Wednesday, April 02, 2008

Net Energy and Jevons' Paradox

As last week’s Archdruid Report post suggested, a difficult paradox lies in wait for attempts to bail industrial society out of its peak oil predicament by bringing new energy sources online. To build the infrastructure to produce a new energy source in meaningful quantities, a great deal of energy will be needed. If the new source can’t be shipped via existing distribution networks, or used in existing end-use technology, more energy will have to be invested to provide these as well.

Until much of the new infrastructure is in place, though, the energy needed to develop it will have to come from existing sources. This is where the jaws of the trap open wide, because in a world already on the far side of Hubbert’s peak, existing energy resources are fully committed. Thus the immediate effect of launching a project to make energy more available will be to make energy less available, driving up prices even faster than they would rise under the pressure of resource depletion.

One conclusion worth drawing from what I’ve called the “paradox of production” is that some recent debates over net energy may need reassessment. Net energy or EROEI (energy return on energy invested), for those who haven’t been following these debates, is the energy that can be obtained from a given resource, minus the energy that has to go into providing that resource to users. Just as net receipts, rather than gross receipts, determine whether a business prospers or goes bankrupt, it’s the net energy available to our society, rather than the total amount of energy it consumes, that determines whether something like today’s industrial civilization can survive.

At the same time, as the paradox of production points out, the energy costs that have to be factored into net energy are not limited to those needed to produce energy from a given source in the first place. The energy cost to get it to the end user and to convert it into useful work at that point also have to be taken into account. Thus it’s important to distinguish production costs – the direct and indirect energy inputs needed to turn a natural resource into useful energy ready for distribution – from system costs – the direct and indirect energy inputs needed to apply that energy to its end use, whatever that happens to be. Both have to be accounted for, but each has its own distinctive features.

In particular, the production costs of a given energy resource depend almost entirely on the nature of the energy resource itself. The system costs of a given resource, on the other hand, depend partly on the resource and partly on the nature of the end use, and the same energy source can have dramatically different system costs depending on the form in which it’s distributed and the use to which it’s put.

Compare the net energy of photovoltaic cells used to power computers, for example, with the net energy of photovoltaic cells used to power automobiles. The production costs are the same in either case, but the system costs are totally different. The data center makes use of an existing distribution network (the electric power grid) and a mature technology (electronic computers), so its system costs are identical to those involved in powering any other computer. Putting the same energy to work powering automobiles requires the manufacture of millions of new cars (if the electricity is used directly in electric cars), or a network of fuel plants, pipelines, and filling stations, in addition to millions of new cars (if the electricity is used indirectly, in a form such as hydrogen).

Discussions of net energy in the peak oil community have generally tended to focus on production costs, to the neglect of system costs. There’s an interesting irony here, because market forces and political pressures in the real world tend to focus on system costs, to the neglect of production costs. The recent ethanol boom in America is the poster child for this oddity of contemporary economics.

In terms of production costs, ethanol made from American corn is a losing proposition. It takes more energy to provide the fertilizers, pesticides, tractor fuel, and other energy inputs to grow the corn, and to ferment and distill it into fuel ethanol, than you get back from burning the ethanol. The system costs of ethanol, on the other hand, are negligible: the US already has an extensive transportation system for getting bulk grains from farms to factories, and existing liquid fuel distribution networks are perfectly capable of handling fuel ethanol. All that has to be added to the mix are factories to turn corn into fuel, and misguided government grants and tax writeoffs seem to be taking care of that nicely.

This same effect shapes less embarrassingly self-defeating choices as well. Look at the suite of alternative energy sources that are getting significant funding these days – windpower comes to mind – and you’ll find that all of them use existing infrastructure to distribute and use the resulting energy. Meanwhile, those alternatives that pose high system costs – the much-ballyhooed hydrogen economy is the classic example – wither on the vine.

This is part of the blowback from the paradox of production, because system costs have another feature that sets them apart from production costs: if an energy resource requires new distribution networks or end-use technologies, all the new items have to be in place before the energy resource can be used at all. If you don’t have every piece of a hydrogen transport economy in place, for example – the electric power plants, the hydrogen factories, the pipelines, the filling stations, the hydrogen-powered cars, and everything else associated with them – you can’t use any of it.

The more existing infrastructure you can use, by contrast, the more flexibility you have. Since windpower can use the existing electric grid to power existing electric appliances, for example, you can add windpower capacity one windmill at a time, and upgrade as you go. In a world of depleted energy reserves and rising prices, this is a viable option; sinking huge sums into new infrastructure for distributing and using a new energy resource probably won’t be.

There’s another dimension to system costs, though, that opens up an unexpected window of opportunity. Since total net energy includes system costs as well as production costs, cutting system costs boosts net energy. One of the largest components of system costs for any energy resource is inefficiency, and in many cases this can be reduced significantly without impacting the flow of energy through the system. When this is done, the effective net energy of the resource goes up.

This is the logic behind Jevons’ paradox, first propounded by British economist William Stanley Jevons in his 1866 book The Coal Question. Jevons pointed out that when improvements in technology make it possible to use an energy resource more efficiently, getting more output from less input, the use of the resource tends to go up, not down. His argument is impeccable: as the use of the resource becomes more efficient, the cost per unit of the end result tends to go down, and so people can afford to use more of it; as efficiency goes up, it also becomes economically feasible to apply the energy resource to new uses, and so people have reason to use more of it.

Jevons’ paradox has been used more than once to argue against conservation, on the grounds that using energy more efficiently will simply lower the cost of energy and encourage people to use more of it. The problem with this logic is that it assumes that the only thing constraining energy supply is price – and in a world already starting to skid down the far side of Hubbert’s peak, this is no longer true. Now that geological realities rather than market forces are placing hard limits on the upper end of petroleum production, Jevons’ paradox becomes a counterweight to rising energy prices.

Now it’s sometimes been suggested that all the easy gains from conservation were made in the 1970s, and that further gains will come at much higher cost. This would be true if the achievements of the Seventies had been kept in place, as they should have been – but were not. Compare the poorly insulated McMansions and gas-guzzling SUVs that define the recent American lifestyle with the snug homes and efficient compacts so common in 1979, and it takes an effort of will to avoid seeing the ground that has been lost.

