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Welcome. I am the author of Universal Time, a sci-fi urban comedy;
Beaufort 1849, an historical novel set in antebellum South Carolina;
and Pearl City Control Theory, a comedy of manners set in present-day San Francisco.

Sunday, December 20, 2015

Obey the Law of Exergy (Time to Go All Electric)


Feel the useful heat
You may not have heard of exergy. (No, it’s not a typo!) In thermodynamics, exergy is the maximum useful work possible as a system resolves into equilibrium. Okay, that’s not a law so much as an inherent property. But the Second Law of Thermodynamics (a true law!) means we are fools not to pay attention to exergy.

Standard physics torture
Don’t worry; I’m not going to torture you with equations. The Second Law just says that energy available to do work in a system always decreases over time. Once this energy is gone, you don't get it back. Let’s examine why exergy is important and what to do about it.

We burn fossil fuels to do work for us, fuels such as natural gas and gasoline. Both are nifty, high quality fuels that contain excellent amounts of exergy. The problem is we use these fuels incredibly inefficiently, getting out of them only a fraction of their potential. And once we burn and waste them, they're gone. The work they could’ve done for the human race, if only we didn't squander them, is dissipated forever.

Wicked hot
For instance, natural gas can be used to create very high heat. Greater than 800°F heat. The kind of heat necessary for industrial processes, like glass and cement manufacturing. The kind of heat difficult to get from solar concentrators or solar boilers. Using natural gas to heat air to 72°F or hot water to 120°F is a gross waste of natural gas exergy since such low grade heat can easily be generated by a solar hot water heater or a heat pump.  Or . . . wait for it . . . the heat can be scooped up from waste heat left over from industrial processes. Indeed, waste heat from industrial processes in the US could heat every single home and business if we set up systems to take advantage of it. (Instead, we squander.)

Busy making gas?
Now, natural gas is not infinite. The earth can potentially continue to make small amounts, but it takes millions of years. Methane can also be captured from livestock, sewage and landfills, but in relatively small amounts. In fact, natural gas is so finite, we’re spending more and more energy drilling and fracking to obtain it, reducing the net energy we get from it. Yes, natural gas is cheap at the moment due to US drillers borrowing endless cheap money courtesy of the Federal Reserve even though they've been unprofitable for years. Easy credit for drillers has come to a halt, however, and much of the natural gas industry is heading towards bankruptcy. Long term, our grandchildren and great-grandchildren may actually appreciate some natural gas left for them to allow them to produce aluminum, iron and steel, not to mention cast metal. (Electric arc furnaces luckily can be used for making steel from scrap feedstock.)

Leaks in Boston alone
The other problem with our current natural gas system is that it involves incredible amounts of pipe to deliver it to where businesses and households can burn it. About two million miles of pipe. Now, natural gas is primarily made up of methane, which, when it leaks into the atmosphere, is twenty times more potent than CO2. And leak it does. Over ten percent of US methane emissions occur from leaks in the natural gas transmission, storage and distribution system. Even though natural gas burns cleaner than other fossil fuels, the amount that leaks does almost as much climate damage as nastier fuels.

Natural gas also poses dangers to homes and businesses via explosions (such as the San Bruno pipeline explosion in 2010 that killed eight people), and through carbon monoxide poisoning, (usually the result of poorly ventilated appliance or heating systems.) Homes and communities that are all electric have fewer potential safety hazards.

What? I'm proposing giving up natural gas for home heating and appliances? Is this even possible? Yes, dear reader, it is. It can be done expensively (all in one fell swoop,) or it can be done economically, by replacing systems and appliances one at a time as they get creaky and old.

The one fell swoop method. If you have gobs of money hanging out in a mutual fund, this is the route I would take. In six weeks you could not only transition to all electric, you could transition to net zero energy and pretty much zero energy bills for the rest of your life. You would have energy security and a low-carbon conscience to boot.

