Geopolitics, Sinister Regimes, Propaganda, Oil, and Sanctions

 

Sanctions Busting Seems to be Creating a Thriving Criminal-Esque Network of Nations: Russian Ghost Tankers, Indian Refiner Profiteers, Enabled Iranian Military Posturing, and Other Back Room Deals and Workarounds

     I realize this post is only marginally related to energy and more of a geopolitical post, but I want to talk about it. It will be a post that rambles quite a bit. I will also be much more liberal and unprofessional in my language for reasons of emphasis. The Kremlin is talking openly about an alternative to the so-called Western rules-based order and their foreign minister Sergei Lavrov has been making the rounds in Africa and elsewhere trying to drum up support for that alternative. I certainly hope he fails miserably. Who the hell in their right mind would want to be part of a world where Russian bullshit propaganda is seen as a viable viewpoint? Russia’s Wagner Group mercenaries, who also take in troops from Africa or any sympathetic country who has poor men willing to fight for them, have been accused of rape, torture, murder, and plundering in several African countries. While they may support some fights against Islamic extremists, in other conflicts they support the morally inferior groups. They are active in Syria, Sudan, Libya, Central African Republic, and Mali. Russia is known to prop up dictators like Assad and indeed it is part of their strategy to oppose the so-called Western order that abhors authoritarianism and come to the aid of any country that distrusts the U.S. Lavrov and the Kremlin like to exploit and bring up past Western colonialism to influence their new African comrades. The so-called Western order is not strictly Western as several Asian, African, and Middle Eastern Countries are a part of the order. Many of those African countries sympathetic to Russia and others remained neutral by abstaining in votes to condemn Russia’s invasion of Ukraine at the UN. Lavrov has also been emphasizing enhanced trading with countries like dictatorship Zimbabwe, which potentially helps them evade sanctions and the effects of sanctions. Russia has also sought diplomacy in their own region with allies like Kazakhstan, Uzbekistan, Turkmenistan, and Armenia, although some of those countries like Kazakhstan are moving away from them a bit. They also retain influence in former Soviet Republics like Georgia, Serbia, Bosnia, and other Eastern European countries. They talk about the Ruskey Mir, or the Russian ‘sphere of influence’ which includes areas they invaded and populated with Russian-speaking peoples. People like Bernie Sanders have defended their claims of the Russian sphere of influence as valid and compared them to the Monroe Doctrine that states that the Western Hemisphere is our own sphere of influence where only democratic governments should be supported. He argued this in an op-ed just before the invasion of Ukraine. I think he is dead wrong, and it is an unfair and inequivalent comparison. In hindsight, the US and the rest of the free world should have acted more boldly against Russian support of Assad in Syria as they brutally bombed civilian areas and institutions and flattened cities full of people.  The UN reported that they bombed hundreds of schools and hospitals and also developed a tactic to then bomb those who were responding to the bombings, the medics and their helpers. Those tactics were used to kill and intimidate civilians. It was a success for them that influenced their strategy in Ukraine. War crimes without retribution lead to more war crimes and the Russian army and mercenaries have no problem at all with committing war crimes.

     In the economic sphere Russia has joined with Brazil, India, China, and South Africa in the BRICS alliance. Both India and South Africa have remained too neutral in the Ukraine conflict and should be strongly criticized for it. Israel too has remained too neutral citing delicate security agreements with Russia. China was expected to remain neutral as their authoritarian government needs friendship with other authoritarians, but they have at least not wholly embraced Russia’s positions. In fact, many of the world’s problems are directly caused or exacerbated by Russia’s influence which they leverage anywhere they can. They rarely follow the rules and they have gotten away with far too much over the years. The Ruskey Mir is not an old idea. It is a new idea meant to invoke old claims to some imagined Russian empire of centuries ago, one Soviet imperialism and brutality helped to rekindle. It is supported by Slavic-centric philosophers and those who would bring ethnic cleansing and genocide if they knew they could get away with it.

     North Korea is a regime that is sinister to the core and is of course supporting Russia with ammunition and likely other things. Their leadership is a cult, a stain on the world, and a disgrace to the human race. They too have long evaded sanctions, had some success in cyber warfare, have starved and tortured their own citizens, and have nuclear capabilities, which is quite scary.  

     The Europeans allowing themselves to become overly dependent on Russian gas and oil was a huge mistake. The over-emphasis on fast decarbonization was a part of that dependence. Not only gas and oil but fertilizer, petroleum products, metals like nickel, uranium, uranium processing and enrichment, and many other things were and still are heavily supplied by Russia. It is the largest country in the world and is endowed with many natural resources, a well-educated population, and many technological capabilities. The sanctions have no doubt disrupted the world economy and everyone is affected by them. However, we see that it is necessary in order to weaken an immoral regime that has long flouted international rules and norms. Putin and company are why I don’t drive as much as I used to drive and why many keep their houses cooler in the winter. However, there are many companies that have profited handsomely from the sanctions, albeit inadvertently. The Big Oil majors Exxon Mobil, Chevron, Shell, BP, and Total have all recorded record profits. While many who work in the industry will say that is just how the market goes, that is not wholly true. The sanctions themselves were a manipulation of the market, a manipulation of available supply and demand. They and other companies, including LNG exporters have profited from the sanctions. Surely, some of that profit was necessary to help balance the new realities of the market. However, others like Biden and company think that turning that excess profit into stock buybacks and not increasing exploration is not fair. He has a point, although to be sure Biden has not signaled much long-term support for the oil and gas industry and the industry is rightfully concerned that they could end up with stranded assets and other barriers like carbon fees and regulatory hurdles.

     Iran has long been sanctioned and has developed over the years many workarounds to the sanctions. The country, ruled by Islamic extremists, has long executed large amounts of people. Human rights there are a joke, and their nuclear and military ambitions are concerning. And yet they are undeterred in their quest for power. They have obviously formed an alliance with Russia, providing with them with kamikaze drones to bomb Ukrainian infrastructure (a war crime in itself), making deals with Russia to receive military jets, training Russians in using their drones, and more recently helping the Russians evade sanctions. One of the first things to do in evading sanctions is to find allies willing to help you evade them. Iran has allies in many places that do this, regardless of their government’s stances: Turkiye – led by Erdogan who has been dubbed the ‘two-faced Sultan’ and Venezuela come to mind. They have continued to sell oil on the black market despite sanctions. They have helped Venezuela do the same. More recently, Iranian engineers are working in Venezuela to help revive their oil refineries, which had been so poorly mismanaged that it will take a lot of time, money, and effort to get them working again. The whole country is basically a failed state due to corruption, mismanagement, suspicion of foreign companies, human rights abuses, and authoritarianism. What started out as a successful Socialist state – Bernie Sanders once praised Venezuela as an ideal government model, how wrong he was – is now a backwater that can’t feed or power its people and their chief export, once oil is now refugees. But they are not the only Socialist Latin American state with diplomatic ties and which aids sanctions busting for Iran. Cuba has long been an Iranian ally and in the past so too was Brazil during Lula’s first regime. Then, he was one of the conveners of the Sao Palo Forum which most of the leftist Latin American parties are a part, including the Socialistic-led states of Cuba, Venezuela, Bolivia, Brazil, and Nicaragua. While Lula has tamed his Socialism a bit in favor of Democracy, he is still certainly not an ideal American ally. He blames the US and NATO just as much as Russia for the war in Ukraine. He is allowing Iranian warships with cruise missiles to dock at ports in Brazil, although he did graciously delay that in order to placate Biden before their meeting in Washington. My question is why the fuck is anyone in this hemisphere, assuming they are democratic in principle like us, allowing an evil and thoroughly authoritarian regime like Iran to gain any influence here? We know Cuba and Venezuela are not democratic. We also know Nicaragua is led by a former Communist who turned quasi-democratic for a while then pivoted to being authoritarian and imprisoning all of his political opponents, although freeing them and flying them to exile in the US was a positive step. We also know Panama has long been helping Iran evade sanctions. Brazil is now helping them to flex their military capabilities by allowing them to dock and retaining strong diplomatic ties with them. This is BS that must be called out. Its nice that Biden and Lula agree on the urgency of climate change but being on friendly terms with an evil regime should not be easily tolerated. In many of these Latin American Socialist-Leftist governments there is distrust and suspicion of Big America and their corporations. Countries like Bolivia have been left in the dust by their distrust of foreign firms mining lithium and other evaporites. Columbia’s new leftist government just decide that new oil and gas development will be banned. Chile’s new left-leaning government just blocked a huge copper mine over climate concerns, even though much of that copper would be used for clean energy.

