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non-news from PINCAS JAWETZ (PJawetz@aol.com)


Washington, October 1, 2004

Mid September, the National Petroleum Council (NPC), a federal advisory committee to the Secretary of Energy, announced for Thursday September 30, 2004, a meeting with Secretary of Energy, the Honorable Spencer Abraham.

NPC is an industry group that since 1977 is operating with the sole purpose to advise, inform, and make recommendations to the US Secretary of Energy, at his request, on matters pertaining to oil and natural gas, or to the oil and gas industries. Prior to the creation of the US Department of Energy, from 1946 till 1977, the NPC had similar position versus the US Secretary of the Interior.  These are open meetings, nothing of the sort that known as by Vice-Presidential invitation only as in the case of the preparation of the draft energy policy by the Vice-President.

At the September 30, 2004 meeting, it was expected that the Secretary will unveil a new report with aspects of an energy policy.
Somebody must have realized that the timing - September 30 - was awkward,  it was just the night before the first presidential debate, and indeed you do not throw oil on a fire. Why supply new material to the upcoming debate?  Debates are intended as non-issue events, why bring in a possible issue that could harm the Administration?  So, the event was cancelled September 24, 2004, and postponed until after the November elections. That was sound policy when it comes to the presentation of an Ersatz energy policy for the United States.

Furthermore, the September 30, Washington DC, NPC date was also awkward for a second reason - it conflicted with the American Petroleum Institute's, Arlington VA, Conference on Oil and Gas Voluntary Actions to Address Climate Change.  Does the Administration not back the industry's voluntary actions

as an Ersatz to policy in general?  Why an NPC meeting before being handed officially also the document from the Arlington meeting?
Somebody goofed indeed !



The IPIECA Climate Change
October 12-13, 2004, Baltimore Maryland, USA

By PINCAS JAWETZ   (PJawetz@aol.com)


