EPA’s New Car Emission Standards Doom the Gasoline Car

By Irina Slav - Mar 21, 2024

• EPA: tightening tailpipe emission standards to an average level of 85 grams per mile would eliminate more than 7 billion tons of carbon dioxide emissions by 2055.
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• Originally, the 85 gram/mile emissions standard was supposed to kick in as of 2030. Now, this has been delayed to 2032.
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• People will not be easily forced into switching to an EV, even if these become less expensive, although lower prices would definitely help EV adoption.

This week, the Environmental Protection Agency announced the finalization of new tailpipe emission standards. The agency boasted that these were the strictest standards ever, adding that they would save money, create jobs, and eliminate billions of tons of CO2 emissions.

The American Petroleum Institute, along with the American Fuel & Petrochemical Manufacturers, issued an immediate reaction, warning that the new standards would make all gasoline and diesel-powered light vehicles illegal in less than 10 years. And that will not be a good thing.

According to the EPA, tightening tailpipe emission standards to an average level of 85 grams per mile would eliminate more than 7 billion tons of carbon dioxide emissions by 2055. This, the agency said, was “roughly equal to four times the emissions of the entire transportation sector in 2021.”

The agency also made claims about public health benefits from the cleaner air and more jobs being created in the manufacturing industry as electric vehicle production picks up and expands

The API and the AFPM, in their reaction, noted that gasoline cars still constitute the overwhelming bulk of total passenger vehicle sales in the country. They cited Cox Automotive figures for last year—which saw record EV sales—that revealed EVs only accounted for less than 8% of total car sales.

Not only did EVs account for less than a tenth of total car sales, but most of them were made in California, and towards the end of the year, sales growth began to weaken. This prompted forecasts that this is a trend and would affect carmakers’ plans for EVs.

Indeed, carmakers changed their plans, seeing as they weren’t selling anywhere near the number of EVs they assumed they would, given the pointed support of the federal government and many state governments. So, they lobbied for less stringent tailpipe emission standards.

The lobbying apparently worked because, originally, the 85 gram/mile standard was supposed to kick in as of 2030. Now, this has been delayed to 2032, which, according to the Wall Street Journal, gives the industry more time to adjust to the situation. In fairness, two years will hardly make any difference for anyone.

There is also the fact that these revised standards would still require a huge increase in EV sales, at between 31% and 40%, per the WSJ, for model year 2030, for example. How exactly carmakers could go from less than 10% to 31% in six years remains a mystery, especially with the signs of waning EV demand among drivers.

The API and the AFPM warn that the new standards are not going to be popular with people. “This regulation will make new gas-powered vehicles unavailable or prohibitively expensive for most Americans. For them, this wildly unpopular policy is going to feel and function like a ban,” they said in their joint statement.

Indeed, the new standards are a form of ban on internal combustion engine car sales, just like the bans that the EU and the UK approved recently, aiming at the very same thing—phasing out internal combustion technology.

Be that as it may, the worry of the API and the AFPM may well be premature. The new standards aim to change the car market in the United States. To do this, they are targeting the supply side. But they can do little—short of direct and bound to be unwelcome intervention—to influence the demand side.

People will not be easily forced into switching to an EV, even if these become less expensive, although lower prices would definitely help EV adoption. Yet there is also the problem of charging infrastructure, range anxiety, which does not seem to have gone anywhere, and exorbitant insurance premiums.

Because of these problems, many drivers would likely prefer to keep their old cars for longer instead of going electric. This would interfere with the federal government’s EV plans and likely hurt carmakers considerably.

By Irina Slav for Oilprice.com

Big Oil Grows Bolder in Transition Pushback

By Irina Slav - Mar 20, 2024

• Several big oil executives at this CERA-week are openly calling for a rethink of the transition and caution in the rush to give up oil and gas.
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• Executives at CERAWeek are now openly warning against moving too quickly and applying some caution in the desired switch from oil and gas to full electrification.
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• Aramco's Amin Nasser was especially blunt, saying, "We should abandon the fantasy of phasing out oil and gas, and instead invest in them adequately,".

Until recently, large oil companies tended to stay quiet when governments and activists urged them to accelerate the transition from their products to alternative energy sources. Now, this is changing. And it is changing radically.

At this week's CERAWeek conference in Houston, this change was especially visible, with several top executives openly calling for a rethink of the transition and caution in the rush to give up oil and gas—which is unlikely to happen anytime soon.