This offers a bitter commentary on the missed opportunities of the last quarter century. From another perspective, though, this provides a certain amount of qualified hope, because it allows lifestyle changes and simple upgrades perfected decades ago to be dusted off and put back to work. Those of my readers who recall the Seventies will remember just how simple and cost-effective many of these changes were. They played a crucial part in dropping petroleum consumption worldwide by 15% between 1972 and 1985. That decrease could have been used to free up resources for the transition to sustainability, instead of being blown off in a final 25-year orgy of conspicuous overconsumption. That didn’t happen, and the arrival of petroleum production declines means that it won’t happen again, but the same effect could be used now to help cushion the otherwise rocky descent into the deindustrial age ahead of us.

The same insight can be put in another way. One crucial measure of our predicament is the steady decline in net energy available to industrial society, from the 200-to-1 surplus of light sweet crude flowing under natural pressure to the single digits available from those renewable sources that manage to rise above the breakeven point at all. As we’ve seen, though, the whole picture of net energy includes systems costs as well as production costs, and rising production costs can be countered to some extent by conservation and efficiency improvements that lower system costs. This won’t bring back the age of cheap abundant energy, but it could make things easier for many people in the near future

If governments in the industrial world want to launch a crash program to do something about soaring energy prices and spiralling energy shortages, then, the obvious choice is the one that worked in the 1970s – conservation. Just now, given the ideologies that dominate the political classes of the major industrial nations, this seems about as likely as a resumption of the Punic Wars, but attitudes and political climates can change abruptly. In the meantime, the more people who learn, practice and prepare to teach the homely but valuable conservation skills that were part of everyday life in the Seventies, the easier the transition will be when it arrives. Where the people lead, at least in this case, the leaders will eventually be obliged to follow.

33 comments:

Diane said...

Thanks JMG, I've been reading your column for some time now and have enjoyed many of your ideas.

I couldn't agree more with the present column. What's needed is for conservation to become a way of life, not just a tool to be used temporarily as though it were an inconvenience.

I’ve been doing some research on Terra preta, the charcoal-type substance added to the soils in the Amazon basin that greatly increased the fertility of the soils. During my searches I came across the Australian program Catalyst which did a segment on Agrichar. (I’ve included a link and a couple excerpts from the transcript of the segment.)

And though this appears to be too good to be true, it seems to take care of a few problems at once. It increases soil fertility at the same time that it produces what they are calling syngas. They use this fuel to run the equipment to create more Agrichar and more fuel. It appears that this process is carbon-negative!

Even though they speak of industrial scale as an answer to our present problems, I believe a more human and environmentally-local scale is what is going to be effective in the long run. It's time to realize that "scale" really does matter. Where you fit tools and equipment into the environment determines the effect of those tools and equipment. As an example, a small dam at the top of the water catchment is a completely different tool from a massive dam built further downstream in that it is much more effective as well as much less damaging.

It's time we recognize that we have the power of scale on our side and that working with our local environments is going to be at the root of a revolution in relationship and thinking.


http://www.abc.net.au/catalyst/stories/s2012892.htm

Narration: But the main attraction here is the pyrolysis plant. It cooks biomass without oxygen to make a renewable fuel called syngas, a flammable mixture of carbon monoxide and hydrogen.
The black waste left behind is exactly what the soil scientists want to use as Agrichar. One person’s trash is another person’s treasure.

Narration: Today they’re using ordinary garden waste.

Adriana Downie: It feeds in through a conveyor to the rotary drier which you can see spinning around.

Narration: The kiln is heated to 550 degrees by burning the syngas.

Adriana Downie: It’s actually our own energy we’re producing in the plant that we’re firing it on.

Narration: The win-win is that half of the carbon in the biomass makes the syngas fuel, while the other half stays in the char.

The amount of agrichar trickling out the end of this pilot plant won’t change the world, but making it on an industrial scale certainly could.

Adriana Downie: What we put in provides enough energy to run the process, as well as then export energy for other people to use for their processes.

Narration: And because the energy comes from plants that absorb carbon dioxide as they grow, it should be carbon-neutral.

Adriana Downie: From all of the technologies that are available, this is really quite a unique one. It’s the carbon pump concept of taking carbon dioxide out of the atmosphere and putting it long-term into a sink.

Narration: That’s what makes this energy so different – better then low carbon, or zero carbon, it’s actually carbon-negative.


Narration: Johannes has a vision of growing energy crops to power Agrichar factories.

Dr Johannes Lehmann: In my view, it has to play a significant role to secure our future.

Dr Tim Flannery: It does seem too good to be true, but I’ve looked at it from every angle, and I fail to see the fault in the system.

Narration: In Australia, Tim intends to use his influence to help make agrichar competitive

Dr Tim Flannery: The key barrier with this technology, it seems to me, is that people have refused to put a price on carbon. They’ve refused to put a price on the pollution that is now dramatically altering our planet, and therefore they haven’t seen the true value in this new technology.

Danby said...

Indeed, I do remember helping my father insulate our house in 1975. It had been built in 1894 and was built using poles, rather than dimensional lumber, for the wall studs. There wasn't a straight line or square corner in the place. That insulation sure made a difference too.

The net energy part of the equation is something that seems particularly for many people to understand, especially the technophiles. Much like the fact that Hydrogen is an energy storage and transfer medium, not an energy source. At least until we get the interplanetary hydrogen mines going. B)

One bright spot is that there really are a lot of viable energy sources out there. Hydro power, wind, geothermal, all of them generate electricity. We could do much worse than spend our last few billion barrels of petroleum building dams and wind farms. We won't of course, so what can be done after the oil is gone will be done, and I do think it will help.

Transport will be expensive, even on electrically-powered railroads, but certainly possible. In particular, electrically powered pumps and refrigeration will be available to many people, which have a lot more to do with quality of life than SUVs

Stephen Heyer said...

Hi John,

Good post: It covers the effects of the “paradox of production booby-trap” on large, established economies in adequate depth without being too long a read.

I haven’t seen the difference between production costs and system costs and the effect of this on the choices societies make, can make, stated so clearly before. I have to admit that I hadn’t really thought through the full implications myself, despite having some idea that it was important.

The system cost factor can even make some quite counter-intuitive energy choices worthwhile. For example, suppose you had an energy source with a low production cost but a high system cost (coal comes to mind). It might well make sense to convert it to an energy source with a low system cost and you could just plug into existing systems, even though this cost considerable energy, thus drastically lowering the total EROEI (energy return on energy invested.

