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The U.S. Federal Government strongly supports green energy policies to displace fossil fuels. Is the Navy’s recent ‘Great Green Fleet’ initiative a sound and cost-effective action towards significantly reducing U.S. fossil fuels consumption and associated carbon emissions compared to existing alternatives?

The U.S. Navy (USN) began developing its ‘Great Green Fleet’ (GGF) initiative shortly after Obama’s presidency began. The GGF initiative includes the USN’s new energy goal to reduce petroleum consumption by 50% in 2020 by switching to alternative green energy sources including advanced biofuels and renewable electric power. While the use of solar PV to displace backup power generation fueled by petroleum is likely a reasonably sound clean energy strategy, substituting advanced biofuels for petroleum marine fuels has been very expensive, with highly questionable environmental benefits.

This USN green energy strategy is supposed to be consistent with President Obama’s position that “there is no greater threat to U.S. Security than Climate Change”. Unfortunately, the U.S. has recently faced increasing world-wide instabilities and growing security threats from countries and groups totally unrelated to greenhouse gas (GHG) emissions. Actual and increasing security threats include growing terrorist attacks in the Middle East and Europe, Russia’s Crimea invasion and Eastern EU insurgency ambitions, Iran’s likely growing support of terrorists and questionable UN nuclear agreement compliance, and China’s unlawful occupation of the South China Sea. These recent developments appear to be much greater and immediate security threats than developing climate changes.

In 2011 President Obama began issuing a series of announcements indicating that the United States would be expanding and intensifying its already significant USN presence in the Asia-Pacific; to possibly counter China’s occupation-militarizing buildup within these international waters. Such an action would require significant increased presence of the USN fleet forces in the Asia-Pacific in addition to their current world responsibilities; the Americas Pacific/Atlantic Oceans, Europe-Mediterranean Sea, etc. In light of past-and-developing security challenges and evolving-new military strategies in recent years, is the Administration’s GGF energy goals to effectively reduce the USN’s petroleum fossil fuels consumption reasonably feasibly and supportive of its growing responsibilities? To begin answering this question let’s start with reviewing the USN GGF initiative in more detail.

Following the Navy’s GGF initiative implementation to displace petroleum with alternative fuels they initially paid up to $ 400 per gallon for advanced biofuels. While this enormous clean energy cost rapidly became the subject of major program criticisms, the Department of Defense defended the initial cost as developmental and key to making the GGF independent to fossil fuels in the near future. Totally overlooked in this debate was the fact that the initial ‘algae’ based advanced biofuels had hugely negative ‘net energy values’ (NEV). Having highly negative NEV’s means that these developing USN advanced biofuels consumed far more, or initially many-times the fossil fuels during their ‘full-lifecycle’ production-thru-consumption than the petroleum fuels displaced. In other words, the net carbon emissions were many times greater than the fossil fuels displaced.

Fortunately, due to a combination of generous Federal Government subsidies and hundreds of millions in Government funding to a couple Private Production-Refining Companies, the cost of marine biofuels has dropped to a couple dollars per gallon or about 50% greater than average petroleum marine diesel market costs. Unfortunately, no credible analyses of the actual full-lifecycle NEV’s or carbon emissions appear to have been completed to verify if these latest and much cheaper GGF advanced biofuels actually benefit the environment or future global warming. Yes, biofuels made from waste materials such as animal fats could feasibly reduce full lifecycle carbon emissions by up to 50% compared to the displaced petroleum fuels. However, the actual impact depends on the level of fossil fuels consumed in the full lifecycle’s ‘supply chain’ from production through consumption. Unlike on-road biodiesel that has an existing, reasonably efficient supply chain infrastructure to transport, blend and deliver this successful biofuel throughout most the U.S., the GGF’s developing advanced biofuel system is new and generally segregated from existing marine fuels supply chains and infrastructures. This leads to likely very inefficient operations (increased fossil fuels consumption) compared to existing marine fuels supply chains, which significantly compromises the full lifecycle carbon reduction benefits of this relatively unique-new biofuel. Not only does this significantly increase the full actual and sustainable costs of GGF blended biofuel-diesel marine fuels, but this also directionally minimizes the availability and environmental benefits of the overall program. Current GGF advanced biofuels have generally limited access to the USN via U.S. West Coast ports.