     Iran is also very problematic in its own sphere of influence. They have long militarily supported Hezbollah in Lebanon, which has been rightly designated a terrorist group. They have militarily supported the brutal Syrian regime. They have long armed the Houthi rebels in Yemen and in just the last few months shipments of arms on ships disguised as fishing boats have been intercepted by US and French authorities. They are probing Israeli drilling platforms with drones and have drone bombed US military facilities in Iraq and Syria and oil facilities in Saudi Arabia. They have bombed Kurdish areas in Iraq. And, of course, they are arming the Russians with drones to bomb Ukraine. They are also imprisoning and executing people protesting their draconian and extremist religious laws. They have obviously and repeatedly lied about their pursuit of nuclear weapons. Responding to stories that the Iranian Revolutionary Guard might be designated a terrorist group by the EU, they threatened to close the straits of Hormuz, which would essentially be a military act. The EU did not push back. But the reality is they are a terrorist group as is their regime. The Russian regime is a terrorist group as well, obviously, whether they are designated as such or not. They repeatedly terrorize civilians with bombs. It doesn’t get any more terrorist than that. The evidence is very strong that Iran is a regime that has no place in the international community. Thus, I would argue that any country that thinks otherwise, including Brazil, should be held to account. It was also found that there are many American parts in the Iranian drones sent to Russia. This is more evidence of sanctions evasion. Part of sanctioning a country is shunning normal relations with them. Now, I realize that Brazil is not party to the sanctions on Russia and Iran, but diplomacy should continue to convince all reasonable countries to stop these fanatics from achieving their nefarious geopolitical goals. Russia says that human rights are Satanism, and that Ukrainians are Nazis. Their crazy TV personalities constantly speak of nuking western countries. They praise our crazy TV personalities like Tucker Carlson and Tulsi Gabbard who are obviously pro-Russia. People cannot speak freely in much of the world.

     One method of sanctions evasion on oil trade has been used for many years by Iran and Venezuela and is now becoming the norm for Russia. That is ships called “ghost tankers” that disguise their ownership and movements. It’s basically routine criminal behavior. According to a Trafigura executive as told to Bloomberg: “Russia’s ghost fleet has expanded to about 400 crude carriers and about 200 oil product carriers.” That represents about 20% of the world’s oil tankers and 7% of the world’s oil product tankers. Russia is also facing higher costs to ship their crude for several reasons. One is that they are using smaller and older tankers (which also increases the chances of spills and accidents). Another is that they are often self-insured since Western insurance companies won’t insure them. More and more transactions are not in US dollars as before. However, they are losing money by being deprived of the competitive advantages of Western insurers and markets. The EU bans/price caps on Russian crude and products are working but much of that crude will still make it to market and frankly the market needs it to meet demand and keep prices low. Russia has recently announced a 500,000 Bbl per day cut in production to influence pricing, but it is not likely to have a long-term effect. The Biden administration called that weaponizing energy and it is just as the G7 price cuts weaponize energy against Russia. It’s not really unexpected but its not that big of a cut either. Russian oil revenue has certainly dropped but has it dropped enough to influence their military ambitions? Mark Finley, a Rice University oil policy expert, points out in the Hart Energy article referenced below that the Russian sanctions were not designed to prevent Russia from selling oil but to decrease their profits on those sales. In that sense, the sanctions have succeeded. In contrast, the sanctions on Iranian oil exports were designed to prevent as much Iranian sales as possible. Those sanctions worked well for the most part, he says, partially because the US was ramping up shale oil production at the time. We still need Russian crude on the market to prevent further price escalations. Thus, it is not the same, but it is having the intended effect in general.   

     There are other beneficiaries to the Russian price caps. Indian refiners, private ones that buy imported oil, not state ones that buy domestic oil, have been profiting handsomely by buying cheap Russian crude, refining it, and then shipping it to be sold on the international market. Indian crude exports have been way up since summer 2022. “We are making refining margins of more than $30 per barrel by processing Russian oil and earning huge profits through exports of refined fuel,” said a private Indian refiner. Buyers include Europe and the U.S. so we are still buying Russian crude, letting the Indians profit rather than the Russians. It is a trade-off for sure and the Indians should appreciate it. India’s neutrality on the Ukraine conflict and its diplomatic friendliness with Russia is also a sore point that should be further addressed. Meanwhile Indian state-run refiners have been facing losses in part due to price caps on Indian fuel sold to Indian consumers. One solution has been for the state refiners to give up market share to the private refiners.

     Not only is India profiting but other countries joining in the refining and shipping profits include the UAE, China, and Greece. China and India are the refiners profiting the most, but the UAE and Greece join them in the shipping profits. Some of the shipping companies are partially owned by Russian companies so a percentage of those profits is making its way back indirectly into the Russian economy. It is thought that the shippers are profiting even better than the refiners. The Russian government is currently considering taxing its oil companies based on the price of Brent crude rather than their own Urals crude since Urals is selling at more than $30 per barrel lower than Brent. This would help increase government revenue. Oil is Russia’s largest source of revenue. Before the invasion of Ukraine, they had great leverage to manipulate the price of both oil and natural gas, which they did when able. Now, they must scrounge around for nefarious means of retaining what profits they can get. There is no doubt the sanctions are working against them. There is also no doubt the sanctions have benefited others: Big Oil, LNG exporters, refiners mainly in India and China, and shippers mainly in the UAE, India, China, Greece, and Russia. Sure, it’s better that these other entities profit than Russia, but it should be considered that they are profiting from sanctions due to a war, or as Biden says – ‘war profiteering.’ It is a fair charge but not one that is likely to lead to much penalty. Temporary windfall taxes on oil and gas profits have been implemented in some EU countries and in the UK. I have heard some of my colleagues in the oil and gas industry complain that this is market manipulation but so are the sanctions from which they have profited. Biden’s threat to quadruple the tax on stock buybacks is one possible American pushback. This is not simply the free market at work. Companies are benefitting at the expense of Russia, a good thing. But they are also benefiting at the expense of consumers, not a good thing.