IPIECA is the London headquartered International Petroleum Industry vironmental Conservation Association.  It was founded in 1974 following the establishment of the United Nations Environment Programme (UNEP) in order to provide, as stated,  the oil and gas industry with a channel of communication with UNEP on key global social and environmental issues - including oil spills, global climate change, health, fuel quality, biodiversity, and social responsibility.
IPIECA organizes all inclusive industry seminars and workshops, and in 1988 created its CLIMATE CHANGE WORKING GROUP (CCWG) that "monitors, analyses and informs the membership of key developments in the issues, especially those taking place at the UN Framework Convention On Climate Change (UNFCCC) and the International Partnership on Climate Change (IPCC)".  This in order to: "help develop policy options that strike a balance between the projected consequences of potential climate change and the estimated costs of response options to mitigate or adapt to climate change".  IPIECA then provides the industry with a series of helpful documents.
The Baltimore meeting was the third meeting held in the Washington DC region by the petroleum industry, within the time span of less then one month - following the Hart World Fuels Conference and the API/US Department of Energy  Voluntary Actions conference.  All three meetings were covered by me in the present Culture Change media series.
The IPIECA meeting, though with about 90 registered participants, was nevertheless the most wide open of the three meetings - it ranged from Kuwait Petroleum Company to Norsk Hydro.  It included Academics, the United Nations, oil companies, and US Government, and even some advocates of alternatives to Petroleum.  The hope is thus that what was said will be written up in the final document, and the presentations made will be enhanced by the interventions from the floor in order to present a fuller view to the industry.
To get a better context to the meeting let me see what the Wall Street Journal, the bastion of oil industry supremacy on the economy, was saying those days: 
On October 12, 2004 - "No Petroleum Needed - One Word Of Advice: Now It's Corn. Plastics Manufactured From the Plant Grow More Appealing Amid Soaring Oil Price". (Do you still remember Dustin Hoffman in "The Graduate" - the movie?)
On October 13, 2004 - "Hybrid Cars Drive a Company, and Its Stock". (Re: Energy Conversion Devices Inc. that developed the batteries for Toyota).  Also, A note about "EU Panel Rejects Second Commission Nominee".  While the first rejection by the European Parliament of a Commissioner, submitted unfortunately by the EC President designate, was that of an Italian conservative Catholic for the post overseeing women's and gay rights, was seen quite logical by everyone, the second rejection was less clear.  This case involved Laszlo Kovacs, a former Hungarian foreign minister who was suggested to serve as energy commissioner.  The parliament's industry, research and energy committee unanimously withheld its blessing for Mr. Kovacs. "His professional knowledge and grasp of issues in energy matters were assessed as insufficient," said German Green member Rebecca Harms.
This opens the question - is it a must to have an energy background to deal with present day energy matters that have long stepped out from being the domain of old, or even new, energy professionals?  Who can speak on energy now - could we dare to entrust this paramount area to an honest novice?  I know nothing about Mr. Kovacs but can easily see that both sides of the issue may have serious bones to contend with. Was Mr. Kovacs also an ideological plant?
On October 14, 2004 - "Not Just Tilting Anymore - Higher Fuel Costs, Tax Credits, Better Technology Whip Up Hopes for Wind Power Again".  Also, "Plans for Huge Wind Turbines Jolt Kansans".  Also, Europe's Car Makers Face Turmoil As Japanese Gain in Market Share".
With this reality in the background, I feel compelled to start with a value statement.  The presentations at the IPIECA meeting were excellent, but many presentations had one clear problem. The presenters had no subject memory.  What I mean is that the presenters approached the problems as if these were new problems, that popped into sight just now, and the industry was called
to answer these problems just now, for the first time, coming up with possible solutions that will take long time to be put in practice.
The reality is that the effect of emissions into the atmosphere on possible climate change  was already pointed out over a hundred years ago by Arrhenius, but the impact of the price of oil on the economy was pointed out only after the first so called modern energy crisis of 1973.  That may date me, but many things did happen in the 1970-1980s. Technologies were tried out, policies were proposed and undermined by the oil industry that now is being pushed to innovate. The public in Europe pushes the governments in Europe to create new energy industries.  The effect of the price of oil in the market place creates opportunities.  Had we had the foresight to
increase prices by taxation, we could have developed the alternatives already then - in the 1970-1980s and have avoided by the way also the plague of terrorism, which is really our own creation, because of our insistence of having our economies dependent on cheap oil.
Perhaps the most informative presentation was the Brazilian biofuels policy paper by Suzana Khan Ribeiro, who for the n-th time told the Brazilian success story, but I had the feeling that some of the oil industry people present heard this for the first time.   The success of South Africa's SASOL, building on German war technologies using coal, was known to the technical people here, but there was no mention in the presentations, and I am sure that this had to do nothing with the politics of South Africa of that time. Further, the story of New Zealand, that lost its chance at a natural gas based energy independence, but that thanks to clear bamboozle that originated with the Mobil Oil Company of the 1970's, made the terrible blunder of producing synthetic gasoline instead. That story was not even known to the technical people present.  When mentioned, it was vehemently objected by the representative of the Brussels based European oil industry center for Conservation of Clean Air, Water and the Environment (CONCAWE) who really had no information on that, international oil industry imposed, New Zealand national policy disaster.
Having gotten above of my chest, let me say that much positive information to the industry, was presented for activities that should be going on now.
In the opening statement, IPIECA CCWG Chair, Richard Sykes, from Shell Oil Co., stated that "Climate Change is one of the most important issues that will change our lifestyles", followed by speakers from the International Energy Agency of the OECD, and from the Austria based Institute for International Systems Analysi, making forecasts for the transportation sector.  This was followed by speakers from China and India.  Then the subject moved to Air and Marine transportation followed by Road transportation.  I walked away from this first day with the notion of a possible second niche market for biofuels.
After years of fight, it is clear now that ethanol should be viewed as the only available octane boosting additive to gasoline. It also replaces more crude then pointed out by the amount of gasoline that its percentage value in the resulting mixture.
Also, possible now that vegetal oils could find a niche market as preferred jet fuels.  This came about after some questions about the sulfur content of jet fuel and the effect of sulfur at high altitudes.  As vegetal oils have no sulfur this seems to be an ideal niche market.  Obviously, the inevitable - no! - was heard from the industry, and I can see that rather then investigating the opportunity, members of the industry will do their best to keep this from happening for many years to come.
The speaker from India made it clear that the Indian priority will be mobility and not the problems of climate change.  China was more forthcoming.
The second day dealt with the motor vehicles and ended in a panel discussion on Transportation and Climate Change without questions from the floor.
The speaker from CONCAWE, employee of Shell Oil Co. mentioned Dimethyl Ether (DME) as a new synthetic diesel fuel.  Prof. C.F. Edwards from Stanford presented a study of the efficiency limits of vehicles and showed how these changed with time.  Prof. J.L.Sweeney from Stanford spoke of Hydrogen, and I noted an aside - "tax the gasoline and subsidize the hydrogen" - now - that is a start !
Mr. L.I. Dale from General Motors, presented the World Business Council for Sustainable Development Report on Mobility and H. Diaz-Bone from UNFCCC an D. Sperling from UofC-Davis  dealt with  emissions from transportation north and south.
JoAnn Milliken, from US D.O.E., speaking on President Bush Administration's "US Climate Change Technology program and the Hydrogen Initiative", told the audience that the President's $1,7 billion accelerated 2003-2008 program has received so far requests for $228 million and approved so far $159 million.  The barriers to a hydrogen economy were talked about and the question about the hydrogen source was raised.  Considering that initially hydrogen will be made from coal and natural gas, it is clear that hydrogen can not contribute to a solution of the CO2 problem unless coupled with a CO2 sequestration technology - so a hydrogen solution for the global warming problem is yet very far in our future, the spending for research is also slow.