The net result of the unique and very limited access to GGF advanced biofuels is to make the original Navy program’s goal of reducing total petroleum fuels consumption by up to 50% in 2020 extremely unlikely-to-infeasible; despite the very high costs compared to existing petroleum supplies. The claimed environmental benefits are also substantially less than available-more feasible alternatives.

Reducing the USN’s GHG emissions by displacing petroleum marine fuels with advanced biofuels is a noble effort, but unfortunately is far less efficient compared to available alternatives. A major problem the USN has and will increasingly face is the fact that its available funds (approved Congressional Budget) is limited, its need for military resources continues to grow (due to increased terrorist, Middle East, Russian, Chinese, etc. threats) and the fact that the total U.S. fleet size/capability continues to decline. Since USN funding resources will very likely continue to be constrained in the future, wasting significant funds on developing the GGF advanced biofuels vs. more cost effective alternatives is generally very poor government, national security and likely climate change-related policy.

Rather than wasting available-limited funds on very inefficient and likely ineffective military marine advanced biofuels, the USN should shutdown this part of their GGF initiative and instead switch available funds to more important priorities such as sustaining, growing and modernizing the existing fleet. Even though state-of-art USN vessels such as ‘all-electric’ Destroyers could feasibly operate on ‘biogas’ (somewhat consistent with part of the current GGF initiative), the USN needs to fully evaluate the costs, alternatives and true benefits of all ‘green energy’ options. For example, operating a state-of-art all-electric Destroyer on biogas will most likely require building and towing a biogas tanker barge; due to the fact that the biogas energy density is but a fraction of the petroleum marine diesel that theoretically could be displaced. The performance and practicality of using biogas for potential combat operations would be a very poor decision compared to existing petroleum marine fuels usage.

If current and future government administrations are truly serious about reducing future U.S. carbon emissions they need to focus on the most cost effective alternatives to petroleum fossil fuels. Historically, the U.S. has been most successful in reducing its transportation sector’s petroleum consumption thru a combination of vehicle efficiency standards (CAFE) and ‘on-road’ biofuels (RFS). While building more efficient military vessels is and should be an ongoing USN priority, producing and consuming marine biofuels is an ineffective and extremely costly green energy initiative/action. If the Administration is truly serious about significantly reducing U.S. petroleum fuels consumption, a much more effective alternative would be to more aggressively produce and increase the level of U.S. transportation ‘on-road’ biofuels requirements; i.e. more significantly increase future annual RFS2 required biodiesel blending levels.

The advantages of further expanding the RFS2 regulation vs. a smaller-very inefficient GGF program are: 1) proven fairly cost-effective production performance (with positive full-lifecycle NEV’s and 50% carbon emission reductions), 2) extensive and existing biofuel transport and blending infrastructures (U.S.-wide supply chains that could be very cost-effectively expanded), and 3) on-road fuels consumption makes up the vast majority of the U.S. transportation sector’s petroleum consumption (the USN accounts for only 1% of total U.S. transportation sector petroleum consumption and about 2% of total distillate (diesel+jet) fuels consumption). Due to these existing commercial-scale advantages, more aggressively expanding existing on-road RFS2 standards should be far more cost and climate change effective than most any GGF advanced biofuel program-policy.

Who knows, someday building and operating increased numbers of nuclear power USN warships may become a feasible and cost effective GGF reality. In the meantime, utilizing advanced biofuels to significantly reduce U.S. transportation sector petroleum consumption and associated carbon emissions should be directed towards land-based/on-road vehicles only; and not the USN GGF. Your thoughts?