     Recent reports by investigative journalist Seymour Hersh that Biden and the U.S. planted explosives to bomb the Nord Stream pipeline should be doubted. I’m not saying it’s impossible, but I think it is quite unlikely. I doubt Biden would want to be directly responsible for one of the largest single methane releases in history. His environmentalist advisors would be horrified. People like Tucker Carlson first planted the idea not long after it happened. Hersh’s investigative reporting has always involved uncovered U.S. intelligence deceits. His claims that the narrative of the killing of bin Laden was wrong have never been substantiated. For me, his claims that the UN’s conclusions that Syria had used chemical weapons was a lie concocted by Syrian rebels that the UN adopted is very wrong. The UN was satisfied with the evidence. I remember at the time when commentators on RT America, which a former social media friend of mine used to post, were saying that the UN was lying. At the time, I was thinking, this is bullshit, and why is Russia Today spouting all this anti-American nonsense to American audiences?  I was quite glad when they got banned here after the Ukrainian invasion. However, Russian propaganda still has considerable reach around the world, in socialist countries like Vietnam and Laos, in India and China, in former Soviet republics, and breakaway regions of Russians, or anywhere Russian language is spoken. It is a world of misinformation, disinformation, conspiracy theories and most of all, lies. Zelenskyy is correct that the war in Ukraine is a case of the free world standing up to the unfree invader and that we can’t tolerate it at all. If Russia succeeds, they will go for Moldova and even Poland, as truly sinister Chechen leader Ramzan Kadrov says.

     I was pissed off when I heard that Starlink was stopping the Ukrainian army from using its services, with arrogant loudmouth billionaire Elon Musk wanting to remain neutral. No doubt he has helped the Ukrainians and they are no doubt grateful. He is an American citizen and so he should support bipartisan American policy, or be compelled to do so, by helping Ukraine and not Russia by directly hindering Ukraine. He has far too much money and far too much power and influence. If he wants to help the world, he should serve food to the poor or pick up trash or somehow gain some humility. He should also pay more taxes. As a self-employed contractor who has been struggling the last few years, I pay a much higher percentage of my income in taxes than he does and I am well into the lowest tax bracket, so fuck him and all the other billionaires. America now has over 1000 billionaires. Make them pay their fair share! And wtf is Roger Waters doing sticking up for Putin at the UN? Is he the new Steven Seagal? Although I have enjoyed his music and lyrics over the years, the man has some serious issues with politics and reality. His anti-Israel pro-Palestinian rhetoric was always horrible. It is quite sad to see.

     That whole series of arguments by the so-called realists and socialists who say that NATO expansionism is the cause of Russian aggression are without merit. Nobody has ever attacked Russia and that has never been a real threat or consideration. They are thoroughly full of shit. NATO is clearly a defensive organization and there are obvious very real reasons that they need to be able to defend against Russia since it is the only country in the vicinity that has invaded other countries, they have done so many times, and they have meddled extensively in those countries and used any leverage they can to push their aims. Putin lies directly to the faces of several European leaders. He is never to be trusted and will never be genuine in any peace negotiations. His villainy runs deep. The world would be a better place without him and his Kremlin comrades.          

    

        

References:

Western forces are raiding gunrunners at sea and throwing wrenches into Iran's plans. J. Epstein. Business Insider, Feb. 9, 2023. Western forces are raiding gunrunners at sea and throwing wrenches into Iran's plans (msn.com)

Russian ‘Ghost Tankers’ Stalk Global Oil Markets. Joseph Markman. Hart Energy. February 9, 2023. Russian ‘Ghost Tankers’ Stalk Global Oil Markets | Hart Energy

Indian private refiners profit from cheap Russian crude as state refiners suffer. Deccan Herald. June 1, 2022. Indian private refiners profit from cheap Russian crude as state refiners suffer | Deccan Herald

Oil Shippers Rake In Billions From Russian Oil Trade. Tsvetana Paraskova. OilPrice.com. February 9, 2023. Oil Shippers Rake In Billions From Russian Oil Trade | OilPrice.com

Load Shedding on South Africa’s Power Grid: A Lesson in How to Fail at Grid Management

 

     South Africa just declared its energy crisis to be a national disaster. South African President Cyril Ramaphosa declared a “state of disaster” due to power shortages that are damaging the economy and the society itself. The causes of the crisis, which has been brewing for many years, includes delays in building new power plants, typically coal-fired plants burning South African coal, corruption in coal-supply contracts, and sabotage and over-regulation of renewable energy projects. Ramaphosa noted that farmers, small businesses, water infrastructure, and transport were all being negatively affected. The state power utility Eskom is forcing necessary rolling outages, the worst and longest on record. The power cuts are expected to cut economic growth by 2% this year, keeping annual growth at just 0.3%. By declaring a national disaster, the government can implement emergency procurement procedures with less bureaucracy and oversight, although many doubt it will have much of an effect.

     South Africa’s power energy crisis is simply lack of capacity to meet demand. Coal powers 84.4% of the grid. With 90% of power coming from coal and nuclear there is certainly more than sufficient firm baseload compared to intermittent sources like wind and solar which make up a little more than 5% of the mix. A lack of grid investment and maintenance is another issue that has led to the crisis.

 

    

South African Power Generation by Source and Percentage for 2021. Data Source: Statista.

    

     Reporter Mpho Lakaje from Soweto in Johannesburg notes that food producers have been losing their product due to lack of refrigeration and even mortuary freezers are failing. He also notes that Eskom has to schedule blackouts for up to 12 hours per day. Lungile Mashele noted that it was the 16^th year of load shedding with no end in sight. She also said that the then CEO of Eskom alerted the government back in 1997 that if new capacity is not added then load shedding would begin around 2007, which is what happened. She said the problem needs to be tackled by capable people: engineers, procurement specialists, lawyers, and contractors that are held accountable. It is also likely that the crisis will reflect poorly on the current government in next year’s elections if not enough is done by then to address the problem.

     As of late 2019 the plan for future energy in South Africa was to add coal, hydro, wind, and natural gas and by 2030 replace much of the coal with wind and hydro. However, adding any coal capacity will be difficult with foreign banks declining to support coal projects, even where they are the cheapest source of power. Coal was expected to still make up about 60% of grid power in 2030 but it remains to be seen whether even those modest decarbonization plans will be feasible. Right now, the need is simply for more juice.  

 

References

 

South Africa invokes disaster law to tackle energy crisis. Wendell Roelf and Carien du Plessis. Reuters. February 9, 2023. South Africa invokes disaster law to tackle energy crisis | Reuters.com

 

South Africa’s power grid is collapsing and outages are disrupting the economy. NPR. Moring Edition. February 7, 2023. South Africa's power grid is collapsing and outages are disrupting the economy : NPR

 

South African power generation plan keeps coal in the mix. Alexander Winning. Reuters. October 18, 2019. South African power generation plan keeps coal in the mix | Reuters

 

Distribution of electricity generation in South Africa in 2021, by source. Statista. April 27, 2022. South Africa: power production share by source 2021 | Statista

Advanced Nuclear: An Overview

 

Small Modular Reactors, Power Ship Molten Salt Reactors, and Micro-Reactors: New Nuclear Models Emerging for Mass Deployment in the 2030’s – But Are They Really Affordable?