Another (unwelcome?) effect is that nuclear power looks a whole lot better as new nuclear power stations can be just plugged into the existing power grid. In fact, there is no real reason why modern coal or natural gas thermal stations could not be switched over to nuclear by simply placing reactors alongside the current boilers. When the time came to switch over it would involve little more than turning a valve.

There is an interesting discussion of some of these factors in “Why EROI Matters (Part 1 of 5)” http://www.theoildrum.com/node/3786#more on The Oil Drum right now.

One of the interesting things to emerge in that discussion is that the EROEI of the French nuclear power grid ranges from pretty good by the most deliberately pessimistic calculations to very, very good indeed by the most optimistic.

Given further major improvements possible by:
1. New, smaller reactors that:
(a). Are cheaper to build and dismantle.
(b). Are much, much safer.
(c). Produce less to nearly no radioactive waste.
2. The development of thorium reactors which have many advantages, not the least being that thorium is much more common that uranium (it is about as common as lead).
3. Already available, much more efficient enrichment processes for uranium (better EROEI).
It could be that John’s previous vision of a landscape littered with abandoned, half completed nuclear power plants is too pessimistic by half.

As well, there is no other presently available low carbon footprint technology with fuel reserves of maybe a few thousand years capable of powering a great city of the likes of New York, Buenos Aires or Sydney. I hope one day there will be, in fact I’m keenly following several promising technologies, but at the moment, if it comes to a bet that decides whether your children live or die, and that’s what it will come down to, nuclear is the safe option for huge, high population, industrial societies.

Now how’s that for a weird outcome: Nuclear as the safe option? Yet, it seems to flow fairly logically from calculations that use production costs and system costs correctly, that is, at the current state of the art.

No, I’m not pushing nuclear, I really only started out to have a bit of fun as a contrarian, but blow me down, the argument actually seems to hold water.

As for the best thing to do right now, well, there I agree totally with John Greer, as you would have gathered from my previous post: Good old 70s style conservation and moderation, along with of course everything we’ve learned and developed since.

Sadly, I also agree that the “powers that be” will do everything possible to prevent that, or any other threat to their carefully built “greed and selfishness is good” endless growth, “hysteria of greed” society.

Is it going to be enough: Hell! I don’t know.

First there is the 30 plus wasted years, then there is the massive, almost impossible to unwind commitment to constant growth and consumption the Right has carefully herded the Western Societies into, then there is the massive increases in population both the Right and the Left (for some bizarre reason) championed in countries like Australia and the USA. This, note, on top of populations we knew were already too large for sustainability even by the 70s.

I don’t know, but lots of luck.

Stephen Heyer said...

diane: “I’ve been doing some research on Terra preta, the charcoal-type substance added to the soils in the Amazon basin that greatly increased the fertility of the soils. During my searches I came across the Australian program Catalyst which did a segment on Agrichar. (I’ve included a link and a couple excerpts from the transcript of the segment.)”

Thanks for bringing that up diane. I too have been following this for some time. It is one of those technologies I have great hope for, simple and ancient as it is, in fact because it is so simple.

I had not realized how appropriate to this blog it is until I saw your posting.

Bytesmiths said...

I realize it was not your focus, but is there some reason you left the first "R" out: "Reduce"?

Don't get me wrong; improving efficiency a la the '70's is good and necessary. But that's just one silver BB, not a silver bullet. People are going to drive less, voluntarily, or as imposed by nature's budget.

Danby said...

Stephen,
The increase in population in the US since the '70s is due almost entirely to immigration.

Hydro-electricity is actually in use right now to power large cities such as Seattle, and New York. The northwest gets almost all of it's power from Hydro, and the majority of the electric power used in New York is from dams in New York state and in Ontario and Quebec. Granted, hydro isn't a possibility everywhere, but it could be much more widely used than it is. There's no pollution at all, chemical or nuclear, to deal with. The same can be said of wind power, which is now at the stage of deployment that hydro-electric was in the early '20s. Dams and even wind farms also tend to be much cheaper than conventional nuclear facilities (although I can't speak to the new tech).

Brian said...

I think it's also important to start focusing on green building. If you're going to build a house, why not build a straw-bale home or a rammed earth one? Same goes with various other infrastructure.

A friend of my parent's built a 1500sqft straw-bale home about 18 months ago. His 12 month utility cost was 300 dollars. That's 25 dollars a month. He doesn't have to worry about heat or cooling. The temperature in his home never got below 68 in the winter or 75 in the summer.

In July of last summer, in my 1100sqft apartment, my utility bill was 240 dollars. That was keeping my thermostat at 78 degrees. Of course I live in Phoenix and last summer was quite hot, even to Phoenix standards.

Not that I think it feasible that everyone go out and build a home from straw-bales or old tires, but it's just another piece of the puzzle that can help to live a more sustainable life. It would be much easier to run a home on solar or wind if you didn't have to worry about heating or cooling it.

Also, the total cost of building the home, including the appliances was $20,000. Granted he did all the labor himself and straw-bale homes are extremely labor intensive, but people are going to have to get used to doing more labor anyways.

eboy said...

Great synopsis John. On the increasing net energy front, I haven't heard many complain about functional obsolescence. If we were to greatly increase the quality of everything produced this would have a profound effect on the bottom e.r.o.i. line.
Terra Pretta soil is the combination of at least 2 factors. One the charcoal two, the clay pottery, in soil clay is the center of the colloid and 3 was/is there a bacterial culture required? Agrichar as a means of sequestering carbon could approach the great gains possible of running towards small mixed organic farms. Who would think that the lowly often patted on the head small farmer could achieve so much! Given this I would anticipate a full out war on small farmers.
Perhaps the single most effective protest/contribution one can make is to grow their own food.

John Michael Greer said...

Diane, terra preta is certainly worth a look -- I'd be interested in seeing how it works in nontropical soils, which are very different from the ones where it's been used in the past. Of course as a way of improving tropical soils it's valuable enough.

Dan, bingo. The future will provide a lot less energy to people than we're used to having around today, but the difference between "lots" and "a little" is a good deal less drastic than the difference between "a little" and "none."

Stephen, if nuclear power had as much net energy as its proponents claim, it would have outcompeted other sources of electricity decades ago. As it is, the only countries in which it's been viable are the ones, like France, where it's supported by massive subsidies for reasons that are essentially political. The market makes a fair surrogate measure for comparing the net energy of one resource to another, and by that measure, nuclear has consistently fallen flat on its face.