First, install a ground-sourced heat pump, a super-efficient, quiet, and long-lasting way to heat and cool your home ($30K, $20K after tax credit.) Add on a desuperheater that will give you free hot water during summer cooling season ($500), and a heat pump hot water system or solar hot water system to provide hot water the rest of the year ($2K for heat pump version; $5K for solar, $3.5K after tax credit). Then put in an induction/convection stove ($1400-$6000 depending on how high-end). Many professional chefs say that induction ranges cook better than gas ones. Next, get a heat pump dryer ($1400). (If you don’t already have a front load washer, get one of those, too.) After that’s in, slap up a couple dozen solar panels on your roof (probably $15K after federal tax credit), and if your house is reasonably well sealed and insulated you’ll be in great shape. If your local utility is hostile to paying you for the extra electricity your solar panels produce during the day, then install a Powerwall battery for $7K  ($5K after tax credit when installed with solar PV) that will allow you to hardly pull from the grid at all.

Utility shield
Total cost to go zero carbon, zero net energy, nearly zero electric bill (with extremely nice, high-end appliances)--$47K. ($52K with Powerwall.) The average US household in 2015 pays about $3200 per year in energy bills (electricity plus fossil fuels burned.) Energy costs are projected to increase 1% per year over time. (I think this is far too low, but hey, we’ll go with it.) So by going all electric/solar PV your energy savings will totally pay for everything in 14 years. (16 years with a battery.) After that your utilities are basically free in perpetuity. Again, this is all averages. Depending on your climate, and the solar insolation of your particular house, your optimal set up may differ.

Note: if you are building a home from scratch, put in radiant-heated, hydronic floors and a drain heat recovery system to produce even higher savings. Harder to do as a retrofit.

The bit-by-bit method. Not all us of have $50K hanging around, so this approach is likely the most viable.

All heating, cooling and appliance systems get old and fail. The trick to replacing them with electric is to not wait until they are totally dead. If your hot water heater goes out at 8pm and you call an emergency repair guy to come over stat with a new unit because you can’t face a morning without a hot shower, you are not going to end up with a heat pump or solar hot water heater. Both take a little more planning.

Let’s look at some life expectancies.
Gas dryer—13 years
Gas stove—14 years
Gas or electric water heater—10 years
Furnace 15 – 25 years

This may not tell you much, but I can't resist the animation.
Because these systems and appliances last so long, it’s vital not to lock yourself into another decade of natural gas use. Look at it this way: there are many ways to generate electricity, many ways that are even low carbon and renewable. Moreover, over the next decade, most households and communities in the US will produce at least some of their own electricity. Few will produce much natural gas. When you have to buy a new heating system or appliance anyway, upgrading to a high-efficiency electric one costs little extra, especially when compared to future energy savings. And you don’t have to put in an expensive ground-sourced heat pump to go all electric. While somewhat noisier and less efficient, air-sourced heat pumps that both heat and cool are far cheaper (only $3K-$5K), and there are new ones out that can deal with temperatures below zero degrees (even -15°F), though if you often have temperatures this low, some kind of back up is recommended. You can even go with a standard electric dryer and electric stove that are almost identical in cost to their natural gas versions, although I encourage you to seriously consider induction cooking.

Get thee gone
The exceptions to the bit-by-bit replacement rule are houses heated with oil, propane, kerosene, and/or baseboard electric heaters. These fuels are so costly, and baseboard heaters are so inefficient, that you’re better off replacing them with a ductless heat pump right away, even if the heating system you have is nearly brand new. (Note: if you heat your house with wood, you should already have a masonry heater, a high efficiency woodstove or a high efficiency fireplace insert. Anything else pollutes, squanders resources and significantly wastes your money.)

Also consider lower-tech solutions, like clotheslines for drying, passive solar and/or adding thermal mass for heating and cooling. And then there are ceiling fans, whole house fans, awnings, and southerly deciduous trees for cooling, not to mention sealing and insulating your home to reduce your heating and cooling needs in the first place.


SESI (the future)
During my investigation of the all-electric trend, I had a chance to tour the Stanford Energy System Innovations (SESI), a new energy plant that the university is deservedly proud of. Stanford has a district heating system, meaning that the majority of campus buildings (over 150) are connected to a central energy system that provides them with heating and cooling. Stanford used to have a cogeneration energy system that burned natural gas to produce both heat and electricity. Cogeneration was all the rage thirty years ago when Stanford put it in, and it’s indisputably more efficient than power plants that burn natural gas for electricity and then do nothing with the waste heat. (Like 90% of US power plants. Squander, squander.) And cogeneration is also more efficient than burning natural gas for low grade heat and producing no electricity whatsoever, like the average home’s furnace. (Squander, squander.)