     Many of us believe it is simply fanciful wishful thinking that wind, solar, and storage can reliably and affordably replace coal and natural gas for grid power. However, there is one source of energy that matches the reliability of fossil generation and that is of course, nuclear. Affordability is a problem with nuclear, especially where safety and regulatory costs are much higher than they need to be. Now, new models are gaining steam that can bypass some of the safety issues and take advantage of manufacturing techniques like modularity. Still, there will be a need for regulatory reforms to get these new designs approved and deployed. As proven with reactors deployed around the world for many decades, nuclear energy is safe. Nuclear has been in operation for decades with only a few disasters that were due to completely fixable human errors and poor reactor designs (Chernobyl) or errors in where they were deployed (Fukushima). Making nuclear cheaper involves cutting unnecessary red tape, perhaps adding more incentives for low emissions intensity baseload or firm power that is reliable and not intermittent, and developing economies of scope and economies of scale, supply chains, and support industries for these new modular models, including domestic (non-Russian) sources of nuclear fuel.

     Concerns and challenges of nuclear beyond safety, cost, and time include dependence on Russia for the more enriched fuel used in 40% of the world’s reactors and almost a quarter of US reactors. This is why the US has not sanctioned Russia’s Rosatom. That is concerning as we know Russia can be unreliable and weaponize energy. New uranium enrichment efforts are underway in the US but will take time. Development of domestic uranium enrichment capacity and complementary nuclear fuel development industries, including mining and milling, is a matter of national and energy security. Another method is to recycle existing nuclear waste. Since nuclear deployment has stagnated in the US over the last 4 decades there will be a need to train more people to do the work if there will be more deployments. The US still makes 20% of its electricity with nuclear and several plants slated to close (often for perceived safety and even ideological reasons) have been given extensions to keep operating.    

 

Small Modular Reactors

 

        The U.S. Nuclear Regulatory Commission (NRC) finally, after six years, issued its final rule to certify NuScale Energy’s small modular reactor (SMR) design. This is the first SMR design to be certified in the US and the 7^th nuclear design overall to be certified. NuScale’s design is an advanced light-water reactor delivered in 50MW modules. NuScale’s power plant design can accommodate up to 12 of the factory-built reactors for up to 600MW of generating capacity. This plant is about one third the size of large reactors. The reactors are passively cooled using convection and gravity, so they require no water, power, or operator actions for cooling. Currently, NuScale is seeking to uprate each module to produce 77MW (924MW for 12). NuScale has worked with the DOE since 2014 to develop these SMRs. A six-module demo project has been up and running at DOE’s Idaho National Laboratory. The first commercial module is expected to be operational by 2029 with full plant operation in 2030. NuScale has 19 signed and active domestic and international agreements to deploy SMR plants in 12 different countries, including Poland, Romania, the Czech Republic, and Jordan, as well as the US. It should be noted that the certification process alone was cumbersome and expensive. According to a Huff Post article referenced below: “The application process alone took NuScale six years, 12,000 pages and more than half a billion dollars. In a lengthy 2021 report, the Nuclear Innovation Alliance, a trade group, called on Congress to reform licensing fees and provide more federal financing for new reactors.”

     Another SMR design has been selected for the first commercial contract in North America, a collaboration between GE Hitachi Nuclear Energy, Ontario Power Generation, SNC-Lavalin and Aecon Group. GE Hitachi will design the reactor, a Darlington SMR BWRX-300 reactor that will generate up to 300 MW of power. This SMR is expected to be completed by the 4^th quarter of 2028 and will likely be the first commercial SMR operational in North America. GE Hitachi notes that “the BWRX-300 is designed to reduce construction and operating costs below other nuclear power generation technologies. It uses a combination of fuel available in operating reactors and does not require high-assay low-enriched uranium. Its design is based on reactor technology already licensed and proven components.” Tennessee Valley Authority is working on preliminary licensing for a possible BWRX-300 deployment in Tennessee. They are working with Ontario Power Generation to get licensing from the U.S. NRC and the Canadian Nuclear Safety Commission.

     Holtec International makes a light water SMR of 160MW where the reactor is buried underground. The life of the reactor is expected to be 80-100 years. Such a long life could also be a selling point when comparing to solar, wind, and even fossil generation, which will not last that long. Holtec’s choice of 160MW as a size is due to its ability to replace a standard boiler in a coal plant, thus repurposing the plant to run on nuclear instead of coal. The SMR-160 can deliver steam at any desired pressure thus utilizing the exiting turbogenerator of the coal plant. Holtec notes that “this approach preserves the jobs associated with the operation and maintenance of the existing plant’s turbogenerator and downstream systems, while creating new, high-paying jobs associated with the SMR-160 nuclear power plant.” They have applied for a patent for this configuration. This is quite an interesting development and can be useful where premature decommissioning of coal plants is occurring or slated to occur due to decarbonization desires or mandates. It can also help the plant remain profitable and not become a stranded asset. India is interested in this technology. The UK has a plan to deploy 32 of the Holtec SMR-160 units for a total output of 5.1 GW. Construction is expected to begin in 2028.  

     Terra Power, backed by Bill Gates, builds a sodium-cooled fast reactor, an SMR that requires high-assay low-enriched uranium (HALEU) for fuel. Their Natrium design features a sodium-cooled fast reactor combined with molten salt energy storage. The reactor output is 345MW and with charged storage added it can produce 500MW for up to 5.5 hours. This gives the plant the ability to respond to a generation fluctuation due to a high penetration of solar and wind on the local grid. Terra Power is currently preparing to begin construction in Spring 2023 of the non-nuclear parts of a demonstration Natrium plant in Wyoming at the site of a coal plant making it the only coal-to-nuclear project being developed in the world, likely the first of many. They do not expect to make power commercially till about 2030.

     X-Energy is developing a high temperature gas reactor that is gas-cooled. The high temperature gas used is helium. They plan to utilize their own developed proprietary fuel: tri-structural isotropic (TRISO) particle fuel. This is a HALEU fuel that they plan to fabricate at their TRISO-X facility at Oak Ridge National Laboratory that has served as a demonstration facility since 2016 of the Company’s patented TRISO fabrication processes. TRISO-X has requested a 40-year license and the NRC presented its proposed 30-month review timeline at the meeting in Oak Ridge on January 25, 2023.