- - - - - - 


A Way To Test Future Industry Mandates. 

 - as gleaned from the American Petroleum Institute and the U.S. Department of Energy 3rd Conference on: "Voluntary Actions By The Oil and Gas Industry To Address Climate Change". 

Arlington, Virginia, September 29-30, 2004. 

by PINCAS JAWETZ (pjawetz@aol.com
Culture Change Media 
International Editor 

In 2002, President Bush, after rejecting the Kyoto Protocol to the UN Framework Convention on Climate Change, proclaimed a DOE Climate Vision program involving 14 industry associations, for the stated goal of reducing the greenhouse gas emissions intensity 18% by 2012, through voluntary actions.  Various industry sectors joined an Alliance for Climate Strategies to start tossing around ideas how to go about reducing the greenhouse gas (GHG) emissions.  The American Petroleum Institute (API) is part of the Alliance.  

I participated at the API meeting with an open mind to see what the industry contemplates doing with this hot topic.  Do the folks understand that it is unsustainable to bring out into the atmosphere, within the span of 200 years, fossil carbon that was deposited underground during hundreds of millions of years?  The API Climate Challenge Program mentions that for years oil and natural gas companies have been reducing emissions by increasing energy efficiency and conservation.  

The new program includes: refineries' pledges to increase energy efficiency 10% by 2012; Increasing use of natural gas; Increasing combined heat and power units at refineries, i.e., in co-generation, reducing leakage of methane in the natural gas industry; Reducing CO2 venting; Develop alternate energy such as renewables, and fuel cells, and Reforestation to capture CO2 and capture CO2 underground. 

All of this sounds like good, self serving, economics leading to financial gains to the industry - so it can honestly be accepted as doable.  Thinking about this somewhat more deeply - the problem here seems to be that the petroleum industry is slow to learn from what happened to the tobacco industry.  The facts are that the tobacco industry did not get nailed by the trial lawyers because there was smoke in their operating smokestacks, rather the obvious problem was that the products they were putting on the market, the cigarettes, were seen as damaging to the health of the public.  The real problem in the Petroleum industry causing GHG emissions is the burning of the gasoline and diesel fuels they sell to the consumers.  

Seemingly only two oil companies - both companies headquartered in Europe - BP and Shell - have accepted the inevitable need to switch their futures from oil to energy, and to understand that they have to become the future suppliers for the energy needs of the economy, and not just suppliers of oil products.  Saving some CO2 emissions by putting solar collectors on an oil rig in the middle of the ocean is good policy, but not yet good enough for changing the image of the company from a seller of fuels to a seller of energy.  British Petroleum has a respectable share of the solar energy industry and Shell Oil Company has a respectable share of windmills' business - that is a start.  

Having made the above statement, I must correct myself by saying that the actual meeting was much wider then the topics suggested in the API Climate Challenge Program folder.  Some academic presentations enlarged the scope of the meeting and some technical presentations presented potential for further extension into the renewables sphere - i.e., the Sasol presentation of producing diesel fuels from gas, gas from coal, could be extended to the use of biogas.  

But then, Larisa Dobriansky, Deputy Assistant Secretary, National Energy Policy, at DOE, could not tell me what was going on regarding biofuels, in parallel, at the same time, in a different hotel.  Several hours later I found out that Biodiesel from soy-beans was being mentioned there.  David Rickeard, Fuels Development & Policy Planning Advisor for ExxonMobil, spoke on Well-to-Wheels Analysis of Future Automotive Fuels and Powertrains in the European Context.  He had by necessity a good presentation of the European scene that included all the various novel fuels.  Listening to this we may also start moving towards a more diversified fuel base.  But then, on the other hand, also a dinosaur or two voiced their opinion at the meeting, special in the non-scripted final panel, such as Mr. Jim Glassman, a Resident Fellow at the Washington DC American Enterprise Institute, who was not sure whether a massive reduction in GHG emissions is a good environmental practice.  