Mind you, there's also the point -- and it's not a small one -- that it's not electricity that's running short in the developed world; it's transportation fuel. Trying to turn nuclear-generated electricity into liquid fuel runs into exactly the traps discussed in this post.

Bytesmiths, it's already in there. Notice the reference to "lifestyle changes." That means turning down the thermostat, walking to the grocery store three blocks away instead of driving, etc.

Dan, in North America there actually aren't that many good hydroelectric sites that haven't been dammed already. Wind is another matter; that's a technology that's being deployed at a very rapid rate, and for good reason: it's a mature technology that gets reliable net energy in the high single digits. I expect to see a lot more of it.

Brian, in the wake of the biggest house-building boom and speculative real estate bubble in recorded history, I don't think a lot of people will be building homes for a while. Retrofitting existing homes for energy efficiency will be a much bigger market.

Eboy, I don't see any point in making suggestions that will never be carried out, and today's corporate economy will give up planned obsolescence when (a) pigs sprout wings, or (b) the last industrial corporation declares bankruptcy. Your final suggestion points in a more useful direction: people can grow food, make and repair tools and other necessary things, and the like, so that when the industrial economy finishes circling the drain there will be another economy ready to take its place.

Brian said...

Homes here in AZ are still being built. Same with buildings, high-rises, etc. Not quite as quickly as 3 years ago, but they're still being built.

Also the cost of retrofitting a new home with a higher grade insulation, new windows, doors, etc. would be quite pricey. For someone like me who doesn't even own a home, I think it'd make more sense to build a green home like a straw-bale or rammed earth than to buy a regular house, fork thousands out of pocket to retrofit it with higher grade insulation, windows, doors, etc and then have to pay for all new drywall and paint/finishing.

Also, I'm in the real estate market and aware of it's struggles. The problem isn't that homes aren't selling, it's that there's 10x too many agents trying to sell them. In 2005 there was 1 agent for every 90 people in the country. It was a fraction of that 20 years ago. Luckily I don't sell homes.

Sure, the numbers are down, but they're no worse than they were in the 80's. Things likely won't get any better any time soon, but that just means more people will be abandoning their fad real estate job and moving on to something else. I know a few people who are still making over 100 grand a year selling homes.

So what I'm saying is, residential and commercial buildings are still being built, sold and occupied. I think it would make sense if we started using more green approaches.

There's still lot's of us young guys who don't own a home and don't have 60 grand in the bank account to go buy a home and then spend all the money it would cost to retrofit it.

If you still don't think this is viable, what would you recommend for a youngster like myself who doesn't own a home and wasn't planning on buying one in the next couple of years?

yooper said...

Hello John, another excellent article in this series. Of course, I can't agree more with youe line of thought here. This is a very difficult concept for most people to comprehend.

Net energy (EROEI) and the processes associated with it derives,"Net Creativity". On the oppisite end of the spectrum of this is "sink". I have often used that term here and for the most part I think your readership knows exactly what I'm referring to.

A "sink" might be an activity that expends more energy than it creates. Oh, oh....The final outcome of that always = E. Or loosly speaking a sink might be described as an activity or end product that expends more energy than it's worth.

An example of this might be, when I came to comprehend this concept at a very early age, my first thought was, "How am I going to escape this?"

As a younger man, I've endured many attempts trying to exsist outside this society (Net Creativity") that was brought about by Net Energy. However, every attempt ALWAYS brought about the same result, that this endeavor was in the long term a "sink" in process. I was coming out on the, "short end of the stick" everytime. Not very long, not very far.....

In the process, practices or proceedures that are sinks (waste) may be eliminated and can be a form of consevation. As can product waste be converted into something useful, a form of consevation.

I can't agree more with your thought, the more we can conserve can only better prepare us for life in a future of terminal energy decline.

Thanks, yooper

eboy said...

John, as you know the one thing that these boys like is money. Functional obscolescence has been rewarded by endless sources of cheap parts designed to breakdown. As supply problems ensue in a catabolic collapse scenario, as you prophecy, then I imagine that those businesses and individuals that have invested in quality should be rewarded. If only for the short term. The numbers that might avail themselves of this notion no doubt will be very small. Amazing isn't it that children can tell us what's wrong with our world, never however to be listened to.

The only economy that I would aspire to would be the humbled human economy of good will towards others. Of course that would mean a rejection of the current success model of : 'He/she with the most things when they die wins'. Perhaps seeing the decimation of much of life and the consequences of this desire to enter the winners circle will enable those who still have hearts and life to see that the better way was prescribed a long time ago. Imagine the hubrous of telling people that pursuing shiny stuff 24/7 wasn't going to work out.

Brian said: "If you still don't think this is viable, what would you recommend for a youngster like myself who doesn't own a home and wasn't planning on buying one in the next couple of years?"
My advice if you would accept it would be to seek out unserviced land say 10 acres with 5 acres of good woods. Then I would build one of those super efficient houses like straw bale or earthships or poured concrete insulated forms. With a root cellar, a dug well and a massive garden.

Stephen Heyer said...

Hi Danby,

danby: “The increase in population in the US since the '70s is due almost entirely to immigration.”

Exactly, immigration enthusiastically pushed by both the Right and the Left.

Now I can understand why the Right is pushing immigration: The more peasants the more wages are forced down and the easier it is to build societies ruled by a small elite, which seems to be what people on the Right want in their heart of hearts, however subconsciously. And of course, a flood of immigrants (legal and illegal) soon swamps the all those nasty anti-growth movements.

It’s the motives of the left that puzzle me. At least here in Australia they have long claimed to be pro-environment, yet have been the most extreme supporters of a large (currently huge) immigration inflow. They are also more effective that the right, screaming “racist” at anyone who questions the flow.

One of their their main contributions to the environment seems to have been a long campaign to ban hunting. Interestingly, in Australia, this has sometimes been very counterproductive as the “Rednecks” here tended to hunt introduced pest species such as the foxes that were wiping out the small native marsupials. When it became difficult for the “boys” to go on their weekend fox hunts the foxes increased in number to the huge detriment of endangered small native marsupials.

WARNING: This is a very simplified example, but overall the principle holds.

As for hydro-electricity, well I should have remembered that it’s big in the Northeast and Northwest of the USA. Here in Australia we built a great scheme, the Snowy Mountains Scheme (http://en.wikipedia.org/wiki/Snowy_Mountains_Scheme) but Australia being flat and dry with unreliable rainfall good hydro-electric sites are in rather limited supply.

