The permanent oil shock

November 27, 2018 by Denis Pombriant

Last week’s New York Times Magazine has a great piece that highlights what not to do to help solve global warming, “Palm Oil Was Supposed to Help Save the Planet. Instead It Unleashed a Catastrophe.”

The article focuses on a boom in creating palm oil plantations in the last decade or so in Borneo and the US demand that spurred it. Where to begin? First, read the piece, it’s not kosher to simply replay it here and there’s so much detail that it’s important to providing a big picture. But here are my takeaways.

  1. Big corporations bought up or, in some cases, stole land from indigenous people in order to make palm oil plantations.
  2. They razed the forests on the land, right up to national parks’ and preserves borders to enable them to plant oil bearing palms. In the process they created an ecological nightmare by releasing huge amounts of carbon into the atmosphere. They had hoped the end products would shrink carbon emissions in motor fuels but that didn’t happen nor could it if anyone bothered to do the math.
  3. No one bothered with that math but many did the calculations that showed big profits from palm oil though at quite a price.

Let’s back up.

The George W. Bush administration wanted to promote energy independence in the US and sponsored legislation that mandated using a percentage of biofuels in car and truck fuels. The result was a 10 percent ethanol mandate as well as a requirement to use vegetable oils in diesel fuels creating so-called biodiesel.

The ethanol mandate made US corn farmers happy because their crops are used to make the ethanol and the diesel mandate helped soy and other commodities farmers too. Internationally, big business decided it could play in the biofuels game by developing greater capacity through palm oil. Palm trees grow fast in tropical regions and their fruit can be harvested for its oil without destroying the tree, so the trees are very productive.

While the efforts were successful, if all you look at is the output (i.e. palm oil), on an energy accounting basis, they were dismal failures at keeping carbon out of the atmosphere. The assumption going forward was that the carbon that went into these fuels came from existing carbon dioxide in the atmosphere, so no net new carbon made by burning fossil fuels would be emitted so everyone would be happy.

In clearing the land in Borneo, corporate farmers harvested the existing timber already there and burned everything else releasing tons of CO2 into the air which was not accounted for in the initial calculations. And although, crop land in the US was not disturbed beyond planting, using corn to make ethanol isn’t much better approach to making motor fuel.

But if you do the energy accounting, which is what thermodynamics is all about, the reality is quite different. Thermodynamics is most likely the course you didn’t want to take at all in college and the subject matter is probably still shrouded in mystery to most people. So here’s a crash course in “thermo” that won’t kill you.

Think of an accounting problem in which you simply need to balance the books. Inputs have to equal outputs, debits have to equal credits—that’s what we’re aiming at. For something like a biofuel, before we can say it’s not contributing to pollution, we need to understand all the fossil energy inputs that account for making it. To make a quantity of ethanol for instance, you simply must ask if the ethanol contains more energy than was consumed in the physical and chemical processes used to make it.

For example, ethanol production has many inputs such as fertilizers, fuels for tractors growing the corn, transportation fuels to get products to market, to name a few big ones. There are others, too like fuel for distilling fermented corn mash into ethanol,  but you get the picture. So ethanol is not a great new energy source. Do the math and you discover that it takes almost as much energy to make ethanol as it delivers.

For comparison, petroleum, gas, and coal are different. They have been made by natural processes. First photosynthesis captures sunlight, then when plants or small sea creatures die they sink to the bottom of an ocean or a swamp where they don’t rot for lack of oxygen. Succeeding generations add to the pileup until it’s quite deep. But over millions of years, naturally occurring heat and pressure in the earth’s crust convert dead bodies into fossil fuels. What’s left for humans to do is collect the stuff and bring it to market.

So it’s really hard to compete with mother nature on this. In the human mediated process people and outside energy sources do what nature does over millions of years for free.

Now, back to palm oil. It takes energy to harvest and clear cut a forest and much more to plant and maintain a palm oil plantation. The palm fruit has to be processed and the oil squeezed out and the product has to be sold through a global distribution channel. This all takes energy, almost as much as the oil contains.