Waste not, want not
But Stanford’s cogeneration system was nearing the end of its lifecycle, so the university assessed its options. It was then that their team of engineers realized that Stanford’s heating and cooling loads overlapped to the point that they could take the waste heat from cooling and use it to meet 70% of the university’s heating needs. Their team also realized that their current heat delivery mechanism—steam—was far less efficient an energy carrier than hot water and much less safe. So the university replaced 20 miles of steam pipes with 20 miles of insulated hot water pipes, while at the same time building a new energy facility with massive electric heat recovery chillers and three monolithic thermal storage tanks.

SESI went on line this last spring. It has cut Stanford’s carbon emissions in half and will save Stanford $420 million over the lifecycle of the system. It’s also dropped Stanford’s potable water consumption by 15%, water that used to go cooling towers to evaporate waste heat. (Squander, squander.)

Down is good
When I toured SESI, I learned that Stanford isn’t completely off natural gas. They still use some during cool weather to boost hot water temperatures in their thermal storage tanks, and they use some in a scattering of older campus buildings that aren’t part of SESI. But with SESI, Stanford is very likely the largest district heat and cooling system in the world to go (nearly) all electric. Stanford is also installing 5.5 MW of solar PV on campus and 73 MW off site to provide the campus with renewable energy. By 2017, their total greenhouse gas emissions will be 68% less than their 2013 emissions.

I have to say, I am such an energy geek, I thought SESI was pretty fabulous and have extolled its virtues to my family well beyond their patience. My college-student daughter, who had to study SESI for a class, thinks I’m nuts.


You don't actually need hard hats in a groovy control room
But after even more research, my enthusiasm has not diminished. Stanford looked into the future, saw where technology and humanity were headed, and converted from 100% fossil fuels to nearly 100% electric, sensibly making good use of waste heat in the process. Yes, Stanford has buckets of money to play with, but as they point out, though SESI combined with renewables had the highest up front capital costs, it was the lowest cost option when taking into account the entire life of the project. (And their calculations didn’t include the possibility of a carbon tax.) In addition, SESI has reduced Stanford’s water consumption no small amount, especially important given California’s drought.

As a country, we will all be off natural gas by 2030 except for high heat industrial processes. There’s no way the planet can stay below a 1.5°C warming increase if we don’t. The cheapest way to do this is to go electric as each appliance and heating system needs to be replaced. Starting now. Basically, there needs to be no more new gas-burning appliances sold or installed in the United States. Starting tomorrow.

Let’s be smart and pay attention to exergy. Let’s only burn natural gas for its high level uses, which certainly don’t include space and water heating. Future generations will thank us.

20 comments:

  1. Aaargh! I'm going to ask you to please amend this to add something! Because you've made the standard error.

    If you live in a hot climate *or* a cold climate, Step one is always, always, *always* to insulate your house.

    Superinsulate it. The gold standard for superinsulation is described in a book published in 1981 called "The Super Insulated Retrofit Book". The techniques are extremely well known and really pretty darn cheap.

    R-values for the roof and walls and floor should be looked up according to your climate zone. R-40 for walls is a minimum, but in colder climates, R-60 or even R-80 is desirable. R-60 for the roof is a minimum, but R-120 is highly preferable.

    Vapor-seal the enitre house, and if you can't, airseal it. Add an Energy Recovery Ventilator or Heat Recovery Ventilator to provide fresh air.

    This cuts the heating and cooling load down to the level where the necessary electric power to heat or cool the house is very small. You'll see heating & cooling cost reductions immediately.

    When you do go electric, you will be able to use a smaller, cheaper heating system: for instance, an air-source heat pump instead of a ground-source heat pump.

    We waste soooooo much energy due to leaky, poorly insulated construction. Even though the correct techniques have been published since the early 1980s. It frustrates me so much, since it's simply pure waste!