Unsurprisingly, Aramco's Amin Nasser was especially blunt, saying, "We should abandon the fantasy of phasing out oil and gas, and instead invest in them adequately," as quoted by Reuters. Nasser added that wind and solar are yet to prove themselves as adequate replacements for oil and gas in terms of cost.

Nasser was not pulling any punches, pointing out that oil demand, whose demise has been predicted repeatedly, was going to once again hit a record this year despite those predictions. Indeed, the International Energy Agency, the most prominent outlet making the demise predictions, has now regularly had to revise its oil demand forecasts almost every month in the past couple of years.

It seems that oil demand may continue to grow at a similar pace in the coming years as well. In fact, another oil executive just warned that energy demand globally is set to increase faster than population growth, meaning that oil demand is nowhere near peaking by 2030.

"The world population is going to increase by about 25% between now and 2050, but energy demand will increase faster than that," Sheikh Nawaf al-Sabah, the chief executive of Kuwait Petroleum Corporation, said at CERAWeek, as quoted by CNBC. He was responding to a question about the IEA's peak oil demand prediction.Related: Oil Supported By Crude, Gasoline Draws

Al-Sabah added that "The global south will be a large component of energy demand in the future. And it's only fair to have countries that have – to use a term – energy poverty, be able to exploit natural resources in a clean and efficient manner."

The comment echoes statements made by African leaders who have slammed the West for preventing their countries from exploiting their energy resources by withholding finance from international lenders such as the IMF and the World Bank.

Private banks in Europe and North America are also reluctant to finance oil and gas projects in Africa, but they are leaving no vacuum. Chinese lenders are happily stepping in to fund oil and gas production in African countries.

The African resource question seems like one that is going to continue garnering growing attention. Africa contains much of the untapped oil and gas resources of the world, and it is difficult to argue with the claim that the West has no moral right to insist African countries skip the oil and gas phase to move straight to wind and solar, which are incompatible with industrialization.

So is the opposition to a rushed transition. Executives at CERAWeek are now openly warning against moving too quickly and applying some caution in the desired switch from oil and gas to full electrification.

A very on-point comment came from Woodside Energy's Meg O'Neill, who said, as quoted by Reuters, that "It has become emotional. And when things are emotional, it becomes more difficult to have a pragmatic conversation."

Indeed, there is a lot of emotion in transition conversations, and this has not been productive. It was because of this focus on emotions—fear of an apocalyptic future around the corner—that some major problems with wind and solar remained overlooked for quite a long time, only emerging recently to haunt the industries.

Take wind's stock market crisis from last year as it emerged that wind energy is not exactly as cheap as advertised and that it cannot be as cheap as advertised because developers won't make any money from it. Then there was the slowing uptake of solar as some governments began to phase out subsidies, suggesting that it, too, was probably not quite as cheap as advertised.

Naturally, none of these statements will be taken seriously by politicians who have declared their complete support for the transition. U.S. Energy Secretary Jennifer Granholm's reaction to the above statements was a good illustration.

"That is one opinion," Granholm said in comments on Aramco's of Nasser's forecast for oil demand. "There have been other studies that suggest the opposite that oil and gas demand and fossil demand will peak by 2030.

Those other studies are the IEA report that Nasser referred to originally, pointing out the prediction of peak demand focused on Western nations while the big driver of additional demand will be the developing world.

Even for Western nations, however, it is difficult to imagine peak oil demand in less than ten years. The average per-capital consumption of oil in the U.S. is 22 barrels annually, versus less than 2 barrels annually for developing countries. Giving up such energy abundance would be quite difficult—and wind, solar, and EVs cannot provide it.

By Irina Slav for Oilprice.com

 

Trouble in the North Sea? Wood Group Announces Job Cuts

By City A.M - Mar 21, 2024

• Wood Group is laying off 200 employees, mostly in Aberdeen, Scotland.
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• The job cuts come despite a slight increase in revenue and profits for the first half of 2023.
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• The company is likely responding to a failed takeover attempt and a windfall tax imposed by the UK government.

UK oil major Wood Group is set to cut hundreds of jobs as it prepares to release its 2023 annual results, reports suggest.

According to Sky News, the London-listed oil major is eyeing up the axeing of 200 positions from its 36,000-strong employee base.

The firm employs roughly 6,500 in the UK, the majority of whom are based in Aberdeen.

The news comes nearly a year after a rumoured £1.7bn takeover by private equity giant Apollo Management was culled, with the investment group saying that it would make no further offers.

