Gas – a Systems View

There is currently a debate about various new energy sources, such as gas, as in the following message from PhillipsConoco: http://www.powerincooperation.com/EN/Pages/index.htm

Gas, or any other fuel, will not solve our future transport needs on its own. A number of systems decisions and very large investments need to be made in order to use it for transportation. We can decide to use it to produce electricity and heat, like in the combined heat-and-power-plant (CHP) Öresundsverket in the city of Malmö in Southern Sweden: http://www.eon.se/om-eon/Om-energi/Produktion-av-el-gas-varme-och-kyla/Kraftvarme/Vara-kraftvarmeverk/Oresundsverket-eng/The-Oresundsverket/

In order to do this we need large numbers of electric or plug-in hybrid vehicles. It is also advantageous to have a district heating system, like the one in Malmö, which provides heat to a large share of the houses in the city. A district heating system is not necessary, but without it the heat generated by the plant is lost to entropy. In order to use large numbers of electric and hybrid cars there is also a need for a large-scale charging infrastructure.

We can also decide to use the gas as vehicle gas. Gas fuelled vehicles are much less fuel efficient than electric ones, so we can drive only half the distance using vehicle gas, compared to using electricity. In order to use vehicle gas as a fuel we need a distribution infrastructure for gas at filling stations, large numbers of gas vehicles, and gas-pipes, or a large scale distribution system for gas using trucks.

None of these alternatives comes cheap and there is a huge difference between the alternatives in terms of cost-, capital- and energy efficiency. The new systems also need to become attractive for users, meaning that it needs to be relatively easy to locate and travel to filling stations etcetera.

We can also use vehicle gas for purposes where electricity is not so well suited, such as for heavy vehicles. There are numerous alternatives with widely different cost aspects, capital needs and other factors. We cannot look at the fuels and vehicle technologies in isolation. We need to evaluate them from a systems perspective.

US oil production is increasing and…

US oil production is increasing and the country may even overtake Saudi Arabia and once more become the world’s largest oil producer. This, according to a news story in The Huffington Post http://www.huffingtonpost.com/2012/10/23/us-worlds-top-oil-producer_n_2006640.html  is primarily due to high prices and improved drilling techniques. Apparently it is not primarily due to new findings of oil.

This may seem to be good news for people who worry about Peak Oil. Maybe the problem has been overstated. Maybe other countries can also increase production and push the impending decline in oil production ahead?

On the other hand increases in production may instead increase our need to forcefully drive Global Energy Transformation forward. Like the proverbial frog in the water tank that is slowly heating up we may find the current situation rather pleasant, only to find later that we have been depleting our reserves faster than expected without adding new ones. Through the past decades oil companies have found declining volumes of oil as new reserves, and findings now amount to only one third of the volumes that we use every year. We use more than 30 billion barrels of oil per year in the global economy, but we only discover some 10 billion barrels of new reserves.

Instead of making us complacent, the news that US oil production is picking up should enamor us to step up our efforts to implement renewable fuels systems. In his now famous book about Saudi Arabian oil production “Twilight in the Desert” (2005), Matthew Simmons warned that new drilling techniques may maintain Saudi oil production for a few years into the future, but it may deplete reserves so that the decline may be steeper once it begins. A similar argument may be relevant for the US.

Only thorough analysis of the situation by unbiased analysts can provide us with a relevant picture of the future development. The retirement the last summer of one of the leading independent oil analysts in the world, Professor Kjell Aleklett of Uppsala University in Sweden, co-founder of ASPO, indicates a need for the development of more resources in this area. There is also a need to analyze the opportunities for renewable fuels and new transport technologies from a systems perspective, identifying the most cost-, capital-, and energy efficient systems solutions for each country that can also be implemented in a relatively short period of time. Needless to say, the systems of different individual countries need to be possible to integrate into international transport systems. This will be the big challenge for our society in the years to come, one that cannot be negotiated due to our late start. We simply have to tackle it, or it will tackle us!

Sitting on the train between Sweden and Denmark crossing the Öresund bridge, which was inaugurated in 2000, it seems relevant to think about the need to coordinate the development of new transport systems.

If it would be more efficient to allow the market to determine which technologies to use for future road transport, why did not the same thought occur to decision makers when decisions were made to build the Swedish/Danish system or the UK/French system that connects these two countries via the tunnel? Governments could have allowed different contractors in the two countries in each case to build the systems they wanted and different alternatives could have competed for the prominence in each country. This could have led to a situation where travelers would have to change trains on the bridge or in the tunnel, moving between the systems preferred on each side.

The comparison is relevant. The primary difference between trains and road transport is that trains move on tracks and it seems obvious that the same tracks need to continue into another region or country if we want to maintain efficient communications. But road transport systems also need very costly infrastructure and vehicles and these systems also need to extend between regions and countries, far beyond the borders of Sweden or Denmark. People travel and we import goods and that are transported on trucks. We cannot leave vehicles behind at the border only to change to other vehicles that are compatible with the fuel systems, filling stations, and charging posts of the country or region we travel to.

What to do with more money?

Numerous voices on political and financial scenes argue that we need to invest more money to curb climate change. Recently in the US, the EPA (Environmental Protection Agency) labeled emissions of carbon dioxide a health hazard for humans, which may open up the path for more government funding. Many environmental organizations, politicians put forward arguments in favor of stronger action.

But what are we going to do with more money?

The most probable response will be increased investments in research and development of clean technologies. In Europe the EU invests heavily in the early phases of such development projects. When the EU doubles the funding, the number of projects that are funded increases dramatically. There is no strategy behind the funding. Research into ethanol, biogas, methanol, and a number of other fuels are all funded in parallel, despite the fact that the transportation systems of the future will become more cost effective if we develop a small number of fuels and expand this on a large scale.