Stephen Heyer said...

Hi John,

Regarding:
“Stephen, if nuclear power had as much net energy as its proponents claim, it would have outcompeted other sources of electricity decades ago. As it is, the only countries in which it's been viable are the ones, like France, where it's supported by massive subsidies for reasons that are essentially political. The market makes a fair surrogate measure for comparing the net energy of one resource to another, and by that measure, nuclear has consistently fallen flat on its face.

“Mind you, there's also the point -- and it's not a small one -- that it's not electricity that's running short in the developed world; it's transportation fuel. Trying to turn nuclear-generated electricity into liquid fuel runs into exactly the traps discussed in this post.”

It’s price not EROEI. I’ve always pointed out that nuclear, especially safe nuclear (which among other things means banks of small, safe, mass produced reactors) is expensive. It could not compete when oil, gas and coal were readily and cheaply available and no one cared about pollution or greenhouse.

In fact, notice that the countries that have been most enthusiastic about nuclear tend not to have large, cheap supplies of oil, gas and coal.

As well, the reactors that fell off the back of the 1940s bomb program, the designs we have been using until now, are inherently unsuitable for domestic power generation.

All that is changing.

As well, nuclear can make a large, direct and easy contribution to transport (as can other kinds of current power stations). Power stations have a huge problem in that they have to be able to generate enough power for peak periods yet much of the day and night only a fraction of that is needed.

You cannot just throttle a power station down like you can your lawnmower or outboard, and in the case of nuclear power stations there is little point.

Now we’ve known how to make perfectly adequate electric cars for at least 2 decades, the reason we haven’t is largely political. Get the picture? The power companies would just love to have somewhere to shunt all that waste power to, they could just run their plants flat out the whole time.

Ok, heavy trucks, tractors, that kind of thing are difficult (not impossible, just difficult) to electrify but if we were running, say, 30% of our car, delivery van and light truck fleet off (waste) electricity it would free up quite a lot of precious liquid fuel.

Of course there are lots of other good sources of electricity, what I’m saying is that in some circumstances, in some places, it is an appropriate base load technology at current and near-future state of the art.

Kathy said...

JMG, great post. I would add some additional factors not usually taken account of in ERoEI calculations. The first is the ERoEI of the EI. If you are using oil with and ERoEI of 10 to make windmills,solar panels, etc each 10 units of EI is actually 11 units. If you try make windmills from an EI that has an ERoEI of 2 then it takes 20 units of EI rather than 11. So the final net decreases for all the alternatives once conventional oil is gone.

Secondly, the human input of energy is never counted. However if you replace the work of any human in a windmill plant with a machine, suddenly you count the EI of fueling that machine. For example in the US we harvest corn with machine so we count the fuel for the tractor. But in Brazil humans cut up to 20 tons of cane a day. No doubt the calorie needs of those humans are not counted against the cane ethanol.

In fact humans and other living creatures are machines that use fuel in the form of food energy. When farming or hunting before oil, a farmer or hunter had to have at least and ERoEI of 1 or he would die. In an interconnected world with high ERoEI oil we have forgotten the energy needs of humans to do work - food, transportation to work, housing, etc. While this is variable and set to decline, there are certain absolute needs to get a human to work. Just because they are paid with money doesn't meant it doesn't count. Money by the way is an energy credit - used to buy food energy, transportation fuel etc.

We can't see the connection yet, but eventually it will become clear. Remember that Roman armies were possible only because Roman farmers could grow more food than they needed to survive - they had a positive net energy and therefore could provision the army of Rome with the energy they needed to create an empire. The army rested on human labor. Human labor still counts but not as much because of oil. Going down the Olduvai cliff it will once again be understood as a source and expenditure of energy that is crucial for human existence.

marielar said...

Hello all,


One of the thing which striked me with Terra preta, are the studies which have shown that in many cases, it was effective only with the addition of fertilizers, especially phosphorus. I would tend to believe that in cold and temperate climate soils, which often have high levels of organic matter to begin with, terra preta is of limited interest. Its likely that the preservation of the added charcoal to those soils was also due to the absence of intensive tillage, which fosters accelerated rate of oxydation. In North America, the soils of the Great Plains, the mollisols and their equivalents in Central Asia, the chernozems have high content of carbon, in the order of 10%, same as the terra preta. Those soils began to release C with the mechanization of farm labor. The combination of tillage and nutrient exportation of the field resulted in extensive degradation. I would expect pretty much the same, all other factors being equal, for soils amended with agrichar. And you still need live biomass to produce the charcoal. In the tropics, due to ideal temperature and precipitations, the potential to generate high biomass is there. This is not the case of arid or cold climates where vegetation growth, for the most part, is limited by other factors than soil fertility. In any case, the limiting factor is still photosynthesis production, which is performed by live organisms. Its a technology which still can be useful, but I dont see it as some kind of magic bullet. Syngas is the New Age name for woodgas or blue gas, which is an old technology dating from the mid 19th century. Instead of relying on imported oil, it uses local solid fuel with much less BTUs than oil based fuels. Wood gasifiers are in used in many developping countries. I dont see how it can be made C negative at a large scale. Say you harvest 100 tonnes of C as wood, you burned 50, or even just 20 as fuel, and you return 80 in the soil. You still have to factor in all the energy to harvest and process the biomass, and then the transportation of the biochar in the fields. The only way this would kinda of work is by assuming the residence time of the C in the soil is increased by the live biomass being turned into char and that the living biomass production is significantly increased by amending the soil with agrichar. As stated previously, organic matter is not the main limitation in many soils. Once 3% of OM is reached, other factors will restrict biomass production. One of the drawback being that by applying char or ashes to the soil, the risks of building up the metals content increase, usually to a point you cant add anymore of it without reaching toxic levels.
I think Sweden has some pilots for wood powered vehicules which is a derivative of woodgas technology. But Sweden has a low population density and has also been a pioneer in sustainable forestry with an history of reforestation over 100 years old.

Bill Pulliam said...

