Bottled Water - Energy

Effect of increased oil prices on bottled water revenues

The motivation for this article comes from the "Oil-in-Big-Macs" work by Gregor. This is a graph that I put together taking data from International Bottled Water Association and the Energy Information Administration (EIA). I used the price of gasoline as a proxy for oil/energy prices. The revenues, both real and nominal are affected by higher energy prices. Watch out for more single-figure articles on natural gas, water and energy in general.

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Book Review: "Energy & International War: From Babylon to Baghdad & Beyond"

The author presents a somewhat academic description of the role played by access to (both fossil fuel and other mineral) resources in international conflicts. Not withstanding the numerous typos, the book is interesting from a historic as well as future-energy policy standpoint. For example, the author describes how access to the iron and coal-rich Alsace-Lorraine region shaped the frontline positions during WW I, how the conversion of British naval fleet from coal to oil gave them an advantage over the Germans before WW I, how the inferiority of the German Fischer-Tropsch aviation fuel contributed to their defeat in the Battle of Britain during WW II, and how Japanese pre-war thinking was heavily influenced by access to energy and mineral resources in south east Asia. On a more contemporary note, the author examines the current war in Iraq and presents some interesting conclusions. Additionally, natural gas, uranium and renewables markets are also explored in a similar vein. French foreign policy towards uranium-producing countries in Africa, and its role in civil/international regional conflicts is discussed. The author notes that after being assured of a dependable world supply for uranium, French policy has undergone a sea-change. The author discusses natural gas markets and the relations of the biggest supplier (Russia) with its former client states and Western European consumers.
The author notes that the European Union evolved from the European Coal and Steel Community, which was established to prevent future wars between France and Germany. One theme expressed in this book is that energy rarely is the main driver for international conflict, however, access to energy resources does play a role in shaping them, or as in WW I and II, influences their eventual outcomes.

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Energy geopolitics: the Ukraine-Russia gas dispute

Map of European natural gas pipelines. Credits: BBC, Petroleum Economist.

The Ukraine-Russia natural gas price dispute is still not settled. Ukraine warns that European consumers might see gas shortages in the coming days if the row is not resolved.
Essentially, Gazprom, the Russian gas monopoly wants to charge Ukraine 450 $/1000 m³ (MCM) of gas, a 150% increase from the existing rate of 179 $/1000 MCM. Because 40% of the gas to EU nations passes through Ukraine, a shut-off of Russian gas to Ukraine affects the downstream consumers. The figure is a map of proposed and existing natural gas pipelines and liquefied natural gas (LNG) storage terminals in-and-around Europe. Although Russia claims that part of the gas passing through Ukraine could be diverted via Belarus, consumers in Hungary, Poland Romania and Bulgaria have reported drops in natural gas supply. Here is a somewhat dated presentation describing the natural gas supply and demand outlook for EU-30 nations. According to this, net EU natural gas imports will grow to 670 billion cubic meters (BCM) of natural gas by 2030, accounting for 70% of the natural gas suppply. Of this, Russia is projected to supply 220 BCM (one-third of natural gas imports) by 2030. From this presentation, it is apparent that Russia has one of the the lowest costs for supplying natural gas on a $/MMBTU basis. The BBC has an interesting article on regional geopolitics that might play a role in resolving this issue.

What other options do European countries have in the long-term?
Poland has 24400 million short tons (Mmst) of coal, and is a big regional coal producer. Coal-to-gas technologies could play a significant minor role in displacing Russian natural gas in the long-term. If we assume that 1 short ton of coal produces 20 MMBTU, of which 30% is recoverable as natural gas equivalent heat, the entire Polish coal resource potential is ~4446 BCM in natural gas equivalents, much higher than the 40 BCM/year natural gas consumption in the Visegrad region. On the other hand, with additional European CO2 regulations, investment in technologies with low-carbon emissions(nuclear, wind, biomass) are projected to increase. However, it is not clear if these would displace a significant portion of the EU natural gas demand.

Conclusion: In the short-term, alternatives for relatively clean Russian natural gas might be difficult to find. European coal has a role to play in displacing some portion of Russian natural gas imports, but the long-term EU energy policy needs to address this issue in the context of geopolitics, GHG emissions, carbon trading frameworks and energy security.

See also: Russian Roulette: Energy geopolitics in the Russia-Ukraine gas row II

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Developing clean energy technologies: Role for green chemistry?

From the ACS Green Chemistry website:
"Green chemistry consists of chemicals and chemical processes designed to reduce or eliminate negative environmental impacts. The use and production of these chemicals may involve reduced waste products, non-toxic components, and improved efficiency."
If we consider that the production of fuels is a chemical process, with the energy in the fuel being the output of the process, applying the twelve principles of green chemistry could potentially impact the way fuels are produced. Three of the twelve principles of green chemistry that can be applied to clean energy technologies are the use of renewable feedstocks, maximizing atom economy, and designing chemicals to degrade after use. Some of the important challenges for developing clean energy technologies from a green chemistry perspective are:

• How can we better use renewable materials to produce fuels or industrial feedstocks?
  
• How can we maximize atom efficiency the above conversions?
  
• How can we plan for chemical degradation/CO2 sequestration after use?
  

To better illustrate the above questions, consider the case of producing fuels/petrochemical feedstocks from natural materials/fossil fuels. The production of fuels and petrochemicals from crude oil is highly atom-efficient (but significant improvements can still be made in the energy requirements), compared to technologies such as coal-to-liquids (CTL). Additionally, the production of renewable polymers from natural materials (corn, cellulose, etc.) also involves breaking them down to sugars, followed by fermentation and polymerization to produce the desired polymer. [As an example, see the NatureWorks(TM) polylactic acid (PLA) production from corn.] Similarly, CTL technologies also involve breaking down the complex organic compounds in coal to simpler compounds and further processing to obtain fuels with desirable properties. From a green chemistry perspective, it is much more efficient to maximize the atom economy in these conversions. (This is probably easier to implement in the case of polymers compared to fuels, because the fuels have to match a given specification, while a polymer's specifications can be changed by controlling various process conditions).

Additionally, planning for the end-of-life means that we should have effective means to recycle/reuse products derived from natural sources, and we that we should have strategies to mitigate CO2 emissions while using CTL. I do not advocate that we only use CTL technologies, but only that if we do, we should have some means to mitigate CO2 emissions in place.

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Resource Conservation & Game Theory

Jeffrey Sachs seems to think that a cooperative approach on the world's most pressing problems of energy, water, raw materials will eventually help in sustaining high growth rates. I like his argument that the world economy has never been so large. This, he says necessitates greater conservation because free market economics which dictate that the prices be set by supply and demand will result in price spikes when disurption of supply/supply concerns set in. As an example, the above figure (credit: Yahoo Finance) shows how the NASDAQ and S&P 500 indices fell as the commodity prices rose in Feb'08. Back then (as it is now), concerns over global food production (mainly corn, rice) and the everincreasing oil prices led to the commodity price increases that we see today.

With my limited knowledge of economics, I think that Prof. Sachs's approach parallels John Nash's game theory. The most optimal distribution of resources (and the best global output) will occur when all the players (individual nations) coordinate their act and come together. However, in practice, every nation has its own strategic objectives which leads to lesser cooperation in sharing/developing the world's resources.

My views:
Conserving resources to save growth sounds like a noble idea. However, will India, China and the rest of the developing world wait until mutual understanding of resource use happen? The recently released Indian climate change plan emphasizes solar energy and sustainability. Given that most assessments of long term energy use have fossil fuels still being the major source of energy, it remains to be seen how far the present Indian government (and its successors) will go towards making climate action a reality.

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