The news wiped 35 per cent off Wood Group’s share price and it still lingers around 32 per cent lower than its position before the announcement.

It is due to report full-year earnings for 2023 next week.

The Scottish engineering giant generated £2.2bn ($2.9bn) in revenue over the first six months of the period – up around 15 per cent year-on-year – and profits before tax of of £149m ($195m), which is a six per cent boost over the same trading period for 2022.

The group is one of the embattled group of UK-based oil majors that will have to continue to weather the battering taken from the government’s windfall tax.

Chancellor Jeremy Hunt extended the profits levy by another year in his Spring Budget speech and even told morning TV stations the day after that it was fair to classify the oil and gas sector as the Budget’s “losers”.

Wood’s North Sea compatriot Harbour Energy, whose chief executive has damned the windfall tax and its effect on energy companies in the past, said earlier this month that its 2023 revenue fell 31 per cent from $5.4bn (£4.2bn) to $3.7bn (£2.9bn).

Harbour’s profit before tax fell 75 per cent to $597m (£468.5m), with a post-tax profit of $32m (£25.1m), up from $8m (£6.2m) in 2022.

Wood Group was approached for comment.

Why Do we Still Have Investor-Owned Utilities?

PRIVATIZATION FAILED

By Leonard Hyman & William Tilles - Mar 21, 2024

For a long time, investors have been accepting relatively low-risk, low-returns in utilities.
With bond yields moving higher, the acceptable total return needed to entice capital to the business may have moved up to 8-9%.

The investor-owned utilities do not seem better run, but all the extra taxes and higher capital costs probably add 5-10% to the customer’s utility bill.

The electricity and water utility industries are mirror images in a way. Government agencies service roughly 85% of water consumers and investor-owned companies the rest. Investor-owned utilities serve roughly 85% of the electricity market and government agencies serve the balance. Government agencies provide both essential commodities at a lower cost in both markets. This is not because they are operationally more efficient but for two other reasons: very low tax rates and significantly lower capital costs.

Regarding capital costs, financial theory tells us that when stocks sell above book value (a dubious concept except for regulated industries where it is relevant) the companies that issue equities are earning more than their cost of capital. They should earn more than their cost of capital to have a buffer for emergencies such as wildfires, droughts, and economic downturns. But as monopolies, rates should not produce a return to shareholders that is so high as to take advantage of their captive customers.

Figure 1 shows the market/book ratio for water and electric utilities for five year periods beginning in 1965. Note that the stocks sold well above book value for all but the high inflation-high interest rate period of the early 1970s to mid 1980s.


IEA Sees OPEC+ Cuts Pushing Oil Markets Into a Supply Deficit







Figure 1. Market/book ratios for water and electric utility stocks (%)

Notes to figure one: Water index has small sample size and components have changed, so caution is warranted on magnitude of movement within index. See Leonard S. Hyman, The Water Business, for historical data.
For historical data, see Leonard S. Hyman and William I. Tilles, America’s Electric Utilities.

For most of the period shown, shareholders in both industries earned total returns close to that of the market as a whole, despite both industries being substantially below the market in terms of risk. That is a polite way of saying that the company management convinced regulators to let them overcharge customers consistently. How? By blurring the assessment of risk in the regulator’s determination of equity returns. And speaking of risk, the equity percent of utility capitalization is also way high for a low-risk, regulated business —providing another avenue for excessive earnings. Well, aren’t managers paid to do that? Good for them.

The past 10 years have not been different. Using S&P indexes to illustrate the point, we find:

Table 1. Ten-year annual total returns as of 15 March 2024 for water and electric utility stocks, for the stock market and for bonds (%)

During the past ten years, corporate bonds yielded 3-4%. Taking that as the risk-free return upon which investors build their expectations,  they should have been satisfied with total returns (meaning current income plus price appreciation) of 6-8% for low-risk utility investments. But investors did far better. Looking ahead, with bonds now yielding 5%, the acceptable total return needed to entice capital to the business may have moved up to 8-9%. Regulators will, no doubt, continue to set much higher numbers for allowed utility equity returns. Whether this is due to regulatory capture or other forms of undue corporate influence we have no idea but the ongoing pattern is suggestive.