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    1. Nathaniel, I entirely agree with sealing and insulating one's house and have written many posts on it. (See http://karenlynnallen.blogspot.com/2014/01/natural-gas-prices-are-soaring-heres.html )

      I mentioned heating and sealing twice in this article, although I agree I could have emphasized it more. So yes, everyone should insulate and seal their houses right away!

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  2. I should note that the reason universities like Stanford don't do the insulation is that they have problematic old stone and brick buildings. Single-wall masonry is very hard to insulate -- it spoils the exterior look if you insulate on the exterior and it spoils the interior look if you insulate on the interior.

    If you have anything other than single-wall masonry, or if you don't care about the exterior look, or if you don't care about the interior look, superinsulation should come *before* all other energy efficiency changes.

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    1. All Stanford's new buildings are extremely energy efficient, and all their renovated buildings (such as the Quad) have been well-insulated. I agree that they do have some old buildings that could use improvement. Some of the old cinder-block dorms especially wouldn't be hurt aesthetically by insulation since they're not much to write home about to begin with.

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  3. Hi Karen,

    I really enjoyed this article! You have a similar approach to me here in Scotland - a country with a growing 7 GW of renewable electricity capacity and population of around 5 million. That's about 1.4 kW per person!

    https://www.scottishrenewables.com/sectors/renewables-in-numbers/

    We have no renewable energy systems on our house but we insulated to a higher standard and put in heat recovery ventilation.

    We got rid of natural gas for heating and cooking when our boiler broke down and put in a Redwell infra red heating system

    https://www.redwell.com/en/home

    controlled by a Honeywell controller:

    http://connectedproducts.honeywelluk.com/evohome/plan.php

    We heat water at night using an electric immersion heater in a well insulated tank.

    We use an induction hob for cooking - really fantastic - have twin electric ovens and use a heat pump clothes dryer in winter - a simple clothes line outdoors in late spring/summer and early autumn. The waste heat from the dryer heats the kitchen when in operation at the expense of a slightly more noisy kitchen environment.

    Even our car is electric - a Leaf!

    I've not done the CO2 emission savings calculations, but our total running costs are slightly higher for the house, but taking the car into account, significantly lower.

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    1. Wow, a great electric conversion success story! Great to hear you're liking induction cooking. Thanks for the link about Scotland's renewables. I had no idea Scotland was targeting 100% renewable electricity by 2020. Very impressive.

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  4. Yes - Scotland has an extraordinary amount of renewable energy resources by any standards!

    https://en.wikipedia.org/wiki/Renewable_energy_in_Scotland

    Although there's 7 GW of capacity now, the potential capacity is 62 GW (see table at end of link above)!!!

    Realising 25 GW of wave and tidal potential is going to be very challenging however!

    There is considerable work in progress to increase the export (and import at times of low wind etc) capability of the power network. There are new connectors just completed between the north of Scotland to the central belt where the population is and others to be built to the rest of the UK and Norway.

    Everyone in the UK should be getting a Smart meter by 2020. I've seen trials where the price of electricity can drop to £0.04 per kWh in times of over production (i.e. windy), normally £0.12 (as it is now), and £0.64 in times of low production. You don't want to be paying £0.64 for too long!

    All coal generating plant in Europe is to shut down by 2020.

    You can get a live look at what the UK grid is doing here:

    http://www.gridwatch.templar.co.uk/

    Best wishes,

    Alister.