 

Nuclear Power Barges and Reactor Manufacturing at Shipyards and Refineries

 

     Samsung Heavy Industries and compact molten salt reactor (CMSR) developer Seaborg announced a joint venture to develop the CMSR Power Barge, a reactor or bank of reactors on a floating barge with from two to eight 100 MW reactors, or up to 800 MW output. The Seaborg reactors use spent light water reactor fuel with Thorium added as a catalyst. They noted that the Power Barge could be used as a thermal electricity source for industry, a dedicated power source for electrolyzers to produce green hydrogen or ammonia, and/or for saltwater desalinization. The Power Barges are expected to have a lifetime of 24 years. Robert Bryce points out in a Substack article on the power Barge announcement that much of the world’s population lives close to an ocean and can benefit from seaborn nuclear. He also notes: “Shipyards have the production capacity – including their own steel mills and armies of welders – to churn out reactor vessels at the scale needed …” They could do it faster than other suppliers. In a December 2022 article in the Breakthrough Journal – The Future of Nuclear at Sea - the authors elaborate on the suitability of shipyards building nuclear reactors:

 

“Shipyards build ships, of course. But they are more than that; in reality, they are manufacturing centers for all manner of extremely large, complex, and highly regulated items, such as oil drilling platforms, cruise ships, and other marine vessels. In addition to large things, shipyards specialize in constructions that are designed for extremely challenging environments and operations, such as submarines or ice breakers. Modern shipyards already have the professionals and the supply chains in place to deliver safe, reliable, and ready-to-go products at impressively high levels of quality control and assurance.”

 

“There’s no real reason that they couldn’t turn that expertise toward building modular reactors and assemble them into barges and other offshore platforms that could operate as offshore power plants—perhaps even offshore power plants linked directly to hydrogen and synthetic fuel production.”

 

They also note that building reactors at refineries, which also fabricate large metal things, for hydrogen production (refineries use much of the world’s hydrogen currently) is a good idea. The basic idea is to build ‘Gigafactories’ at shipyards and refineries. Globally, there are 280 shipyards. Most are in South Korea, Japan, and China. The authors also point out several reasons why Finland is an ideal place to get ‘shipyard nuclear’ started. It is an interesting and fascinating article – referenced below.  

 

Micro-Reactors

 

     One company already fabricating prototype reactors at a manufacturing facility that makes equipment for refineries is startup Last Energy. These reactors are 20MW air-cooled single loop pressurized water reactors (PWRs), an existing reactor type already on the market, just re-packaged into a different and smaller form. The 75-ton reactor pressure vessels will be buried underground. They plan to deploy 10 of the reactors (200 MW total) in Poland beginning in 2025. Each 20MW reactor is expected to cost $100 million for construction. Last Energy will operate and maintain them. They are taking on the risk of cost overruns. Long-term power purchase contracts are the basis for borrowing the $1 billion needed for Polish project, in line with wind and solar financing models. The Last Energy model involves each reactor module being replaced every six years with a new module pre-loaded with fuel. The old module stays in the ground where its waste is secured within the multiple redundant cooling mechanisms. It cools for years until it is time to decommission. It is a trade-off meant to make the process a little easier on balance.

     The Nuclear Energy Institute defined micro-reactors in a 2019 report as those between 1 and 10 MW in size. Thus, Last Energy’s rector is too big to fit their definition and might be better defined as an SMR. A company called Oklo applied for licensing a 1.5MW non-light water reactor, fast reactor design that uses HALEU fuel from spent fuel nuclear fuel (SNF) which is currently stored as nuclear waste. They’re application in 2020 was denied by the NRC due to security and safety concerns. They re-launched their licensing process in September 2022 and hope to re-apply to the NRC soon.

 

Recycling Nuclear Waste to Reduce Dependence on Russia

 

     As mentioned above, one way to add uranium enrichment capacity in the U.S. is to recycle existing nuclear waste. This has the added advantages of reducing overall nuclear waste and avoiding more mining and processing of uranium ore. It would have been better to build a U.S. nuclear fuel recycling plant years ago, but political headwinds were against it after nuclear fell out of favor.

     Fast reactors like those of Oklo, X-Energy, and Terra Power, are able to deal with impurities that may be present in spent nuclear fuel. The fuel, known as high-assay low-enriched uranium (HALEU) provides better energy density than other nuclear fuels and can cost less. It also enables longer core life and more of the fuel burns up so there is less waste. However, HALEU can only be acquired in the U.S. by down-blending (diluting?) U.S. DOE high-enriched uranium. It was estimated in 2020 that it would take a minimum of seven years to develop fuel cycle infrastructure for HALEU. Oklo’s was the first pilot project to use that down-blended high-enriched uranium. However, as demand builds for HALEU, SNF recycling will have to be ramped up.

     Both Canadian mining company Cameco and Oklo want to begin enriching SNF to make HALEU. Cameco entered into a strategic partnership in late 2022 to acquire Westinghouse, a long-established American nuclear company that has manufactured for about half of global nuclear plants and also is a major nuclear fuels supplier. Oklo has a goal to recycle and enrich the waste from their own reactors ultimately making recycling a less costly option than mining, processing, and enriching new uranium ore supplies. They also hope to establish an alternative to Russia’s closed-loop fuel services that appeal to countries that want nuclear power but do not want to deal with the waste. Russia’s close-loop system can offer the ability to design, build, and even operate a nuclear plant as well as take away the waste. The U.S. currently buys 3 times more Uranium from Russia than it produces so ramping up domestic uranium mining and buying more from countries like Canada is also being pursued. According to the EIA in a 2021 report the U.S. only domestically produces 5% of the uranium it uses. The rest is imported: 35% from Kazakhstan, 15% from Canada, 14% from Australia, 14% from Russia, 7% from Namibia, and 10% from other countries combined. Oklo is aiming for a model where fuel recycling and sales (potentially to competitors like Terra Power) makes up 40% of their business and reactors make up 60%.

 

Affordability

 

     Detractors to nuclear energy, including advanced and SMR designs, point to construction costs and regulatory time. They say it can’t be done fast enough or cheap enough to make a dent in emissions reduction, compared to wind, solar, and storage, including long duration storage like pumped hydro. They do have a point if the past is considered. The Unit 3 reactor at the Vogtle nuclear plant in Georgia began construction in 2009. It is expected to finally be online in April of 2023. That is 14 years later. A plant in Finland took 17 years for the same process and though online in 2022 is still having problems. The Vogtle project was nearly 2.5 times over budget. It was expected to cost $14 billion and ended up costing $34 billion. The South Carolina nuclear project collaboration between Westinghouse and Toshiba was scrapped in 2017, with both companies facing huge losses and Westinghouse filing for bankruptcy. Detractors also cite the high construction costs of advanced nuclear, but these are costs for prototypes, pilots, and the first commercial projects of immature technologies without well-established manufacturing and supply chains. Construction and deployment costs will come way down as these technologies mature. Of course, that will take time, and climate alarmists always argue that we don’t have time.   

     Nuclear has additional safety considerations that renewables and storage don’t have to worry about. If it is deemed cheaper and faster than nuclear to overbuild wind and solar, add battery and other energy storage, including pumped hydro, then why not just do it instead? I think the answer will end up being a combo. If we can hold off on climate alarmism a bit and plan our energy future smartly, we will likely find we need an increase in all those technologies along with decarbonized and efficient natural gas designs that incorporate carbon capture, partial electrification of peak load natural gas plants, blue and green hydrogen, and molten salt, lithium batteries, vanadium flow batteries, and other energy storage technologies. Charging batteries and other energy storage and making green hydrogen will require even more dedicated wind and solar. But for each technology, costs will have to be forecasted and watched closely to avoid overruns and it will need to be determined whether the cost to commercialize them at scale is reasonable compared to alternatives. It will be an all-of-the-above strategy that will still include coal where it is cheap, available, and needed for energy access in developing countries. It will not be strictly natural gas-to-nuclear as Robert Bryce favors, but wind, solar, storage, and upgraded and expanded power grids will also be a big part of the picture. Other technologies like geothermal will play a part as well. Perhaps deeper into the future, the deeper and hotter parts of the planet can be accessed in supercritical geothermal, but that day won’t be soon.