Over the coming decade electric utility companies face two challenges. They will lose major customers because they will be unable or unwilling to furnish the quality of service these customers require. And customers will have the ability to contract out for a “premier” utility service or own and operate the assets themselves. As a result, the legacy franchise-owning electric companies may lose revenue. This will occur while electric companies are attempting to raise huge sums in the capital markets to upgrade and expand plant and equipment, replace aging assets, and decarbonize and upgrade the grid. Financing that program will require a steady stream of rate hikes for customers, some of which may drive away business dependent on low energy costs or adversely impact the neediest customers. We expect regulators to meet these challenges in the way to which they have become accustomed. They will cut back on rate increases. And if we are right in our analyses of cost of capital, regulators have a fair amount of room to cut back before they start to affect the utilities ability to raise capital. We don’t see the water companies running out of capital, do we? However, years of big capital spending (as we’re facing now), coupled with adversarial regulators holding down the allowed equity returns, could definitely depress the utility market/book ratio, as occurred in the 1970s-1980s. Not a bullish thought for electric utility investors.

But the real question is this: does the equity investor in the investor-owned utility serve a function that is worth the additional cost? The investor-owned utilities do not seem better run, but all the extra taxes and higher capital costs probably add 5-10% to the customer’s utility bill. The bulk of the nation’s water consumers get the benefit of lower capital costs and taxes via public or municipally owned entities while the bulk of the nation’s electricity users do not. With capital becoming a bigger part of product cost as the electric industry moves to decarbonized generation, that question is worth considering. In other words, why do we still have investor-owned utilities, which charge higher prices, for identical services, while using public money to lobby for further rate increases? Maybe governments at various levels should simply finance the big-ticket items of electricity decarbonization themselves and reap the savings. 

By Leonard Hyman and William Tilles for Oilprice.com

Tokyo Tech Scientists Crack Hydrogen Storage Conundrum

By Brian Westenhaus - Mar 21, 2024

• Scientists developed a method to release hydrogen from hydrogen boride sheets using an electrical current.
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• This method is more efficient than traditional methods requiring high temperatures or UV light.
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• The new method paves the way for safer and more convenient hydrogen storage for clean energy applications.
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Tokyo Institute of Technology scientists have reported hydrogen stored in hydrogen boride sheets can be efficiently released electrochemically. Through a series of experiments, they demonstrated that dispersing these sheets in an organic solvent and applying a small voltage is enough to release all the stored hydrogen efficiently. The results suggest hydrogen boride sheets could soon become a safe and convenient way to store and transport hydrogen, which is a cleaner and more sustainable fuel.

The research paper, published in the journal Small, reported on the investigated potential of hydrogen boride (HB) sheets as practical hydrogen carriers.

Scientists worldwide are looking for cleaner alternatives to fossil fuels, and many believe hydrogen is our best bet. As an environmentally friendly energy resource when combusted or energizing a fuel cell, hydrogen as two atom dihydrogen (H2) can be used in vehicles and electric power plants.

Hydrogen release from hydrogen boride sheets explained graphically. Image Credit: Tokyo Institute of Technology. This image is too large and complex to reduce and show on a web post. The full size image can be seen at the press release page. It is also noteworthy that the study paper is Not behind a paywall at posting.

Meanwhile, storing and transporting H2 safely and efficiently remains a challenge. Compressed gaseous hydrogen poses quite significant risks of explosion and leakage, whereas liquid hydrogen must be maintained at extremely low temperatures, which is very costly.

This raised the question, what if we could store hydrogen directly in the molecular composition of other liquid or solid materials?

Storing hydrogen in HB sheets is not an entirely new concept, and many aspects of their potential applications as hydrogen carriers have already been studied.

However, getting the hydrogen out of the sheets is the tricky part. Heating at high temperatures or strong ultraviolet (UV) illumination is required to release H2 from HB sheets. But both approaches have inherent disadvantages, such as high energy consumption or incomplete H2 release.

So, the team started research into a potential alternative: electrochemical release.

In consideration of the mechanism of UV-induced H2 release from HB sheets, the team speculated that electron injection from a cathode electrode into HB nanosheets by an electric power supply could be a superior way to release H2 compared to UV irradiation or heating.

Based on this theory, the researchers dispersed HB sheets into acetonitrile – an organic solvent – and applied a controlled voltage to the dispersion. The experiments revealed that nearly all of the electrons injected into the electrochemical system were used to convert H+ ions from the HB sheets into H2 molecules.

Notably, the Faradaic efficiency of this process, which measures how much electrical energy is converted into chemical energy, was over 90%.

The team also conducted isotope tracing experiments to confirm that the electrochemically released H2 originated from the HB sheets and not through some other chemical reaction.