Next week, the International Petroleum Industry Environmental Conservation Association, of which API is a member, will hold a similar meeting in Baltimore (12-13 October 2004) with the pinpointed topic "Transportation and Climate Change."  This organization has a larger number of oil companies in its membership.  It would be interesting to see the continuation of the Arlington discussion.  Yes, though slowly, but things are moving nevertheless.  I would dare to conclude here, that the writing is on the wall - the industry knows that eventually mandatory regulations will be put in place, and the flurry of activities is simply to test how far the industry could go along with these regulations. 

Furthermore, the industry, this in order to have a level playing-field for business, actually does, secretly, welcome government involvement and regulation. We shall see.

- - - - - - 

as gleaned from presentations at the
22nd Annual Hart World Fuels Conference
September 14-16, 2004, Washington DC, USA

 by  PINCAS JAWETZ   (pjawetz@aol.com)
Culture Change Media International Editor

 Focus: Global Fuel and Vehicle Policies
Near term Solutions for Long Term Issues

"The biggest new source of oil may indeed be conservation."

Hart Energy Publishing activities of the Hart Downstream Energy Services, today one of the most important information gathering organizations for the oil and automotive industries, were started in Washington D.C. by Frederick L. Potter in 1981 as Information Resources Inc. (IRI).  Fred, who worked with the Office of Alcohol Fuels of the US Department of Energy, understood that the inclusion of non-petroleum fuels in the fuel mix is dependent on acceptance by the oil and automotive industries.  Today Hart is providing the industry with a large variety of expensive specialized newsletters on such subjects as "World Fuels Today,,"Global Refining & Fuels Report," "Renewable Fuels News," "Octane Week," "Diesel Fuel News," "Gas Processors Report," "LNG wire," and an online "U.S. Government Affairs Service."  Hart's International Fuel Quality Centers are located in Houston, Washington DC, Brussels, Belgium for Europe and Singapore for Asia.  These centers provide information  -  policy and technology  -  about the inclusion of biofuels, such as ethanol and biodiesel, as part of the fuel mix.

Hart is also running a series of Fuel Conferences in places like Prague, Rio de Janeiro, Tokyo etc.  To these conferences come representatives from various interest groups, even though they are basically viewed as petroleum industry conferences.  Government policy makers are among the participants and are obviously among the speakers.  Many industry representatives come to these meetings specifically to hear what these office-holders have to say.  At the Washington conference one such presenter was U.S. Secretary of Commerce, Mr. Donald L. Evans.  He is a former businessman in the energy industry and is a close member of President Bush's team in charge of many issues including trade, energy policy and even leads the United States negotiating team within the context of the UN Framework Convention on Climate Change (UNFCCC), i.e., the issues of the Kyoto Protocol.  He is the adviser to the Bush Administration on Energy and Economic Policy.

Mr. Evans looked at the packed room and said that the energy business has good people; he spent most of his career in the oil business and he misses them; he is happy to be now again among the industry representatives.  It pains him that the public views in negative eyes the industry and its income gains.  He expects the energy bill to pass after the November elections.  It has now 58 votes in the Senate but 60 are needed to prevent filibuster; the quirk is that a majority is not good enough.  He enlarged on the stock-market dependence on the price of oil and the price of oil being dependent on bringing the oil out of Saudi Arabia.

When questions were asked from the floor, Mr. Evans was reminded that he was also in charge of negotiations on climate change and the Kyoto Protocol.  Even though the Kyoto Protocol will not be ratified by the U.S. Senate, nevertheless much is being done overseas on reducing emissions by changing dependence on oil now.  Also, the biggest new source of oil may indeed be conservation  -  does he think that the United States does enough in those areas?  Mr. Evans chose not to answer most of these topics, but kept saying that conservation was in the energy bill.  When he was told that this was not the case, he said the energy bill as originally introduced in 2001.  That part was particularly funny as he did in effect refer back to the original Vice President Cheney meetings with the oil industry before suggesting an energy bill.  At coffee brake it seemed clear that the performance by the Administration's representative lost some votes.

