higher concentration of carbon dioxide in exhaust gas is enough to tip the cost advantage against capture from the atmosphere. The logistics of the latter certainly look much easier and of course there are economies of scale and a free choice of location to suit sequestration and perhaps provide low cost energy/fuel.

Thursday, 28 January 2010

Readiness of Carbon Capture

Recent reports from the World Future Energy Summit say that “speakers pointed to the maturation of CCS and many successful pilot facilities around the world. And they set the expectation that the industry is now ready to see production facilities built in large numbers.”

Carbon capture is not new technology. We have been capturing carbon dioxide on an industrial scale from the partial oxidation of coal, oil and gas for many decades in the chemical industry. We have been reinjecting carbon dioxide down the well to enhance oil recovery for many years. The IPCC say the same in their report on carbon capture.

To be sure the capture and storage technology have not yet been put together and used on a large power generation plant. Process selection, cost estimates and performance will no doubt improve as we gain design, construction and operational experience, but that does not mean there is any likelihood of the technology not working. What is currently lacking is not the know-how but the economic incentive to apply it, except to demonstrate the technology.

I remember when we wanted to get lead out of gasoline, everyone said they were not ready, it would be very difficult and expensive. Then along came a tax incentive of a few pence per litre and it all happened painlessly. I suspect carbon capture will be the same. When the fuel producers are obliged to place contracts for carbon capture and sequestration for a proportion of the carbon in their fuel, as I propose, I think there will be power companies from around the world competing to take their money. I hope we will be left wondering what all the fuss around cutting emissions was about.

Thursday, 14 January 2010

More on Global Warming

As anticipated the world agreed to limit global warming at Copenhagen but could not agree who should do it and who should get how much money from whom. Perhaps the politicians will be more open to new approaches now that their single-minded pursuit of cap and trade with offsets has got them nowhere.

Among people polled there is strong support for the alternative scheme detailed in my previous blog in November. In a recent Times Online live debate 85% voted that "Fossil fuel companies should be obliged to sequester an increasing fraction of the carbon content of the products they sell to avoid dangerous climate change"

This motion was proposed by Myles Allen, head of the Climate Dynamics Group at the University of Oxford. Darren Johnson who is Chair of the London Assembly and a Green Party councillor also voted in favour because energy conservation and renewables will be much more attractive if we have to pay for sequestration when using fuel. He saw the proposal as a transitional measure in the move to a renewables/efficiency led programme but I see it as a long-term way of growing our affluent industrial society without stressing the planet.

Ed Miliband, Secretary of State for Energy and Climate Change, has failed to even acknowledge my emails on the proposed scheme but Norman Baker my local Liberal Democrat MP has offered to chase him for a response and I will shortly ask him to do so.

The International Energy Agency (an intergovernmental organisation) say that stabilising the climate in 2050 would cost at least 70% more without carbon capture.

Myles Allen pointed me to a paper which shows how very slowly atmospheric carbon dioxide concentration would decline even if emissions stopped. The ocean currently absorbs 2.2 billion tonnes/year of carbon (as noted in my November blog) but as described in the paper, uptake would fall to about a quarter of that value (ie only 6% of current emissions) if atmospheric carbon dioxide concentration stopped rising today.

The arctic ocean downwelling flow corresponding to the ongoing carbon uptake of 0.54 billion tonnes/year predicted in the paper gives an ocean turnover time of 2500 years. The 0.54 billion tonnes/year also implies that only about 1.4 billion tonnes/year of carbon in dead organisms sinks far enough to contribute to the measured increase in dissolved inorganic carbon in the cold downwelled polar water that fills the ocean below about 500 metres depth. Most of the often quoted 10 billion tonnes/year of sinking solid organic matter must decompose in the shallower water and leave the dissolved carbon there.

The observed 2 ppm per year increase in atmospheric carbon dioxide concentration would explain the other three quarters of the current 2.2 billion tonnes/ year of oceanic carbon uptake if the top 350 metres of the ocean were well mixed.

The ongoing ocean carbon uptake would be higher if the atmospheric carbon dioxide concentration were higher, because more carbon would dissolve in the icy water downwelling to the deep ocean. But even if the atmospheric concentration were allowed to level out above 500 ppm (compared to today’s 388 ppm) the ocean would only continue to absorb at the rate of 10% of today’s emissions.

A reduction to that level will be difficult but not impossible to achieve without sacrificing worldwide growth or our living standards. Recovery efficiency for carbon capture will need to approach 100% but no doubt this will be possible with the right financial incentive. Overseas holidays and year-round exotic perishable produce have become a key part of our standard of living, but planes need fuel and cannot easily capture carbon. Aviation already accounts for 2% of carbon emissions and this will probably rise as incomes rise substantially in China and India. Biofuel use on such a scale may not be politically acceptable as pressure grows to feed an expanding population without increasing the area under cultivation. There will also be a residual fuel requirement for transport, heating etc. in remote locations without the possibility of a mains electricity supply.

But for sure every year that we delay cutting back on our emissions we are squandering at least ten years of our children’s meagre ration. They will not thank us for going round the same old loop over and over again ignoring the obvious option of obliging fuel producers to pay for the capture of the carbon dioxide their fuels produce.

Wednesday, 25 November 2009

Climate Agreement

There is a problem at the heart of cap and trade, how to allocate the permits to emit or the revenue from auctioning them. It is clear from the response of oil and coal price to minor excess demand just before the boom turned to crunch that we are prepared to pay almost anything to sustain our energy consumption. The rights to emit will be worth trillions of dollars and sustainable worldwide agreement on who is entitled to sell them will therefore be extremely difficult.