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Rio Tinto Rössing uranium mine, Namibia (photo jdbdodane)

Rio Tinto Rössing uranium mine, Namibia (Photo: jdbdodane)

The negative sentiment around uranium is starting to change, writes James Stafford of Oilprice.com, as the world is starting to build more nuclear reactors. He notes that “billionaire investors” are already placing heavy bets on a uranium recovery. Analysts expect prices to double by 2018.

It’s been a very tough few years for uranium. But it now looks like we’ve reached the bottom, and the future demand equation says there’s nowhere to go but up—significantly up.

Uranium analyst David Talbot of Dundee Capital Markets is forecasting 6 percent compound annual demand growth through 2020, which is enough, he says, to “kick-start” uranium prices up to and beyond 2007 levels. Morningstar analyst David Wang predicts prices will double within the next two years.

Mining Weekly expects “the period from 2017-2020 to be a landmark period for the nuclear sector and uranium stocks, as the global operating nuclear reactor fleet expands.”

“It’s impossible to find another natural resource that is so fundamentally necessary and yet has carried such negative sentiment as uranium. The market has been skewed by negative sentiments that ignore the supply and demand fundamentals,” says Paul D. Gray, President and CEO of Zadar Ventures Ltd., a North American uranium and lithium explorer.

A total of 65 new reactors are already going up, another 165 are planned and yet another 331 proposed

But “the toxicity levels have dissipated, and nuclear energy is rebounding as a cleaner power source with next generation safeguards. The fundamentals are again ruling the day, and this will be the key year for uranium,” Gray told Oilprice.com.

Why sentiment is changing

The negative sentiment on uranium was largely made in Japan. The 2011 disaster at Fukushima created an irrational disconnect between sentiment and uranium fundamentals.

Now that enough time has passed since Fukushima, this negative sentiment is losing steam as it appears that Japan has succeeded in bringing some of its reactors back online – four of its reactors have already restarted operations. So the world is refocusing on what are arguably brilliant fundamentals, which actually have been there all along.

“Nuclear energy’s clean bona fides may be its saving grace in a wobbling global energy market that is trying to balance climate change ambitions, skittish economies and low prices for oil and natural gas”

First and foremost, the world is building a great many nuclear reactors right now, despite Fukushima. A total of 65 new reactors are already going up, another 165 are planned and yet another 331 proposed.

Powering all of these developments will require an impressive amount of uranium. Right now, existing nuclear reactors use 174 million pounds of uranium every year. That will increase by a dramatic one-fifth with the new reactors under construction. But in the meantime, uranium producers have reduced output due to market prices and put caps on expansion. As a result, supplies are dwindling.

Spectre of accidents

The world is increasingly recognizing nuclear energy as the cheaper, cleaner, and greener option—as indicated by the number of reactors being built.

As the specter of nuclear accidents wanes in the aftermath of Fukushima and climate change fears move to the top of the chain, uranium is set for a global sentiment transformation.

As Scientific American opines, “Nuclear energy’s clean bona fides may be its saving grace in a wobbling global energy market that is trying to balance climate change ambitions, skittish economies and low prices for oil and natural gas.”

According to Bloomberg, in Asia alone, approximately $ 800 billion in new reactors are being developed.

The minute the market catches on to the massive amount of reactors coming online combined with the pending uranium supply shortage, uranium will experience a price surge

The market hasn’t quite caught on yet to what this massive nuclear development means for uranium because it’s still stuck in the Fukushima sentiment.

At the same time, the uranium industry is not producing the uranium needed to feed the hundreds of new reactors slated to come online. Not even close. The uranium is not being produced because producers can’t turn a profit at today’s spot prices.

The minute the market catches on to the massive amount of reactors coming online combined with the pending uranium supply shortage, uranium will experience a price surge. Up to 20 percent of the uranium supply needed to operate the world’s existing 437 nuclear reactors for the rest of this year and next is not covered, according to uranium market analyst David Talbot.