"Also the cost of retrofitting a new home with a higher grade insulation, new windows, doors, etc. would be quite pricey. For someone like me who doesn't even own a home, I think it'd make more sense to build a green home like a straw-bale or rammed earth than to buy a regular house, fork thousands out of pocket to retrofit it with higher grade insulation, windows, doors, etc and then have to pay for all new drywall and paint/finishing. "

No, I don't think you will find it makes energetic sense to replace an existing inefficient house with a brand new one, versus retrofitting. A lot of energy is already tied up in the structure of that existing house; it'd be interesting to see what the payback time is for the differential energy investment of retrofitting an existing house versus building a new one. Remember to include all the energy associated with producing and transporting the building materials from raw ecological/geological starting materials to finished structure, and the longevity and maintenance of these materials. My house was built 122 years ago, and only a small percentage of the structural lumber has needed replacement or reinforcement after over a century. If we keep it from burning down, it'll likely last another century or two. I'd be astounded to see straw bales accomplish that feat.

People are often tempted to vastly overdo retrofit. Windows are a good example. Replacing existing windows is expensive and wasteful of materials, requiring an entirely new window and disposal of the old window. A simple retrofit with tightly-fitted plain storm windows can achieve the same or better ultimate R-value at about 10-20% of the materials and labor cost, with almost no wasted material to be disposed of and much less new material required. And true, you can probably only bring the R-value of your walls up to an effective value of 10-13 or so with a well-done retrofit, as compared to maybe 18-25 with new construction. But consider that you probably started with an R of about 2 with all the leaks, gaps, and air spaces. So your retrofit cuts heat loss by about a factor of 5. Tearing the house down and starting from scratch only gives you at best another factor of 2. In most of the US you can probably beat that extra gain by just retrofitting your newly weatherized old house with a ground-source heat pump, again at far less cost and far less waste of already-built infrastructure than you get by building new from scratch.

One of the basic rules of restoring and maintaining old houses (so often forgotten): whenever possible repair, don't replace. It applies to houses just as it applies to farm tools and kitchen utensils. Building new houses on previously unbuilt lots using "green" materials and techniques, while existing houses decay and are torn down, is one of the pervasive false environmentalisms that permeates the "green" movement at present. Stack it up next to biofuels in my book.

A final semantic note... residential buildings are "houses" not "homes." Referring to them as "homes" is a marketing gimmick from the "home" building and real estate industries to give us all warm fuzzy feelings about the pieces of worthless crap they slap together and hawk shamelessly.

Brian said...

Oh and btw, I also read your Druid Handbook and found it extremely helpful. My favorite book on the subject.

I'll likely be purchasing many more of your books. Keep up the writing!

RAS said...

JMG, of all the writers have read who have focused on energy issues, you and Kuntsler are the only ones to even mention net energy. Most people seem to think it doesn't matter at all -even some scientists and engineer who should know better!

I think Brian might be right that we will continue building houses for serveral years despite the glut, but for different reasons. First, a lot of our current houses may become practically unlivable when cheap natural gas and electricity become a thing of the past. Insulation can only do so much, if it's available at all. Second -and probably more important -most of the recently built houses are so poorly built that they will pretty much decompose without costly and expensive upkeep. Sad, but true.

John Michael Greer said...

Brian, well, we'll see. Where I live, new home construction has ground to a halt, and new homes have lost 35% of their value over the last year. My guess is that in many cases, intelligent retrofitting will work a lot better.

What would I recommend? Wait until the housing market hits the capitulation stage, when the conventional wisdom is that nobody in their right mind would invest in real estate, and then buy a house. You'll get one for a fraction of the price it's running now.

Yooper, good. Watching out for energy sinks, to use your term, is like finding and stopping up leaks in a leaky boat -- a very useful thing to do unless you like breathing water.

Eboy, my guess is that people who can do quality work, producing things that people actually need or want badly enough to buy in a period of economic decline, will do very well over the years to come.

Stephen, the motives of the left are simple enough -- it's easier to win elections when you can import voters who will support your party.

As for nuclear energy, price is one of the few surrogates for net energy that can't be fiddled by fancy arithmetic. The fact that nukes have never been economically viable anywhere in the world, except when they received massive government subsidies, suggests among other things that the analyses that claim they have hugely positive net energy may have something a bit wrong with them. As for the new technology, well, let's see it compete in the market.

Kathy, all good points. Net energy is fiendishly difficult to calculate precisely because you have to include the energy needed to produce all the things you need to produce the energy to produce all the things you need to...

Marielar, this is one of the reasons why I've been waiting to see whether terra preta works well outside the tropics.

Bill, excellent points. Boutique environmentalism -- the attitude that limits ecological concern to buying "green" products -- is no better than any other kind of consumerism.

Brian, thank you!

Ras, I've also noticed the way that net energy just keeps dropping out of the discussion. It may just be that one step too far for people who aren't willing to step outside the mindset of industrial culture. Still, Kunstler is one of my favorite writers in the field, so I appreciate the company!

Danby said...

Stephen,
Immigration is a "left vs right" issue. The problem is that the left and right as popularly understood are neither left nor right.

In the US, the so-called right consists of a coalition of conservative Catholics and Evangelical Christians and a wide array of political ideologies, including libertarians (or classical liberals), Neocons (Trotskyite proto-fascists), white and Asian racialists, a few paleo conservatives, and militarists. The coalition is run by the corporations that sponsor the various rightist pulpits, like the Heritage Foundation and the Washington Times.

The left in this country consists of secularists, mainline Protestants and liberal Catholics, and includes a similarly wide array of ideologies including Black racialists, anti-racialists, feminists, organized Labor, a small number of genuine socialists, and the academic industry. The whole motley assortment is not run at all, but rather stage-managed by the press and various activist organizations, such as moveon.org.

I don't know the specifics in Australia, but I am given to understand they're pretty similar.

The point of this all is that neither coalition is recognizably right or left, in the original meaning of the words. There are, for instance, no monarchists in America, and only a few faint voices from the paleoconservative right and the academic left talking about such things as the importance of culture and community. The real argument is over whether our lives should be run by the government or by the corporations, neither of which could be called a rightist proposition.

RE:nuclear power.
I got to watch the WPPSS debacle here in my home state, as the escalating cost of a series of nuclear power plants wound up extracting some 1 billion dollars from the customers and 1.5 billion from the investors, with the net productive result being one (1) nuclear generation facility. You'd have a very difficult time selling a nuke plant around here.

If the problem is the expense of building the plants, what makes anyone think that cost would stay level when the cost of petroleum skyrockets? And if we're looking at a full-blown economic collapse (which I believe we are) where will even a relatively small amount of money come from?

Panidaho said...

Danby said:

If the problem is the expense of building the plants, what makes anyone think that cost would stay level when the cost of petroleum skyrockets? And if we're looking at a full-blown economic collapse (which I believe we are) where will even a relatively small amount of money come from?