A carbon tax has some of the same problems once you try to go worldwide (who gets the revenue, fuel producing nation, fuel consuming nation or worthy cause?). Furthermore there is no way of knowing what rate you need the tax to be at to get emissions down to the desired level. The price consumers need to see to persuade them to change is the same whether you manipulate it with a tax or with cap and trade.

There is a further problem with cap and trade if the permits are allocated to existing emitters rather than auctioned. Those emitting carbon dioxide have their marginal cost increased by the tradable value of the permits even though their total costs are unchanged. Basic microeconomics tells us that prices go up to equal marginal cost, and profits with them of course at the consumer’s expense.

Without other measures, legislating for new coal fired power stations to incorporate carbon capture would deliver too little too late. Carbon capture is costly to build and to operate so utilities would also be discouraged from investing in much needed new capacity and from operating it once built, the old dirty plants would cost less to run.

Insisting that all new and existing power plants capture their carbon would deliver very substantial emission reductions if adopted worldwide, but if done abruptly would probably make the lights go out and miss opportunities for evolutionary improvement in process design. Moreover carbon capture only becomes economic if power price rises relative to fuel, while the long-term aim must be to reduce low carbon electricity price relative to fuel to encourage people to switch to electricity for heating, transport etc.

There is a way of avoiding all these problems that every nation should find attractive and could agree to without protracted negotiation.

Fossil fuel producers and importers would contract for the capture and sequestration of a quantity of carbon dioxide equal to a proportion of that produced from the fuel they supply. The proportion would start at a few percent and build up. This would increase fuel price gradually, encouraging energy saving, nuclear, renewables, electric cars etc. It would also provide full, immediate funding for carbon capture and storage. Carbon tax or cap and trade schemes on the other hand only provide sufficient incentive to capture carbon when tax rate or permit price has reached a high level, which may be too late.

Energy saving, nuclear, renewables, electric cars etc. are only ways of filling the energy gap that cutting carbon dioxide emissions will create, and mankind has been effectively filling energy gaps for centuries without the aid of agreed national or global strategies, taxes or caps. Carbon capture is different. It is a way of stopping pollution and will always add cost. You can legislate to stop pollution or you can use market forces by giving credit in a cap and trade system, credit against a carbon tax or by paying directly in fuel prices as above. If carbon capture is driven in any of these ways all the other things will happen too.

The contract might permit capture to be delayed for a year if the quantity captured were increased by 10%, and for another year for another 10% etc. This would not only help with plant problems, but would also allow contracts to be placed today, providing a huge incentive to get carbon capture and storage up and running as soon as possible. It is not lack of know-how that is holding back carbon capture but the lack of an incentive to apply it widely, except as a demonstration of the technology.

To contain global warming we must soon stop carbon emissions from power generation, cement manufacture etc. and substitute electricity for fuel use in many domestic, industrial and transport applications. Taxing carbon, capping emissions or contracting for carbon capture when fuel is produced could all provide the economic incentive, but unless the world joins in they will not solve the problem.

Contracting for carbon capture is certain to reduce carbon dioxide emissions to whatever annual target is set (if the contracts are honoured) and is relatively easy for everyone to agree to because:

 It will appeal to rapidly growing and mature countries alike. There are no national caps to restrict relative growth.

 It will allow all industries in all countries to compete on a level playing field. There are no carbon tax or emission cost differentials.

 Because there is only one number to agree, the global annual target, extensive international negotiations will be unnecessary. There will be no national targets to haggle over and perhaps never meet. There will be no issue about who gets the revenue from a carbon tax or what the rate should be or who gets free allowances (or the revenue from an auction) with cap and trade.

 Enforcement is straightforward and does not rely on the co-operation of every country. The contracts would be traded and recorded centrally, mostly placed and paid for by the international energy companies. If countries were uncooperative and used their own fuel internally without contracting for carbon capture, a central monitoring organisation could impose an increased capture proportion on imports or exports of fuel for that country to compensate.

Put simply, carbon capture and storage could typically cost 50 euros per tonne of carbon dioxide emission avoided. This is equivalent to $32/barrel of oil and the contract would only be for a proportion of that. This is modest compared to price changes over the last few years.

The major complication is that it is only practical to capture carbon dioxide from large point sources like power stations. Forcing 75% capture on the global market through this scheme would drive fuel price up and electricity price down until we switched from fuel to electricity for many industrial, domestic and transport applications. Once nearly all power stations etc. had captured their emissions there would be an incentive to build new power plants simply to create more carbon dioxide to capture and to dump the electricity they generated onto the market at a low price. Fossil fuel power generation with carbon capture would collect payment for all the captured carbon but only pay back 75% in its fuel price, giving it an unfair advantage over nuclear and renewables. It would be perverse to tax carbon capture while we were trying to encourage it, but as we approached the endgame national governments could tax away the 25% of the capture contract price that was not being paid in the fuel price. The revenue could then be paid out per kilowatt-hour to subsidise power from all clean generators.

Eventually we could define the proportion of carbon to be captured, based on fossil fuel production at the time, such that global emissions were contained at the level that the oceans absorb annually. That is about 2.2 billion tonnes of carbon per year (25% of current emissions). Atmospheric carbon dioxide concentration would then stop rising, assuming zero net contribution from deforestation and other land based sources and sinks.