     As mentioned, one thing that can make advanced nuclear attractive in the long term is plant life. If typical plants could last 60-100 years with just routine maintenance, they could outcompete wind and solar in the long term, which last a third or half as long before they need replaced. Wind and solar advocates would likely counter that argument with the immediacy of climate change mitigation that they say wind and solar can offer. That too is debatable.

     Some think that building nuclear plants smaller is one key to the affordability problem, at least on the front end. Large construction projects, not only nuclear ones, have been beset with cost overruns in recent years, often due to poor construction management. Projects involving less construction do not have those problems and modularization, which involves making bulk components in controlled factory settings, can help keep costs down. The large nuclear projects in the U.S. that were mothballed or slow and over cost have also been hampered by the fact that no large nuclear plants have been built for decades so there were new learning curves. Over-regulation has not helped either. Theoretically, small designs are easier to manage and regulate. Modular factory processes are also easier to standardize so that building the next ones of a bank of reactors can benefit from the building of the ones before. This is how it has been done successfully for nuclear submarines and aircraft carriers.  

     Another issue nuclear has faced, especially with just a few large projects, is supply chains. For the most part, there are none. With smaller modularized projects those supply chains can be developed much easier and much faster, especially as new orders arrive to keep them running and growing. Upfront spending and de-risking before engineering, procurement, and construction (EPC) contracts are awarded, are being done more now, after lessons learned from Vogtle. Jigar Shah, head of the DOE’s Loan Program Office noted that they give loans with preferences given to those who have acquired long-term off-take agreements and EPC contractors that believe they can build the plant at cost. They will not lend to a supply chain vendor unless that vendor has many orders ready to go.  

     Solving the world’s energy conundrums is neither easy nor easily agreed upon. Commodity prices and forecasts are always changing and subject to geopolitical risks and glitches. New technologies often experience unexpected problems and costs. Materials, minerals, metals, and labor costs fluctuate. While new tech often makes resource costs drop, resources may become less concentrated, or of a lower grade after high-grade deposits are depleted, which makes costs rise. Thus, the cost picture for each energy resource is always changing. Regulatory red tape seems to affect just about every resource, but is very high with nuclear, mainly due to safety concerns around radioactivity and potential weapons proliferation. Virtually every power generation resource has environmental impacts that must be considered. Weighing all this stuff in comparisons can be daunting. Wind and solar have high upfront costs compared to natural gas which is pay-as-you-go with fuel purchases and use spread over the life of the plants. This offers a net present value advantage. Nuclear has even higher upfront costs than wind and solar but is both a comparable low carbon generation source and a much more reliable one that can supply baseload needs which wind and solar cannot do. It has fuel costs but they are much lower than fossil fuel plants. Thus, with all the buzz about the energy trilemma of security, sustainability, and affordability, it is affordability that is most difficult with nuclear. However, that could and should become much less of a problem as these models mature.

 

Some Basic Data of Selected Advanced Nuclear Designs, Cost Projections, Timing, and Comparisons

References:

More people are talking about nuclear energy as a solution, says Breakthrough Institute’s Nordhaus. CNBC. December 27, 2022. More people are talking about nuclear energy as a solution, says Breakthrough Institute's Nordhaus (cnbc.com)

US Redoubles Efforts to End Dependence on Russian Nuclear Fuel. Jonathan Tirone. Bloomberg. September 29, 2022. US Redoubles Efforts to End Dependence on Russian Nuclear Fuel - Bloomberg

NRC Certifies First U.S. Small Modular Reactor Design. Energy.gov. Office of Nuclear Energy. January 20, 2023. NRC Certifies First U.S. Small Modular Reactor Design | Department of Energy

NuScale Small Modular Reactor. Factsheet. smr-fact-sheet.pdf (nuscalepower.com)

GE Hitachi and 3 partners announce first commercial contract for grid-scale SMR in North America. Stephen Singer. Utility Dive. January 30, 2023. GE Hitachi and 3 partners announce first commercial contract for grid-scale SMR in North America | Utility Dive

Holtec’s SMR-160 Nuclear Reactor Slated to Repurpose Coal-Burning Power Plants into Clean Energy Generators. Holtec International. Press Release, January 10, 2023. Holtec’s SMR-160 Nuclear Reactor Slated to Repurpose Coal-Burning Power Plants into Clean Energy Generators - Holtec International

Holtec Britain Applies to Join UK Government Process for Generic Design Assessment of US-Origin SMR-160 Nuclear Reactor in the United Kingdom. Holtec International. Press Release. December 19, 2022. Holtec Britain Applies to Join UK Government Process for Generic Design Assessment of US-Origin SMR-160 Nuclear Reactor in the United Kingdom - Holtec International

Demonstrating the Natrium Reactor and Integrated Energy System: Factsheet. Terra Power. TP_2022_Natrium_Technology.pdf (terrapower.com)

NRC Begins Public Engagement for TRISO-X Advanced Nuclear Fuel Facility License Application. X-Energy. Press Release. February 1, 2023. NRC Begins Public Engagement for TRISO-X Advanced Nuclear Fuel Facility License Application — X-energy

X-energy is Developing a Pebble Bed Reactor That They Say Can't Melt Down. DOE. Office of Nuclear Energy. January 5, 2021. X-energy is Developing a Pebble Bed Reactor That They Say Can't Melt Down | Department of Energy

Samsung Heavy moves ahead with floating nuclear power barge. Mariska Buitendijk. SWZ Maritime. January 5, 2023. Samsung Heavy moves ahead with floating nuclear power barge (swzmaritime.nl)

Why Shipyards May Be The Future of Fission. Robert Bryce. Substack. January 20, 2023. Why Shipyards May Be The Future of Fission (substack.com)

The Future of Nuclear at Sea. Kirsty Gogan, Eric Ingersoll, and Rauli Partinen. The Breakthrough Institute. Breakthrough Journal No. 18, Fall 2022. Dec. 26, 2022. The Future of Nuclear at Sea | The Breakthrough Institute

Inside The Audacious Plan To Use 10,000 Nuclear Microreactors To Wean The World Off Coal. Christopher Helman. Forbes. February 3, 2023. Inside The Audacious Plan To Use 10,000 Nuclear Microreactors To Wean The World Off Coal (forbes.com)

Oklo Relaunches NRC Licensing Process for Nuclear Microreactor. Sonal Patel. Power Magazine. September 20, 2022. Oklo Relaunches NRC Licensing Process for Nuclear Microreactor (powermag.com)