Determining when the break-out will come, exactly, is part and parcel of playing this rally with an eye to massive returns. But all bets are that this year we’ll see the first new reactors come online, and then it will snowball from there, transforming from a buyers’ market into a sellers’ market.

The billionaires’ sixth sense

Billionaire investors are lining up behind uranium with major acquisitions, betting that they are on the edge of a price break-out.

Earlier in June, Hong Kong billionaire investor Li Kashing, though his CK Hutchinson Holdings and CEF holdings, said he would buy $ 60 million in convertible bonds from NexGen Energy targeting uranium projects in Canada’s Saskatchewan province.

“The current spot prices seem low, but the fundamentals indicate there’s going to be a very large demand and supply gap — that’s what you’re making a call on,” NexGen CEO Leigh Curyer said of the deal. NexGen is slated to start production in the 2020s.

Mr. Li’s $ 60-million bet on Saskatchewan uranium is near another uranium company, Zadar Ventures Ltd, which has four projects in Saskatchewan and one in Alberta, and stands to benefit from the high-dollar renewed focus on this resource.

The Athabasca Basin is elephant country in terms of uranium deposits. It represents the world’s highest-grade uranium deposits and is the home to all of the major uranium producers, developers and explorers.

Considering that nearly half of the U.S.’ 57 million pounds of uranium imports last year came from Canada and Kazakhstan, with Canada providing 17 million pounds—these producers are extremely well-positioned for what comes next.

This is shaping up to be the the Year of Uranium, but while the market sleeps, big investors don’t

Talbot predicts that the uranium pound price could reach $ 65 within two years, and notes that some mines will be extremely profitable at this price—particularly those in the Athabasca Basin and in the western and southwestern U.S., while development of uranium deposits in Africa will require higher prices.

The Athabasca Basin is precisely where Zadar and NexGen operate, along with other promising contenders, including Cameco Corp. (TSX:CCO) and Denison Mines Corp. (DML:TSX).

Last month, billionaire D.E. Shaw let us all know that he’d acquired 1.4 million shares in Cameco, eyeing rising uranium prices, tightening supplies and growing demand—and joining the ranks alongside George Soros. And others have lined up, too, including well-known money managers Ken Griffin, Ray Dalio and Steve Cohen.

Then we have Bill Gates—who has jumped on the uranium bandwagon with great determination. Through his TerraPower company, Gates is developing a Fourth Generation nuclear reactor that would run on depleted uranium, rather than enriched uranium.

Increasingly, this is shaping up to be the the Year of Uranium, but while the market sleeps, big investors don’t: They’ll be all set when uranium experiences a violent upswing, and those operating around the Athabasca Basin are likely to be among the first to benefit from the upward price trend and shrinking supply.

by James Stafford

This article was first published on Oilprice.com and is republished here with permission.

Original Post

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photo Orin Bloomberg

Photo: Orin Bloomberg

The implications of the global water footprint of energy generation are phenomenal, writes Gary Bilotta of the University of Brighton. He warns that if policy makers fail to take into account the links between energy and water, we may come to a point in many parts of the world where it is water availability that is the main determinant of the energy sources available for use. Courtesy The Conversation.

With a quarter of the world’s human population already living in regions that suffer from severe water scarcity for at least six months of the year, it is perhaps not surprising that the World Economic Forum recently rated water crises as the largest global risk in terms of potential impacts over the next decade.

Electricity generation is a significant consumer of water: it consumes more than five times as much water globally as domestic uses (drinking, preparing food, bathing, washing clothes and dishes, flushing toilets and the rest) and more than five times as much water globally as industrial production.

Gary Bilotta figure 1

Figure 1: Water abstraction for human activities globally, based on data from Mekonnen et al., (2015) and Hoekstra and Mekonnen (2012). Gary Bilotta, Author provided

While electricity generation consumes far less water than food production globally, it is expected that there will be enormous changes in the water demands of electricity over the course of the 21st century. The International Energy Agency projected a rise of 85% in global water use for energy production between 2012 and 2032 alone.