Moreover, they also employed scanning electron microscopy and X-ray photoelectron spectroscopy to characterize the sheets before and after H2 release, yielding further insights into the underlying mechanisms of the process.

These findings contribute to the development of safe and lightweight hydrogen carriers with low energy consumption.

Although the team studied the dispersed form of the HB sheets in the published paper, the current findings are applicable to film or bulk-based HB sheet systems for H2 release.

Additionally, the team will investigate the rechargeability of HB sheets after dehydrogenation in a future study.

The press release closes with, “With any luck, this line of research will help pave the way to cleaner energy sources and more sustainable societies!”

**

This looks to be quite the breakthrough! There remains quite a list of questions, but the major ones about process and handling suggest this is a very promising start.

On the other hand, the weight to energy potential is the typical low of hydrogen. H2 is only two of the smallest atoms in the universe. The energy potential is always going to be small. The potential of multiple carbon atoms with a bunch of H2 wrapped around them common to organic matter and petroleum molecules such as designed and trialed by nature over hundreds of millions of years is way beyond where H2 can ever go.

Hydrogen does likely have a role in quite large niches. But it’s not clear that this tech would cut the risk of in-home storage to acceptable levels.

Let’s hope so though.

By Brian Westenhaus via New Energy and Fuel

ERA applies to renew Jabiluka lease

JUST SAY  NO

21 March 2024

Energy Resources of Australia Limited says it has lodged an application to renew the lease in Australia's Northern Territory but says it has no plans to develop the high-grade uranium deposit. (ROFLMAO)

The deposit's Mirarr Traditional Owners have said they oppose both the renewal and development of the lease, which is surrounded by the World Heritage-listed Kakadu National Park.

A retention pond at the Jabiluka site, pictured in 2010 (Image: Owen65)

Energy Resources of Australia Limited (ERA) has a long-term care and maintenance agreement with the Mirarr Traditional Owners that includes a veto over development of Jabiluka unless approved by the Mirarr. Renewing the lease - which is due to expire in August - extends this arrangement and is the best way to preserve this veto, and Jabiluka's cultural heritage, CEO Brad Welsh said.

"ERA has protected the cultural heritage at Jabiluka for almost two decades under a long-term agreement with the Mirarr Traditional Owners that also includes a veto right over any future development. The agreement and veto right only remain in place if the lease is renewed," Welsh said.

The Jabiluka uranium deposit was discovered in the early 1970s and, with resources of more than 130,000 tU3O8 (110,240 tU), is one of the world's largest high-grade uranium deposits. Jabiluka is also a site of international cultural heritage significance, containing extensive rock art galleries of World Heritage significance as well as sacred sites and the archaeological site of the oldest known human occupation in Australia.

A mining lease was granted in 1982. ERA purchased the Jabiluka lease from Pancontinental in 1991, and some development work began with the construction of an access decline excavation around the orebody, but mining was subsequently deferred and in 2005, the Mirarr and ERA formally agreed that mining may only proceed with the written consent of the Mirarr Traditional Owners.

ERA Independent Non-Executive Director and former Federal Indigenous Affairs Minister Ken Wyatt said the application for the lease renewal protects the rights of the Mirarr to control the future of the site. "The best way to preserve the veto right is to renew the MLN1Jabiluka lease," he added.

The Gundjeihmi Aboriginal Corporation, which represents the Mirarr Traditional Owners, has publicly expressed its intention to oppose both the renewal and development of the Jabiluka Mineral Lease, and say the Traditional Owners "remain concerned about ERA's capacity to deliver on their commitments in Kakadu National Park": the company is currently rehabilitating the former Ranger uranium mine after more than 35 years of uranium production operations came to an end in January 2021, and recently said it will need to raise further funds this year to cover the work.

"ERA's announcement today that it has applied for an extension of the Jabiluka Mineral Lease does nothing to improve the Mirarr's confidence in the mining company or its capacity to clean up properly at the former uranium mining site at Ranger," the corporation said.

CEO of the Gundjeihmi Aboriginal Corporation Thalia van den Boogaard said the Mirarr Traditional Owners would now seek formal protection of Jabiluka's cultural heritage and called on the Australian and Northern Territory governments as well as ERA to support this. "We've heard very encouraging words from this company when they assured us Ranger would be cleaned up by January 2026 and look how wrong that turned out to be. We don't doubt their sincerity, but we gravely doubt their capacity," she said.

ERA is majority owned by Rio Tinto.

Researched and written by World Nuclear News