Exclusive: Why Oklo’s Demonstration of HALEU Could Be Groundbreaking for New Nuclear. Sonal Patel. Power Magazine. February 20, 2020. Exclusive: Why Oklo’s Demonstration of HALEU Could Be Groundbreaking for New Nuclear (powermag.com)

Inside The Race To Tap A Controversial Source Of Carbon-Free Energy: Nuclear Waste. Alexander C. Kaufman. Huff Post. February 6, 2023. Inside The Race To Tap A Controversial Source Of Carbon-Free Energy: Nuclear Waste (msn.com)

The United States imports most of the uranium it uses as fuel. Energy Information Administration. July 7, 2022. Where our uranium comes from - U.S. Energy Information Administration (EIA)

Nuclear Power? Have No Fear – Our Clean Energy Future is Radioactive. Jack Holmes. Esquire. January 25, 2023. Nuclear Power? Have No Fear—Our Clean Energy Future Is Radioactive. (msn.com)

‘Advanced’ Nuclear Reactors: No Climate Cure. Stephanie Cooke. Energy intelligence. February 1, 2023. 'Advanced' Nuclear Reactors: No Climate Cure | Energy Intelligence

Interview: DOE's Jigar Shah on Lending to Nuclear Projects. Jessica Sondgeroth. Energy Intelligence. January 27, 2023. Interview: DOE's Jigar Shah on Lending to Nuclear Projects | Energy Intelligence

 

 

Wind Development Profitability, Deployability, and Environmental Concerns Mount

 

Wind Developer Siemens Gamesa Reports Quarterly Loss Just Below $1 Billion Citing Slow Permitting, Electric Grid Constraints, and Regulatory Uncertainty. Meanwhile Environmental Groups in the U.S. Argue With One Another Whether Offshore Wind Development is Leading to Whale Deaths

 

     These new rather unsettling headlines about wind development are concerning. Siemens Gamesa cited slow permitting, grid constraints, and regulatory uncertainty. These are causing employment destruction and investment constraint, it was noted. They had already faced significant losses in the hundreds of millions due to manufacturing flaws in turbines that caused them to wear out quickly. The consensus seems to be that they scaled up deployment of new turbine designs without enough testing time. One would think that a wind turbine company would be profitable in an industry buoyed by significant direct government subsidization. I am guessing high energy costs in Europe did not help their profits either. The manufacturing flaws will increase service and warranty costs. Other issues negatively impacting wind component manufacturers, especially those in Europe like Siemens Gamesa and Vestas Wind Systems, include high steel prices and supply chain issues that lead to delays. Vestas also reported steep losses. These companies will be raising their prices, making wind energy more expensive.

     Demand for wind is still growing and is expected to continue to grow due to governmental pressures to meet decarbonization targets. However, it appears it will get more expensive. In one sense the deployment of turbines is too slow due to delays, but in another sense, it is happening too fast due to manufacturing flaws not being worked out.

     Environmentalists and wind groups have been complaining that wind deployment is falling behind decarbonization targets, targets that many of us pragmatic energy scholars think are far too ambitious. Unfortunately, these groups have been given a lot of clout in determining the world’s energy future, which in itself is concerning. In a lot of places siting problems and public opposition have been slowing deployment, not only of wind farms but of the transmission lines needed to carry them. The International Energy Agency states that 70-80 GW of offshore wind will need to be deployed annually to 2050 in order to meet net-zero targets. In 2022 just 21.1 GW of offshore wind was deployed. It should perhaps be pointed out that even with that under-deployment to meet targets, costs are rising, supply chains are strained, and manufacturers are experiencing problems and profitability issues.

     Meanwhile an uptick in dead whales appearing on the East Coast has one set of environmentalists blaming wind development and other set of environmentalists denying that is the cause. Nine whales, two sperm whales and seven humpback whales have been found dead in less than two months. The only new industrial or human developments in the area are offshore wind. One set of groups is calling for the industry to slow down and study the issues and get more public input, citing the Marine Mammal Protection Act, while another set, including the Sierra Club, is saying that fishing and vessel strikes could be causing the deaths and that slowing wind development will slow the stemming of climate change impacts. Other groups were more middle ground. The Center of Biological Diversity called for slowing wind development in the area. Incidentally, that group itself is not middle ground at all as I have found them to be one of the more radical and biased groups despite their pragmatic view in this case and I do not think their name fits them – they are not a scientific group as the name appears to suggest, but a radical environmental group. I am wondering how these issues will affect Biden’s plan to establish 30 GW of offshore wind by 2030, which is less than 83 months away from now.

 

References  

Massive green energy company reports nearly $1 billion in losses, calls for 'further governmental action'. Thomas Catenacci. Fox News. February 2, 2023. Massive green energy company reports nearly $1 billion in losses, calls for 'further governmental action' (msn.com)

 

Siemens’ troubles mount on wind turbine flaws. The Star. (Bloomberg). January 24, 2023. Siemens’ troubles mount on wind turbine flaws | The Star

 

Wind energy expansion faces strong headwinds across US, industry report shows. Thomas Catenacci. Fox Business. July 15, 2022. Wind energy expansion faces strong headwinds across US, industry report shows | Fox Business

 

Uptick in dead whales along East Coast sparks intense debate among environmentalists over offshore wind. Thomas Catenacci. Fox News. Feb. 2, 2023. Uptick in dead whales along East Coast sparks intense debate among environmentalists over offshore wind | Fox News

Carbon Capture and Sequestration: What’s Ahead for North America in the 2020’s

 

     Recently. I attended a webinar presented by Todd Bush of Decarbonfuse.com titled Carbon Capture Outlook 2023. He provided a good overview of what’s ahead for North America in CCS and the different drivers that will be important. I am summarizing the webinar here.

     According to analysis from Princeton University using different scenarios the U.S. needs between 0.8 and 2 Gigatons of CO2 to be sequestered, presumably to 2050. The U.S. 45Q tax credits for Carbon capture and sequestration are: $85/ton for geological storage, $180/ton for direct air capture (DAC), and $60/ton for CO2 enhanced oil recovery. There is direct pay for the first 5 years. The credits are transferable. Canada, in comparison has a carbon tax of $50/ton which increases to $130/ton in 2030 – EOR is excluded. These numbers for both countries could change due to political climates, energy security concerns, or new technology.

     Decarbonfuse’s data analysis gives three potential Capex scenarios based on announced projects only, where the highest could see $33 billion in CCS Capex by 2030, although $28-30 billion is more likely. They also have a low scenario where projects are delayed and experience permitting and supply chain bottlenecks, that sees Capex dropping as low as $10 billion. However, their high scenario has Capex up to $13 billion in 2023 alone. They do not include energy related Opex in these analyses, which in some cases can be 25% or more of a project, although they predict 5-25% depending on project. Carbon capture costs vary widely for different types of facilities and by asset for facilities of the same type. They note that about half of hydrogen and natural gas projects would be under $85/ton and most ammonia, ethanol, and cement projects would be under $85/ton.