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  5. Karen, it is always interesting to read your blog and your enthusiasm is appreciated. My take is that I think you have fallen into the efficiency /resilience trap, a common trap in this uber technology world. Go all electric? I think not. If you choose to put all your eggs in one energy basket, you put your system at risk, and not just your system either. It is really a terrible idea to suggest that electricity is your sole energy source. And that is what electricity is, a conduit for energy from other other energy sources, primarily of course fossil based. Here is Electricity generation in the US by source:Coal is about 40%, NG 27%, Nuclear 19%. And so called renewable sources like hydro @6% and wind @ 4 %. And solar, a whopping .6%.(source:EIA for 2014) Wind and PV solar are not really renewable because they are subsidy remora fish that ride on the belly of primarily fossil fuel providers. Renewable energy can never substitute for the amount ofenergy output provided by fossil sources to support and Industrial civilization unless of course we as a world reduce our energy use fantastically. Generating electron flow to produce electricity from burning is inherently inefficient from the get go and about a third of the energy is lost in an endothermic process and the payoff is in bond cleavage and formation which adds oxygen to carbon and oxygen to hydrogen yielding co2 and H20. Now you have to consider the inefficiency of the power plants with coal burning around 40% and NG about 60%. Ready for more inefficiency? Line losses are huge. We sit here in Wyoming and send electricity to the Bay area and electrical resistance in the transmission lines eats up another 12-20%. Remember that when we burn our Wyoming coal to make steam to spin a generator we and all the poor souls downwind reap the benefits of carbon and heavy metal pollution.
    My main point which I seem to be finally getting around to is that electricity generation is in this country at least, a very complex and fragile technology for many, many reasons. There are many players in the process and the entire system could crash suddenly for any number of reasons. Deregulation of electricity has created thousands of players, most of whom don't share data with one another, not to mention sharing with the Federal government. Worse,the controls on generation, distribution, load sharing etc is modulated by digital processes instead of people watching dials which creates more fragility because command and control functions require what: electricity!. It is a terrible mistake to sacrifice resilience in a system on the altar of efficiency. As a world and a nation we need a resilient mix of energy sources so we have a backup system in case one source fails.
    I do feel you and your commenters gave proper attention to the importance of insulation of dwelling and workplaces but we must realize that we need a divers energy mix. If you look around the world at nations undergoing social/political instability, the electrical supply is always one of the early casualties. Since electricity is generated directly or indirectly from finite sources it stands to reason that electricity as a mode of performing work will also have a finite lifetime, at least in an industrial civilization.

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    1. Hi SV--Good to hear from you! Evidence in Europe points to grid reliability increasing with renewable electricity generation. Germany, for instance, has far fewer hours of outages per kwh produced than the US. Energy can be produced from many different sources, including fossil fuels.

      I agree it's important to look at all the sources of a state's electrical power, especially for California since we still import a big chunk. And it's true, the US electrical grid still uses coal and natural gas heavily. But this varies a great deal by state, partly because some states have great hydro-electric resources, and others have been ramping up renewables remarkably. It won't be many years before the states that haven't adapted to new energy sources will find themselves behind the curve in terms of resiliency and economic productivity.

      Already three states produce the vast majority of the electricity they use from hydro + renewables: Washington (95%), Oregon (85%) and Montana (84%). Another four produce a large portion: Maine (65%), North Dakota (50%), South Dakota (63%), Idaho (50%).

      Another three have made big strides in the past few years and are now producing roughly a third of their electricity this way: New Hampshire (31%), Iowa (38%), and Vermont (37%). Another seven get at least 20%, including both your state and my state: Kansas (26%), Wyoming (26%), California (24%), Alaska (28%), Oklahoma (22%), Nevada (21%), and New York (22%). Again, this renewables+hydro generated in state as a percentage of total electricity used, not electricity generated, so it doesn't sweep California's dirty imports under the carpet.

      All these numbers are just utility-scale generation and don't include behind-the-meter PV. If we include behind the meter PV, it's estimated that California's renewable+ hydro percent is 27%. Even Texas is coming along, with 11% of its electricity from renewables. So you can see, the future is already here or arriving quickly, it's just unevenly distributed.

      Locally-produced electricity via renewables is spreading fast. Solar and wind are cheaper than coal and in many places at parity with natural gas. The more locally-produced our electricity is, the fewer transmission losses. Remember, there are expensive, dangerous losses in our leaky, fragile natural gas system. It's just that we're used it.

      Completely agree about the inefficiency of fossil fuels being burned grossly inefficiently with waste heat loss by US power plants. If we had any sense, we would do combined heat and power like Europeans do and get double bang for our buck. Even so, we still have to move away from natural gas for low level heat.