Exactly. The failing economy may take many of these options, nuclear included, off the choice menu before we ever even get very far down the other side of Peak Oil.

Frankly, given the sorry state of the world economy and the fact that governments are taking THAT on and throwing hundreds of billions of bucks at IT instead of using that money to fund alternative energy research, I think that it's time for a little healthy panicking.

Even if the economy doesn't fail, the government here in the US at least seems to have decided that alternative energy is purely a "marketplace issue" and therefore the right thing to do is to sit on the sidelines and wait for the market to come up with a solution. Given that this is the same corrupt and soulless "marketplace" whose criminal mismanagement is now threatening the solvency of nearly every large banking institution on the planet and is heavily impacting the governments of most developed countries as well, I think this is damnable folly.

I think perhaps it's time for every family and every community to start really looking at what a future without affordable energy will look like and deciding how they will deal with it. I don't mean a future without CHEAP energy, I mean without AFFORDABLE energy. Because I'm getting the distinct impression that we're probably going to be mostly on our own on this one, governments the world over being busy for the foreseeable future tending to other matters they deem more vital to the health of their wallets.

Stephen Heyer said...

Hi danby,
Thanks for the explanation.

Yes, the “Right” and the “Left” here in Australia are sort of a bit like that, but not (thank God) as obviously far along that track yet.

Both are really fighting over the middle ground and in their incarnations as the Liberal party and the Labor party neither really claim to be right or left these days, but rather squabble over the who best serves the middle class as it is now defined (urban, 2 professional well paid jobs, huge debts, McMansion, SUVs, full “hysteria of greed” thing).

Still, at least both main Australian parties really do seem to try to rig things to favour the middle class, or rather the urban professional class, rather than the wealthiest one tenth of one percent we hear everything is run for in the USA.

Both parties, and especially Labor, used to make a fuss about favouring the working class and poor, but not even Labor pretends this anymore.

As for the nuclear thing, well that seems to be the normal experience over the past 3 decades or so. Fits in quite well with my (somewhat educated) opinion that (1) nuclear power is expensive and (2) we are trying to build entirely the wrong kind of reactors.

Apart from being far too big for safety, the monsters that we’ve been trying to build are all more or less custom one-offs (France may be a partial exception). Really, they are at the stage steam engines were at more than 2 centuries ago when each engine was a special project. This makes them ridiculously expensive and rather unreliable.

Even the current nuclear industry is swinging around to the idea that small, mass produced reactors that are factory built, sealed, moved by barge or truck to their power station, run sealed with little maintenance for about 20 years, then returned to the factory for refurbishing or disassembly are probably the way to go.

Of course, another factor adding to costs is violent public opposition to building each and every new nuclear power station. Unfortunately, the anti-nuclear public is probably right: The current designs are not safe and are horribly expensive and difficult to disassemble at the end of their service life.

Hypatia said...

JMG-your posts are always thought provoking, as well as folks making comments. I too was led to your site by your work, The Druidry Handbook.

I appreciate that you've set the tone of your site to focus on reasoned debate and thoughtful discussion instead of hysterical hyperbole!

Anthony said...

I think danby may be close to the truth. To me it looks like the two sides are thus:

Right wing - Corporations tell the government how they will run our lives.

Left wing - Governments tell the corporations how they will run our lives.

I "think" the more traditional positions were.

Right wing - constrain the government from being ruinous to our lives. Corporations do not need constraint because the invisible hand of the market will provide constraint.

Left wing - constrain corporations from being ruinous to our lives. Government does not need constraint since elections will provide constraint.

Yes, simplistic and stereotypical but perhaps not an inaccurate characterization . I think the truth is that both have been consistently wrong.

AV

Brian said...

Bill, I disagree that straw bale houses won't last a few centuries.

"As for longevity, straw bale advocates point out that many 19th- century Nebraska straw bale homes are still standing."

Taken from http://findarticles.com/p/articles/mi_qn4176/is_20040501/ai_n14572219

Straw is also considered a waste product and is something that could be used instead of cutting down trees.

Granted straw-bale homes would be better suited to dry climates, like AZ or New Mexico. Straw is more likely to decompose in high humidity climates.

There are still other versions of green building we can do. Millions of tires get thrown away that could be used for rammed earth houses(I believe some people call them earthship houses). Those would be perfectly suitable for various climates. There's also numerous other ways to build houses using what the earth has given us.

You're still failing to see that houses/buildings continue and will likely continue to be built, regardless of economic troubles. Maybe not at a break-neck pace but still moving forward.

I just would like to see more efficient houses be built. And until you've been around these houses you just don't have any idea how incredibly efficient they are. The average R value of each straw-bale my friend used was 50. It's damn near impossible to get that out of standard construction. And again, he built the entire house for $20,000. That includes the appliances.

I did a report on alternative construction in college and while I've forgotten a lot of what I discovered, I still firmly believe we'd be much better off using the earth for our building than continue living in our poorly built track "homes". Perhaps your house will last 200+ years, but I highly doubt these crappy track "homes" built in Phoenix will last more than 60-70 years without major renovation.

Maybe it's not the most energy efficient way initially(considering shipping costs), but I think it's likely more energy efficient in the long run. And cost efficient too. Especially for us here in the desert who see 110+ quite often in the summer. Cooling bills are not cheap.

RemyC said...

I just discovered your work picking up a copy of PanGaia... aim to read more of your posts... you may want to visit my own port, as these are issues I've been working on for many years.
Be well.
RemyC
www.remyc.com

Stephen Heyer said...

First up, having seen hundreds of new technologies appear that promised to “solve” the energy problem I largely agree with John Greer: There isn’t going to be a magic fix.

Still, not all have been useless so it pays to keep an eye on new developments. One I like is the use of carefully tuned microwaves (like a microwave oven) to degrade waste into energy rich gas and oil along with raw materials such as carbon and steel. It also, supposedly, is useful in reviving old oil wells and in processing oil shale.

The claim is that it uses far less energy than other processes that do essentially the same thing. We’ll see, and for once quite soon too.

Anyway, the best coverage I’ve found is at: http://www.stockgumshoe.com/2008/04/oil-vacuum-key-to-unlocking-800-billion-barrels.html. Have a look.

Problem is, I’m almost frightened the damn thing might work, then we would greenhouse ourselves all the way to the climate of Venus.