The above became obvious when before the session titled "US Energy Policy Preview - Considerations for Future U.S. Energy Policy," the five people at the podium, including an oil company VP, a stuffer for the Ranking Member of the Senate Energy and Natural Resources Committee, and the person in charge of Energy Information Agency of the US Department of Energy, decided to take a poll in the room.  The questions were (A). Should the present Energy bill be passed?, (B). Should the present Energy Bill be voted down?, (C). Should the Energy Bill be passed after amendments without going here into what amendments?, (D). There is no need of an Energy Bill.  To my surprise - D got hardly any takers, A and B had equal votes, but C was the clear winner.  So, even in this room with mainly people from the industry present  -  there was a clear rejection of the Bush Administration's so called Energy Bill  -  perhaps 20% were ready to accept the present bill.

Further, in the session on "Global Energy Markets - the Well-to Market" conundrum, there was a great panel including a spokesman from the Venezuela Embassy, a hydrocarbons consultant, and the Director of the Cox School of Management, Maguire Energy Institute at the Southern Methodist University.  An interesting question "Will the lights go out?"  Then, actually sustainable development was defined as "not to compromise the future generations". The interesting observation was made that Russia is increasing oil production  -  not Saudi Arabia.  Eventually Mr. Joe Colluci, former head of fuels at General Motors Company, remarked that data presented by the Venezuelan came from the US Department of Energy but they were different from the data presented by Mr. Evans.  Mr. Darrell Ragnow, VP of Invensys, the consultant on the panel, said that there must be a movement away from the SUVs and he also put the finger on the reluctance to reinvest by the oil companies.

Another interesting session revolved around the subject of the legislation calling for the removal of sulfur from diesel fuel.  Here again the subject of biodiesel that has no sulfur, mixed in with the petroleum based diesel, could help in addressing this need  -  albeit, the eventual reduction to 15ppm, down from 500ppm, means a very high new technological advance, but, nevertheless, the biodiesel could be of help.  The removal of sulfur will be done with traps attached to the exhaust pipes of trucks and heavy vehicles.  Further, a spokesperson for the truck rental business spoke up as being afraid of renters abusing the technology and creating big losses for the truck owners.

Further, on the fuel demand side, was the session on the "Evolution of Automotive Technology - The Next Wave."  Mr. Mark Chernoby, VP Advance Vehicle Engineering, DaimlerChrysler, made the interesting observation that we are now at the same spot as in 1910.  At that time there were steam engines, electrically run engines, the gasoline internal combustion engine, and a scenario of all of the above.  Now we have electric vehicles, hybrid powertrains, fuel cells, internal combustion engines, diesel engines, and a scenario of all of the above.  Mr. Chernoby said that the gasoline internal combustion engine won out in 1910 and all other methods lost out and vanished.  He went on then to find some future niche for various vehicles, so this time there may be a multi system solution.  Neighborhood electric vehicles will find a place as appropriate in local transportation.  DaimlerChrysler will have 100 fuel cell vehicles on the road in 2004/2005 including a hydrogen refueling station in Ann Arbor, Michigan, the Jeep Liberty that runs on diesel and is in high demand in Europe that prefers diesel engines to gasoline engines, and someday the U.S. Administration's proclaimed Freedom Car that will run on hydrogen.

Eventually, the speaker had to be reminded that the internal combustion engine was not put on the market by Henry Ford as a gasoline fueled engine, but as an ethanol fueled engine.  This may be only a seemingly slight correction, but it covers over the implication that it all started with oil.  The truth is rather that the petroleum was put on the market as a source of light in kerosene lamps, and gasoline use for powering engines was only an afterthought  -  the cheap, and originally unwanted, gasoline driving out the farm/locally produced alcohol.  So, who knows, by rethinking the biofuels we may indeed grudgingly move away, at least partly, but even further away, from the dependence on oil.  This statement is clear to the organizers of this World Fuels Conference, from the Hart's International Fuels Quality Centers, via the already successful use of ethanol for octane in the USA, ethanol as a fuel in Brazil, and biodiesel in the European Union.

To be successful indeed, in the creation of an energy policy, clearly, one starts with energy saving methods of conservation and less energy intensive systems, i.e., the elimination of unreasonable use of SUVs.  Then one figures out what type of energy to be used by what sector of the economy  -  this may allow a higher portion of liquids or gases for transportation fuels.  Further, when it makes sense to rely on electricity for transportation, some of this electricity will be from renewable sources rather then from burning fossil fuels.  Economic conditions will make all of these changes possible.



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