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In The Head of U.S. Energy Secretary Chu

Professor Ferdinand E. Banks
ferdinand.banks@telia.com
February 1st, 2012

As most observers of the energy scene know, Dr Steven Chu is the Energy Secretary of the United States, a physicist, and a Nobel Laureate. Discovery Magazine, in a recent issue, selected what it called the “100 top stories of 2010”, one of which was authored by an editor of Discovery, and whose main purpose was evidently to verify Dr Chu’s green credentials.

As good luck would have it, the article was only two pages long, and did not contain any elementary physics or mathematics – two subjects that I failed twice in my first year at engineering school, and as a result of which I was duly expelled and forced to join the army. On the other hand, some important observations of the Econ 101 variety were missing from Dr Chu’s answers to editor Corey Powell’s questions, which unfortunately prevents me from recommending his ‘piece’ to my friends and neighbors.

Mr Powell began his Q&A with a reference to the Gulf Coast oil spill, asking how an accident of this magnitude could happen. I won’t bother to discuss Dr Chu’s answer, because both question and answer were irrelevant. Statistically, accidents of that type are unavoidable, and have always taken place. If we go back to the Second World War, we can e.g. consider the completely unnecessary attack on Manila, the failure to clear the approaches to the port of Antwerp as soon as possible, and perhaps the worst blunder of all, which was adopting the ‘Sherman’ as the main American battle tank. Compared to those ‘accidents’, the Gulf Coast tragedy was small beer.

For long term energy investments, Dr Chu pictures the U.S. moving toward a large-scale electrification of personal vehicles. So do I, only in my head the details involve electricity supplied by breeder reactors, and since I am not a fan of the plutonium community, I confine my studies to the economics of conventional nuclear facilities. Even so, I would be genuinely pleased if the secretary and his successors, and their foot soldiers, could provide me and my future students with their insights on this topic, and preferably sooner rather than later – assuming that they, unlike my good self, have examined this issue sufficiently to tell us something beyond public relations hype.

I will admit that Dr. Chu’s thoughts on nuclear energy bother me somewhat, because he states that large reactors will cost 7 to 8 billion (US) dollars. I regard that estimate as completely and totally wrong, and suggest that he should have a talk with the former director of the French firm Areva, Anne Lauvergeon, and in particular ask about the information she has concerning the new Chinese reactors. In terms of cost, those Chinese reactors are probably capable of producing the most inexpensive electricity in the world. As I informed the environmentalist Mr Jeffrey Leggett, after he questioned my bona-fides at the Singapore Energy Week, the problem is the grotesque failure to teach the kind of economics that would enable the advisors of politicians and bureaucrats (and others) to provide accurate calculations for their employers.

If his French is not up to scratch, Dr Chu can obtain and read some of the materials in my new textbook (2012), because evidence from the nuclear past and present leads me to insist – often in non-academic language – that “large” nuclear facilities, whose construction is organized by competent managers, who in turn have the sympathy of competent politicians, will soon cost a maximum of 5 billion dollars. In other words, buyers of nuclear equipment could do business with enterprises like Areva or the South Korean firm that is constructing reactors in the United Arab Emirates (UAE), and five years later – or thereabouts – they can begin selling electricity.

Here I can mention the new reactor in Finland, the largest in the world (at 1600 MW), which was supposed to be constructed in 5 years, but required 8+. The Finns reacted to this disappointment by beginning a discussion about the purchase of two more reactors, because in that country, with its highly educated population, nuclear offers attractions that the non-nuclear silliness sponsored by the Merkel government in Germany cannot match, or for that matter the natural gas of Norway or Russia.

“Future-gen” (in the form of zero-emission coal power plants) evidently plays a prominent role in Dr Chu’s vision of an optimal energy structure. It plays none whatsoever in mine however, and I never use the expression “future-gen” nor listen to anyone discussing it. I also think that it is necessary to be realistic about the use of coal in the U.S. (and also other countries, particularly China). In these countries, in the near future, coal fired power plants cannot be dismissed. In the U.S. they account for more than fifty percent of electric power production, which is more than natural gas and nuclear combined. Moreover, estimates of U.S. coal resources (or hypothetical reserves) – as compared to verified reserves – are huge, and there are still some question marks associated with the future availability of natural gas.

For instance, according to a Bloomberg article (2012), the U.S. Energy Department reduced its estimate for natural gas reserves in the Marcellus shale formation by 66 percent. If this turns out to be correct, and possibly an indication of what we can expect in other shale formations, then a little secondary school mathematics will show that a number of big-ticket investors are going to lose billions of dollars as a result of over-aggressive beliefs and commitments in these resources.

Carbon Capture and Sequestration (CCS) is found close to the top of Dr Chu’s wish list, and where that topic is concerned the directors of the Swedish firm Vattenfall once made certain optimistic promises to the German government, as well as newspaper readers in several countries. Jeffrey Michel, an MIT graduate and important energy consultant living in Germany, calls CCS a thermodynamic travesty, and my own long and delightful study of thermodynamics and engineering economics causes me to say that Michel’s judgement is much too mild. ‘Crank’ is the most appropriate description of the discussions coming my way on that subject.

As abstract as it sounds, the notion of carbon-free regions is still making the rounds. A recent large energy meeting in Berlin was on the same wave length as Dr Chu’s contemplations, where the emphasis was on the part that solar and wind would play in Germany’s new energy future. Where wind is concerned, readers should turn to GOOGLE and its reference to John Droz. With all due respect, the German aims are strictly off-the-wall, and in 2050 the German nuclear intensity will likely be as large as that prevailing in France. Much of the nuclear apparatus will be breeder reactors, and I sincerely hope that the security problems associated with those reactors are solved the way that they should be solved, because if not somebody could be in a world of hurt.

Finally, Dr Chu mentioned that “there is no law of physics which states that the whole society can’t benefit”, and unlike the contention of e.g. Gordon Gekko (in the film Wall Street), he says that “there is no zero-sum game here”. It was really very decent of the Secretary to inform us of his interest in things like welfare economics and game theory, because in a world of 9.5 billion souls – which is his prophecy for 2050 – a complicated version (or extension) of the zero-sum paradigm is going to be the order of the day, and there is very little – or more realistically nothing – that he or all the Nobel Prize winners since Adam and Eve can do about that.

For his information, as well as yours and mine, for the first time in human history, people aged 65 and over will soon outnumber children under the age of five. This will pose enormous problems for the health and general welfare of those ‘pensioners’. But unfortunately, even if the supply of youngsters were to greatly increase, it may not improve things, which is an ugly reality for persons reading this contribution to ponder and discuss at great length. They might also attempt to understand that their Governments should be compelled to deal in facts rather than half-baked fantasies, and in addition try to learn that the right kinds of education and educational milieus are the key to confronting and dealing with this and other dilemmas.

REFERENCES

Banks, Ferdinand E. (2012). Energy and Economic Theory. Singapore, London and New York: World Scientific (Forthcoming).

Bloomberg . (2012). U.S. cuts estimate for Marcellus Shale Gas Reserves by 66%. Bloomberg Com News (2012-01-24)


Professor Ferdinand E. Banks
February 1st, 2012
ferdinand.banks@telia.com




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