The US has a history of running successful large scale programs. The Apollo program, and the space program are cases in point, but also The Marshall Plan, and the transformation of US industry to war production during the Second World War. If The United States implements a well funded fast track program like it has the experience and the resources to do, this will leave Europe far behind in the global “clean tech race” and in clean tech markets. Europe needs to get its act together. Frankly, I feel certain that the US will invest its money in a clever way. The high level proponents of increased investments have just not shown us all their cards yet.

We not only need more money. We need a strategy and a plan that will show us how we can invest the money in the wisest possible way. The best possible way is not to invest in a very large number of research projects in their early phases. We need now to invest large sums of money in the expansion of the use of the clean technologies that are already available to us, and invest in the further development of a number of new technologies that show the biggest promise for the future.

We need a strategy, plan and managed change, and all of this needs to be based on a sound analysis of the most important aspects of the transformation. We cannot do everything at once. We need to go about this cleverly, and the less time we have at our disposal, the better we need to plan the programs that need to follow.

Learning from best practices

The debate about energy efficiency and sustainability is full of technical issues and high flown ideas. Many of these will be important, but they need to become included in a plan for how we approach change practically.

Large companies often have decades of experience from change management in their own organizations and from change together with suppliers and other partners. We need to apply the lessons from these companies in the change management of the energy transformation.

We also need to apply the competence of the most advanced companies and industries in areas such as technology and product development, systems integration and production organization. Many industries are not as advanced as the automotive industry and its suppliers in these fields. Now, as companies with first rate experience from these areas turn their eyes towards energy related issues, competition is likely to increase in many industries. This, however, will become necessary in order to develop technologies, products and systems that are competitive and cost effective.

The book Global Energy Transformation outlines many important change management aspects, and provides tools based on experiences from leading companies and industries in all the above fields.

The stories we need to tell

In order to develop images and visions of the direction and methods for change, we do not only need analysis and dry conclusions. We need vivid accounts of the transformation process and methods.

In the same way that novels and stories of earlier generations have ushered in new ideas and helped us give up out-dated ones, we need stories that tell us how to build the society of the future. If we look at current movies and literature it seems as if we are not approaching a dramatic challenge. It seems as if film makers and authors are entirely unaware of the impending change, or it may be that they refuse to help in the transformation process.

We need stories that provide seemingly realistic accounts of the transformation process. These could be:

–          Thrillers that present different aspects of the transformation process as a struggle between ideals, systems, nations, companies or individuals.

–          Epic stories that tell of the difficulties of changing society and building communities and the struggles that people will encounter on the way to a new future.

–          Artistic and creative attempts to present ideas through metaphors or that create multi-faceted stories that challenge us to interpret them in different ways.

The Great Gatsby by F. Scott Fitzgerald, provided images of “The American Dream” through images of upper middle class life styles of the “Jazz age”. We need similar images of the future that may complement attempts, such as Global Energy Transformation, to analyze the transformation challenges.

Society is a learning organization

Organizations develop through learning. Individuals on different levels learn and they develop and refine society’s structural capital. Society’s learning is directed in the directions that individuals, companies and organizations lead it. Historically, it has been directed in the direction of reduced cost and time, which has been the main factors to impact increasing revenues and economic growth.

In the future we are facing a situation with a reduced supply of oil. Energy and the amount of oil available for transportation have closely correlated with economic growth. In the future we need to break this relationship. This has to be done through learning, which needs large scale coordinated projects for sectors, in companies and organizations and in society as a whole.

As well as learning new things, learning means un-learn old habits and routines. In combination with investments in new and energy efficient transportation and production structures, we need to get rid of old systems that are heavily reliant on large volumes of energy.

The book “Global Energy Transformation” describes in detail how this process of learning needs to be organized.

Amazon:

The present debate about the transformation of global energy system focuses either on the problem or problems themselves or on technology issues. There are books about global warming and peak oil and about the need to transform energy systems in order to avoid global disasters, and there are arguments that we need a hydrogen economy, a solar revolution or a large scale increase in nuclear power.

These are all necessary arguments, but a further analysis of the problems or an in-depth analysis of technology opportunities will not bring us much closer to the solution. The solution depends on managed change, which involves the development of high level strategies and detailed plans for the transformation from fossil fuels to renewable energy sources. We need to analyze and understand the sources of financing that we can rely upon to supply the necessary capital for this transformation and we need to start to rapidly implement these plans.

Yes, solar energy would be a good solution, as argued by Hermann Scheer, Travis Bradford and many others (see links below) but at present the cost of electricity produced from solar cells is about three times as high as electricity produced from nuclear or hydroelectric plants. This should not keep us from developing these new sources of energy, but we need a detailed plan, which also deals with the financial aspects of a large scale transformation to an energy system that at present is substantially more expensive than existing systems. The management of the transformation will be key to its success and arguments for large scale implementation of new systems are incomplete without an analysis of several of the aspects of change management.

I believe that the transformation from fossil fuels to renewable energy sources is necessary, primarily because of the peak oil issue, which will force us to rethink many aspects of transport solutions. The solutions we develop will impact electricity systems as well as other energy systems. We need a plan!

http://www.hermannscheer.de/en/index.php?option=com_content&task=view&id=33&Itemid=7 ,

http://www.amazon.co.uk/Solar-Revolution-Economic-Transformation-Industry/dp/026202604X/ref=sr_1_2?ie=UTF8&s=books&qid=1244560782&sr=1-2

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