      You might want to check out former President Bush's ranch in Crawford, Texas that uses a ground source heat pump for its heating and cooling needs. Though I'm not a particular fan of the guy, I do give him credit for building a highly energy-efficient, lovely home that uses a fourth of the standard energy to power a house of that size. And it's pretty much all electric, although I couldn't tell about the range in the kitchen from the pictures.

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  6. There are different levels of appropriate complexity and cost for different kinds of situations. At the Stanford University level, yes, by all means go with cogeneration district heating and cooling and hyper efficient systems with solar PV and so on.

    However, at the $28K a year just-trying-to-scrape-by household level... not so much. It pains me when exotic solutions are proposed when the simpler option is so much cheaper and just as effective.

    Reducing the need for energy and money in the first place is the better route. A bicycle eliminates the need for a super efficient (electric?) car if you live in the right kind of neighborhood. Fruit tress and veggie beds cut out the middle man of organic "locavore" grocery stores, especially if you dry, can, and otherwise preserve the harvest for the off season. Adding insulation to a home is relatively inexpensive. I've retrofitted several properties over the years in a DIY tight budget manner that didn't require hiring professionals, government subsidies, or any kind of advanced technology. My favorite example is grandpa's removable storm windows and grandma's heavy wool drapes for winter. These have been shown to perform nearly as well as the best high tech super expensive triple insulated windows on the market. The trade off is this old fashioned approach requires a bit of time and thought rather than money or complexity.

    I like to remind people that Denmark (arguably one of the most "green" and energy efficient countries on Earth) still gets 80% of its energy from coal. It just uses very little of it relative to its very high standard of living.



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    1. For people without lots of cash to burn, replacing gas appliances with electric when they have to be replaced anyway doesn't cost any extra. This is exactly why replacement with electric instead of gas when an appliance/heating system fails is so critical.

      I've written a number of times about how to reduce energy consumption cheaply. For most American households cutting energy consumption in half is fairly easy with just a few cheap technologies and some behavioral changes. (Cutting it in half a second time takes some money and work.)

      http://karenlynnallen.blogspot.com/2014/01/natural-gas-prices-are-soaring-heres.html
      http://karenlynnallen.blogspot.com/2013/02/one-familys-energy-evolution-how-we.html

      Your statistic about Denmark isn't true. (Perhaps outdated? Although I don't think coal has been a primary source of energy for at least several decades.) In 2014, Denmark got 15% of its energy from coal, and 24% from renewables. (That percentage of renewables is one of the highest of any country in the world.) However, it's certainly true they use energy very efficiently--they consume 123 btus per person, whereas the energy-gobbling US consumes 288.

      Denmark achieves much of this efficiency not only through bicycles and trains, but through mandated electric appliance efficiency (much stronger than in the US), cogeneration power systems that produce both heat and electricity, and remarkably extensive district heating systems that provide space heat and hot water to much of their urban areas.

      Further, many of their cogeneration systems burn trash as their primary fuel source, although recently since the country produces less and less trash, this has become dicey. (I also think composting organic matter is better than burning it if there are farms that can use the compost within 100 miles or so.)

      So in particular Denmark does not burn fossil fuels solely to produce low level heat. In fact, anywhere district heat is available, they've outlawed putting in fossil fuel-burning private heating systems, either new or replacement.

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  7. We are in broad philosophical agreement. We're just nitpicking here.

    Gradually replacing one kind of appliance with another over time is dependent on social and economic forces. I've noticed that as American homes and cars have become ever more energy efficient over the years they've also become larger with more bells and whistles and located/driven farther and farther from civilization. Efficiency only liberates money to be spent differently with no net reduction in overall consumption. If you save $1,000 a year on energy you just take a vacation to Hawaii with the extra money and burn up the fuel that way. In order to actually use less fuel overall the price must rise so people change their overall behavior. Or you could have a serious economic contraction with high unemployment which will accomplish the same goal.

    You and I are both correct and both wrong about Denmark's energy statistics, depending on how you slice it. We could have a very long Talmudic debate on the subject, which I tend to enjoy and learn from...