If policy makers fail to take into account the links between energy and water, we may come to a point in many parts of the world where it is water availability that is the main determinant of the energy sources available for use

These changes will be driven by a combination of factors. First, human population growth, which is estimated to rise from 7.4 billion people today to between 9.6 to 12.3 billion by 2100. Second, by improvements in access to energy for the 1.4 billion people who currently have no access to electricity and the billion people who currently only have access to unreliable electricity networks. And third, progressive electrification of transport and heating as part of efforts to reduce dependence on fossil fuels and reduce greenhouse gas emissions.

Exactly how these changes in the water footprint of electricity are going to play out will depend on the national and international energy policies enacted over the next few decades. Historically, energy policies have been influenced by a multitude of factors (national availability of energy resources, financial costs, reliability of supply, security of supply and the like).

Following on from the Paris COP21 agreement, the carbon footprint of energy should have an increased influence on decision making in the sector. As can be seen from Figure 2, there are considerable differences in the lifecycle greenhouse gas emissions from different electricity generation technologies (g CO2eq/kWh), with average values ranging from just 4g CO2eq/kWh for hydropower to 1,001g CO2eq/kWh for coal, though there are significant regional and technological variations in values reported for the same energy source.

Gary Bilotta figure 2

Figure 2: Lifecycle assessments of greenhouse gas emissions from electricity generation technologies (g CO2eq/kWh), displaying minimum, median and maximum reported values for each technology, based on IPCC literature reviews. Gary Bilotta, Author provided

Thirsty work

While it is important to consider these factors in policy making within the energy sector, it would be a wasted opportunity if policy makers were to overlook the other environmental footprints of electricity generation – and in particular the water footprint – when making decisions on which technologies to support and prioritise. The fairest way to compare electricity sources in terms of their water demand, is to consider their lifecycle water footprint – the consumptive demand of water for construction and operation of the plant, fuel supply, waste disposal and site decommissioning, per unit of net energy produced.

As can be seen from Figure 3, there are staggering differences in the water footprint of different electricity generation technologies. Minimum life cycle consumptive water footprints vary from 0.01 litres per kWh for wind energy, to 1.08 litres per kWh for storage-type hydroelectric power, though there are significant regional and technological variations in values reported for the same energy source. (Note that water footprint data represent the ‘blue’ water footprint, i.e. the consumption of water resources – from rivers, lakes and groundwater – whereby consumption refers to the volume of water that evaporates or is incorporated into a product. The blue water footprint is thus often smaller than the total water withdrawal, because generally part of the total water withdrawal returns to the ground or surface water.)

gary bilotta figure 3

Figure 3: Life-cycle assessments of consumptive water use (litres per kWh) of different electricity generation technologies, displaying minimum and maximum reported values for each technology based on data from Mekonnen et al (2015). Gary Bilotta, Author provided

When these differences between sources are scaled up by the number of units of electricity required to meet the needs of the global population, the implications of the global water footprint of energy generation are phenomenal. Failure to plan and consider the water demands of energy will likely result in insecure and unreliable energy supplies and negative effects on the other important users of freshwater.

We have recently observed the impacts of droughts on US energy supplies from thermoelectric plants and hydropower plants. If policy makers fail to take into account the links between energy and water, we may come to a point in many parts of the world where it is water availability that is the main determinant of the energy sources available for use.

This will inevitably force countries to make emergency decisions on the distribution of scarce water between generating electricity or producing food, maintaining health and sanitation, maintaining industrial production, and/or conserving nature.

by Gary Bilotta

Gary Bilotta is Principal Lecturer in Physical Geography and Environmental Science at the University of Brighton as well as Head of the Aquatic Research Centre (www.brighton.ac.uk/aquatic). This article was first published on The Conversation and is republished here with permission.

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