Oh! And it isn’t nuclear, in case you thought I was always defending the nuclear option.

P.S. One of the things I like about the nuclear option is that most of the places where I think it can be logically recommended are literally on the other side of the planet to Emu Park, Central Queensland, Australia.

John Michael Greer said...

Danby, as far as I can see, we haven't had real conservatives in this country, in Edmund Burke's sense of the word, since the rise of Communism frightened them all into abandoning their principles. Does anybody today even remember that the American right used to fight for lower military budgets?

As for nukes, as the "oil subsidy" goes away and new construction has to be done with much more expensive energy, my guess is that most large projects are going to grind to a halt. Salvage is likely to be the wave of the future for the next quarter century. The same goes for housing, of course.

Teresa, a lot depends on your definition of energy. Food is an energy source; so is firewood. I'd say that most Americans are going to have to get by on much more expensive and less concentrated energy resources than they're used to. The moral of this story? Provide as much of your own energy as you can.

Stephen, don't believe it for a moment -- the US political system still panders shamelessly to the middle class. The reason for the current ballyhoo about the upper tenth of one percent is that the middle class in the US isn't getting as much as it thinks it deserves, and is looking for scapegoats.

Hypatia, many thanks.

Anthony, go back a step further still, and you'll find that what defined liberals once upon a time was an interest in using ideology as a guiding system for social change, while conservatives saw tradition and experience as better guides. Burke's Reflections on the Revolution in France is worth reading.

Brian, you might want to check out statistics for house building during the Great Depression. As I recall, some building did go on, but precious little. As for Phoenix, without cheap energy and imported water, its population will likely drop to levels last seen in the 19th century -- and that means there will be more than enough houses for everyone for a long time to come. What percentage of the local housing stock is currently uninhabited? The last numbers I saw were pretty high.

Remy, I'll check it out.

Stephen, there are definitely new technologies worth pursuing. My guess is that the best options are the ones that cost least and can be built and operated by individuals or small communities, because anything on a larger scale may be unworkable until the approaching round of crises is over. What won't work for Emu Park may not be too useful anywhere else, either.

Panidaho said...

JMG said:

Teresa, a lot depends on your definition of energy. Food is an energy source; so is firewood. I'd say that most Americans are going to have to get by on much more expensive and less concentrated energy resources than they're used to. The moral of this story? Provide as much of your own energy as you can.

Perhaps I'm just thinking too much of my own situation. We can't use firewood here, there simply isn't enough in this rather arid valley. And my guess is there isn't enough in or near most big cities, either. We do have wind, though, and hydropower - if we can keep it running and the power companies don't decide to sell most of it across the grid for big bucks to places like California instead of keeping it here and "affordable" for our rather less affluent population.

Your point about food is well taken, in particular because it means "people power." Unfortunately, the prospect of even having enough affordable food for everyone in the future, from where I sit, isn't a given - even in this relatively wealthy country. But I'm more focused on the kind of energy that isn't people power or provided by resources that wouldn't last a year if even a large fraction of the population were to suddenly have to depend on them to get heavy work done.

I think your solution - "provide as much of your own power as you can" is the right one. In the end, most of the change we need will have to come from ordinary folks like us, because the government we have elected simply isn't up to the task of doing the real work required to deal with the changes that are already taking place.

yooper said...

Hello John, perhaps more of a personal note. In my research, naturally I'm discovering facts that I rather not have viewed.....
A good wealth of information can be found here http://energyfacts.blogspot.com/

A lot of these links are no longer viewable....Hmmmm, par for the course, eh?

Thanks, yooper

Bill Pulliam said...

Brian -- it is easy to get seduced by big fat R-values. But, especially for walls, these impressive numbers are nowhere near as meaningful as they might seem.

S'pose you have 80% wall space and 20% door and window space, and your R values are 10 for the walls and 2 for the windows+doors. So what's your total R value for the wall-window-door system? If you said (10*.8+2*.2)=8.4 give yourself a big zero. It's 1/(.8*(1/10)+.2*(1/2))=5.6 (reciprocal of the average of the reciprocals, just like electric resistance). Now if you boost your walls to an R of 50, you get a total R-value of 8.6 for the whole system. In other words, your overall gain for a 5-fold increase in wall insulation isn't even a 33% decrease in heat loss, since most of that occurs through windows even in poorly insulated wall systems.

What's the point? The specific point is that massive wall insulation doesn't do much to help reduce heat loss. Major heat loss occurs through windows, doors, and roofs. Heat finds the easy way out, just like water. You reduce heat loss most effectively by going after the big leaks, not the solid walls.

But the more general point is that just like with alternative energy, there is a lot of misperception and lack of big picture and long-term thinking going on in the "green" construction movement.

And sure, we will need new *housing*, but this does not mean we need new *houses*, especially of the stand-alone, large lot sort, in suburbs or (absolute worst) on formerly rural farmland or forested land. Sprawl is sprawl no matter what color you try to paint it.

So straw bales are most durable in arid lands; these are exactly the sorts of environments in which we should not be building ANY new housing AT ALL!

Loren said...

Physical peak oil can't happen until the political road blocks get out of the way. Laws and lawsuits have prevented development of quite a bit of oil, and a number of oil alternatives. Last I heard, there were considerable roadblocks to using the more economical methods of coal-to-liquids in the states, including a law that flat out forbid it. The issues you bring up are sound, but any serious discussion must mention this.

When you did ethanol, did you put the increased cost of the feedstocks(corn mostly) in the equation? Burning corn, essentially, prevents it from being used for these other purposes, and the increased demand increases the overall cost of corn for everything, leading to system costs far beyond the energy system itself.

An interesting thing about hydrogen is we already have infrastructure that can be more easily modified to handle it--natural gas lines would need to be renovated(seals mostly, I'd imagine the pipes themselves are fine), but the expertise can probably carry over for the most part, and specialized things such as propane and butane appliances already move the fuel in small tanks--a fuel cell generator would run off tanks piggy backed on this infrastructure. Assuming the production costs don't overrun these savings.

I've not heard of subsidies for nuclear, but I'd not be surprised. Due to paranoia and a few close calls due to idiocy of one sort or another, nuclear power in the US is expensive due to regulation--and only some of it is clearly useful. This is the main reason plants stopped being built in this country--it got to expensive. Modern designs without the burden of excessive regulation would be a very different story. If subsidies are part of the system cost, then the regulation must be too.