    I did some quick research. In 2014 coal was burned to produce 48% of Denmark's electricity and 22% of its heat. 39% of Denmark's electricity came for wind - which is impressive. Oil and natural gas account for most of the remaining national energy consumption, particularly in the transportation sector. So you are correct and I'm wrong about the "80% coal" comment. Touche. It would have been more accurate for me to say that the majority of Denmark's energy comes from fossil fuels and then we could quibble about the details.

    Some mitigating factors which need to be included...Denmark's stash of North Sea oil and natural gas allow exports to heavily subsidize the underlying national economy. They sell their dirty energy to others in exchange for cash that the Danes then use to build up a renewable energy infrastructure with self-reinforcing economies of scale. That's one of the reasons wind power has been able to ramp up so spectacularly in recent years. It's a great model worthy of praise and imitation. As Denmark's oil reserves deplete and exports drop to zero in the next twenty-ish years the country will be well set with alternatives. At least for electricity. Transpiration will continue to be a trickier situation. Trains and many cars can run on electricity, but ships and planes will still need liquid fuels.

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    1. Natural gas has been sold well under cost ever since the Fed opened the gates of cheap money. My understanding is natural gas isn't profitable until the price is $5-$6 per mmbtus, whereas it's been sold for under $2.50 for the last several years while its zombie production companies acquired more and more debt to keep afloat. The whole nearly-free money scheme by energy "investors" has lasted far longer than I or most other energy watchers thought possible, but when it ends, vast changes in US energy production will occur rapidly, and I would expect the price of natural gas to double or triple in short order. Anyone who has reduced their natural gas usage (through efficiency or conversion) will benefit. Anyone who has not will scramble to do so at that point.

      Denmark most likely joined the former-oil-exporters club in 2015, and will definitely belong in 2016. It is not a club with a happy membership--Syria, Yemen, and Egypt are poster children for the chaos that ensues once the oil money stops flowing. The net export land model by Jeffrey Brown predicted this former-oil-exporters club, but for some reason people in oil-importing countries (such as the US) focus on how much oil a country produces rather than how much is available for export.

      Saudi Arabia in particular has had escalating domestic consumption that has decreased its available exports, all because it did not spend a tiny percentage of its wealth during good times building out its vast solar potential, and so it has had to burn escalating oodles of oil to produce electricity and desalinate water. Now with the crash in oil demand, Saudi Arabia is stuck. I give them two years before an Arab spring removes them for the oil equation for quite a while.

      The Danes have been much more sensible with their brief two decades of North Sea oil export riches, and at least have, as you mentioned, something to show for it--wind power infrastructure, decent bicycle infrastructure,cogeneration plants, and extensive district heating systems. And now with their wind turbine manufacturing industry, they can export wind turbines instead of oil.

      Britain didn't do as well with their North Sea oil wealth (they are also in the former-exporter-club), and even Norway is not nearly as energy efficient as their neighbor just to the south, though they probably have a couple decades of slowly declining exports left to them.

      I agree ships and planes are trickier to fuel by renewables. The best option for shipping may end up being hydrogen fuel cells, even with the energy losses involved. Planes may be able to use jet fuel made from the few biofuels that are energy-dense enough. And of course there will still be oil around the next few decades, just less of it, and it won't be nearly as cheap.

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  8. Agreed. All of it. Natural gas Ponzi scheme, former energy exporters, Arab spring... all of it.

    I do disagree slightly about the future price of oil being really high. The more likely scenario is that short spikes in the price of oil will choke off the economy and cause a recession. Unemployment and "demand destruction" will pull the price of oil back down below production costs. Rinse. Repeat. That's not only what triggered revolution in Egypt, Yemen, and Syria, but it's the root cause of the 2008 financial crisis. Wall Street shenanigans make us all more vulnerable, but the same results were inevitable under any circumstances.

    The internal struggles in the House of Saud and the saber rattling with Iran suggests the kind of environment where the free flow of goods and services may not hold up well in the Persian Gulf for a period of time. That's 20% of the global oil supply. Prices will spike, the economy will crash. Buckle up. It's going to be a bumpy ride.

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    1. Agree that we're in for a bumpy ride and that we'll see spikes and crashes and world oil production falling significantly. But if you figure a gallon of gasoline is worth 500 hours of human labor, eventually that's going to put a floor under the price of oil for uses that are difficult to find substitutes for. (Heavy farm equipment? Backhoes? Air travel?)