Worse yet, the island of Borneo is a big swamp, or at least there’s a big swamp on it. The swamp is a major carbon sink. Organic materials from the forest fall into the swamp and layer upon layer of vegetation sinks and there’s so little oxygen at the bottom of the swamp that decay is thwarted. Over a hundred million years or so, under accumulated pressure the dead vegetation gradually turns first to peat and then to coal.

But all that is reversing now as human activity is releasing that carbon to the atmosphere. So in the energy and carbon accounting for palm oil you have all of the carbon inputs from growing, harvesting, and marketing the oil, and you also have a big carbon bill you might not have been considering as the old forest gives up its carbon. So that’s where we get the idea of catastrophe in the title of the Times article.

The petroleum paradigm

To summarize but not to alarm you all of this can condense into a few points. It would be nice if we could find a substitute for gasoline and diesel fuel. Something that’s a liquid, energy dense and cheap, and easy to produce. That would enable the entire petroleum industry to preserve most of its investments in infrastructure and go on almost undisturbed. But the sad facts are that,

  1. Petroleum is running out. BP’s 2014 Annual Report said there is about a 54- year supply of petroleum left in the ground. Getting it all out of the ground is also a problem for another time.
  2. You can make synthetic gasoline or diesel from plants or even from coal, but the thermodynamics don’t work. It would take more coal energy to make a gallon of synthetic gasoline from coal than the gasoline contained. As a lab experiment that’s cool, but it doesn’t scale to the global economy.
  3. The unmistakable conclusion we have to draw is that we can’t save the fossil fuel industry. Coal pollution is killing the environment and there is no liquid fuel equivalent of petroleum that can supply earth’s needs at scale. Even if it wasn’t running out, it’s killing the planet so it’s almost good that the two things are happening together.

My two bits

Killing the planet hasn’t been an idea that’s moved enough people to action on climate change. But if you add the inevitability of running out to the mix, you have a new dynamic and a better chance.

For many, it’s hard to conceptualize a climate that changes incrementally over time to one that has more violent storms, less water for farming, hotter summers and so on. But many people remember not being able to buy gas during the oil shocks of the 1970’s and few people want a replay of that scenario. But that’s where we are headed by mid-century—a permanent oil shock.

In case you have the idea that you won’t be here at mid-century so you don’t have to worry, or if you think everything will be more or less the same until then, you should recalculate. As oil continues to run out prices will continue to rise such that a greater proportion of your income will go to driving your car and heating your home, cooking, heating water and so on.

But as with the thermodynamic discussion above, there’s an energy component in every part of life. Food will be more expensive as the costs of the energy inputs rise, clothing will be more expensive too because synthetic materials and dyes come from fossil fuels too. And transporting raw materials to factories and finished goods to market all have a cost in energy. Add to that the reality that by mid-century there will be about 2.5 billion more people on the planet all demanding the goods and services of life based on fossil fuels and you have a perfect storm that threatens human survival.

It doesn’t take much to conclude a dystopian vision of the future awaits us unless we act now to bend the curve of history toward a better outcome. The challenges we all face include building a new, global energy paradigm based on electricity and the machines that will use it.

At the same time, we need to employ strategies that treat environmental pollution as a chronic problem rather than as an emergency. In practical terms it means implementing a scalable, global pollution abatement plan that does more than limiting emissions. We need a solution that actively removes carbon from the environment.

Finally, we also need a new economic model. The one that humanity has always relied on, of using natural resources to the point of exhaustion, is nearly exhausted itself. Not only are we running out of petroleum, the environment’s ability to absorb ever greater amounts of exhaust— a different kind of resource—is reaching its limits.

There’s also a huge investment in fossil fuel infrastructure consisting of oil rigs, pipelines, refineries, tankers, trucks, and more. The investment reaches into the trillions of dollars. We need to have a conversation about how the public sector allows the private sector to write off those investments without causing a global depression. One suspects that if that conversation was ongoing there might be less resistance to climate change predictions.




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