      Of course, "eventually" is after all the waste and substitutions and political upheavals have wrung their way through both the US and world economies, which will not be a turbulent-free experience.

      Given that the House of Saud is one of the nastiest regimes on the planet, I'm not going to shed tears when they go, even though I do see that the ramifications will be enormous. However much our family has prepared (vegetable garden, fruit trees, minimal energy consumption, solar PV, solar hot water, bicycling, close to electrified transit, etc.) it's going to be a tidal wave of change we will all have to ride out as best we can.

      What would be even worse is if war is chosen as the best mechanism to account for/accustom the US populace to a lower energy way of life. Sadly, most politicians are easily capable of this.

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  9. Thank you Karen for such a well researched and timely article. 25 years ago our local clean energy hero Randy Udall wrote an article about the oilngas industry titled Methane Madness http://www.mnforsustain.org/udall_and_andrews_methane_madness.htm
    Years ago I remember reading that in the US we were building CNG pipelines at a rate of $6 billion a year.
    Now we have this.
    http://news.nationalgeographic.com/energy/2016/01/150113-methane-aliso-canyon-leak-noaa-flaring-map/?google_editors_picks=true
    I told people protesting fracking on Grand Mesa in Colorado that the oilngas industry weren't doing it because they hate columbines and aspen trees and this wouldn't end until we all quit paying the utilities to bring us methane to heat our homes and cook our dinner. I hope your article helps begin to turn the tide towards renewable energy.

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    1. Thanks Solar Spike. It seems obvious to me as well that households have to move off natural gas in order for our planet to avoid drastic climate change, and I'm kind of surprised that the idea seems to perturb/confound some people. The same is true of oil, which people want to face even less. Ah well. Change will come. The question is how painful it will be, and how much of the planet we will have messed up first.

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  10. So many better choices and so many big loosers if things change. For oil powered transport consider the supply chain...distant oil fields, shipping and refining, pipelines of toxic liquids. Or PV on the roof to the EV in the garage. I am not sure about the exergy but the efficiency is much greater for electric drive than internal combustion engines. Hope we all make the right choices.

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  11. I am enjoying this thread and the give and take from some sharp readers. There is no way for anyone to know what the price will be in the near future given the debt destruction looming in the Oil and gas sphere but it looks to be horrendous if you are a fracker. The majority of fracking E&P companies were losing money even at $100/bbl and there will be losses spread around when the bankruptcy ball begins...banks, pension sovereign wealth and hedge funds not to mention derivatives in full swing. When the price goes too high, it crashes economies. Too low and it crashes companies.There will be volatility in price and certainly availability. Keep in mind the world surplus is only a mil to a mill.5 xs of demand and that could be eliminated in a Manhattan minute in a Middle East meltdown.
    We all should reduce our carbon emissions as a duty to our descendants but I think it's too late to do anything about global warming. We have spewed 370 Gigatons of C into the air in human history with a large % of that since 1970 and are increasing C emissions 10%/yr which puts us on track to kick out maybe another 1000 to 1400 Gigatons by the end of the century and these dreary statistics if correct tell me that the party is over. The cake is baked and nothing we can do will alter the outcome. But that is the subject for another post.

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  12. Yikes, SV, so sorry, this comment went to my moderate comments page without any notice to me. Just saw it.

    Agree that frackers are headed for bankruptcy the minute the cheap money financing dries up and that it will hit all the other financial areas you mention. Probably why the Fed is terrifying of drying up cheap money even a tiny bit. Also agree a Middle East meltdown (Saudi Revolution?) will turn our entire energy situation around overnight. I don't agree that we can't do anything to make the future more tolerable for coming generations. Carbon can be sequestered through no-till agriculture and reforestation; Americans could reduce carbon emissions by two-thirds in ten years if we just put that as a priority before skiing, snowmobiles, jetskis, new cars, new trucks, vacations, Big Macs,driving half a mile to the store, attempting regime change in faraway countries, etc. Of course, what we can do and what we will do are entirely different things.

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