     They note that 155 CCS projects have been announced for North America through 2022 and a couple more in January 2023. This does not include micro-capture projects for things like buildings and shipping. They also do not include pilot and demonstration projects, only commercial projects. Ethanol, natural gas, and hydrogen will make up the largest number of facilities. They think ammonia, hydrocarbons (much will be LNG facilities), and biofuels can reach 50% CC equipped by 2030. Hydrogen, ethanol, methanol, and cement will be a bit under 50%. I hope I understood that correctly since that seems like a lot to me. As far as spend scenarios, it will depend on constraints which include delays, permit bottlenecks, public opposition (big in Midwest and Wyoming), and supply chain issues. Permit approval times of 18-36 months are expected. As expected, pipeline companies will take on much of the transport side and oil and gas companies will take on much of the sequestration side. Carbon utilization and carbon capture will involve many new and existing companies more specialized in those functions. Most projects announced thus far are in Alberta, the Midwest, the Gulf Coast, the Rockies, and the Permian Basin region.

     Some equipment and materials constraints include steel availability, constrained till mid-2023 nationally and till mid-2024 in the Gulf Coast. Also of limited availability is CO2 compression equipment, heat exchangers, chillers, and pipe. Availability of skilled labor is also a constraint and that will vary by region. Coordination will be required to meet project timelines.

     New business models are being developed. CCS-as-a-service is one possibility. CO2 utilization companies will be integrated into some projects. Standardization is something that will need to be pursued to maximize operational efficiencies, comparison of projects, and shorten learning curves. Modular techniques for manufacturing components will need to be pursued for the same reasons. The goal is to jump over from pilot to scale to commercialization at scale. Community support will be needed as public opposition has been significant in some areas. Cancellation of some projects may occur if costs overrun, if the political climate changes, or if more focus goes to energy security, taking from decarbonization.

     The EPA’s recent approval of a Class II injection well for CO2 sequestration is a good sign that more existing wells will be approved, making sequestration more flexible if more existing Class II wells are approved. These types of wells already inject CO2 for enhanced oil recovery. So far only a couple of Class VI wells have been approved but there are about 20 permits pending and those in Wyoming and North Dakota are expected to be approved soon.

As an addendum there are other market reports predicting the size of the CCS market going forward. The NETL's latest Carbon Transport and Storage Newsletter, (Vol 23, No. 2) notes a market report by MarketsandMarkets that suggests the CCS market will be worth $7.7 billion by 2026 (or $4.9 billion by 2027) with a compound annual growth rate of 15.1%. They also note a lot of uncertainties due to the constraints mentioned above.

 

References:

Webinar. Carbon Capture Outlook. Presented on February 1, 2023. Todd Bush. Decarbonfuse.com

NETL Carbon Transport and Storage Newsletter. Vol 23, No 2. February 1, 2023. 

Risk Assessment, Risk Management, and Risk Perception

 

This is adapted from my 2021 book, Sensible Decarbonization: Regulation, Risk, and Relative Benefits in Different Approaches to Energy Use, Climate Policy, and Environmental Impact

     Risk assessment can be generally defined as “the process of characterizing the potentially adverse consequences of human exposure to an environmental hazard.” Risk management can be defined as “the process by which policy choices are made once the risks have been determined.” A committee of the National Research Council (NRC) in 1983 came up with a four-step process for risk assessment: hazard identification, dose-response assessment, exposure assessment, and risk characterization. The council was established in 1916 to advise the federal government on science and technology.

Hazard identification: The determination of whether a particular chemical is or is not causally linked to particular health effects. Dose-response assessment: The determination of the relation between the magnitude of exposure and the probability of occurrence of the health effects in question. Exposure assessment: The determination of the extent of human exposure before or after application of regulatory controls. Risk characterization: The description of the nature and often the magnitude of human risk, including attendant uncertainty.[1]

     Hazard identification also involves consideration of the nature and strength of the evidence that a substance presents a hazard. Dose-response assessment includes consideration of intensity of exposure, patterns of exposure, and age and lifestyle of those exposed that might affect susceptibility. Often animal responses must be extrapolated to human responses and low-dose responses must be extrapolated to high-dose responses. Exposure assessment also involves characterization of emissions: determining the magnitude and properties of emissions at different points that result in exposure. When emissions can’t be directly measured and analyzed, modeling is used. Modeling is of course prone to more errors. Risk characterization is more or less the final stage of assessment where exposure and response are analyzed together to predict probabilities of specific harms. This should also include the distribution of risk in a population. Risk assessment is what we use to arrive at risk management: “Risk assessment is a set of tools, not an end in itself. The limited resources available should be spent to generate information that helps risk managers to choose the best possible course of action among the available options.”[2] The goal is to move toward quantifying risk better and to not over-rely on qualitative or descriptive risk assessment which is more subjective and more prone to error. Methods like cost-benefit analysis attempt, often inadequately, to quantify risk.

     The ISO 31000 standards define risk management as “the effect of uncertainty on objectives.” Risk management involves the “identification, evaluation, and prioritization of risks. It also involves minimizing risk and monitoring risk. We can see that uncertainty is part of the very definition of risk which suggests that risk is a probability, a predictive process. More specifically it is a probability of certain impacts. Risk is often presented as a set of options. Risks are ranked into a hierarchy of choices prioritized according to threat level.[3]  

     Using the NRC definition, basically, one wants to know what is dangerous, how much of it is dangerous, what is the likelihood of exposure at those levels, and what should be concluded about those risks to inform policy. Dose-response and exposure are very important. We can measure chemicals present in the environment at minute levels in parts per billion or even smaller amounts like parts per trillion in recent times but that does not mean those levels will elicit any biological response at all. If there is no plausible avenue of exposure, then there may be little to no actual risk. Dose-response data is widely available for some pollutants at different doses, but effects of lower doses must be extrapolated for others. Uncertainty and sparseness of data are two problems for risk assessment even though improvements through time are expected. Thus, data is important for risk evaluation. That data should be widespread, applicable and relevant, have good coverage and sufficient in number (not sparse), and be accurate. It should be evaluated with the best science and policy prescriptions and options should consider all costs and benefits in some sort of cost-benefit analysis. Periodic re-assessment of risks can be important. Insurance companies must constantly evaluate data in order to calculate financial risks, weather risks, crime risks, property liability risks, etc. Accurate prediction of these risks allows them to set rates and avoid payouts that could have been prevented with better predictive risk management. “If risks are improperly assessed and prioritized, time can be wasted in dealing with risk of losses that are not likely to occur.”[4]  

     The National Research Council recommended organizational and administrative separation of risk assessment, which is strictly scientific, and risk management, which involves policy decisions based on science. They define risk management as a “decision-making process that entails consideration of political, social, economic, and engineering information with risk-related information to develop, analyze, and compare regulatory options and to select the appropriate regulatory response to a potential chronic health hazard. The selection process necessarily requires the use of value judgments on such issues as the acceptability of risk and the reasonableness of the costs of control.”[5]

     Types of risk include operational risk, market risk, credit risk, asset liability management, natural disaster risk, so-called climate risk which overlaps natural disaster risk, information technology risks like cyberwarfare, and a myriad of health, safety, and environmental risks. Risk communication is a subject that involves communicating risks to the public. Public health and safety agencies are concerned with risk communication. Yale has a climate change communication program that involves communicating the risks of climate change and which researches “public climate change knowledge, attitudes, policy preferences, and behavior, and the underlying psychological, cultural, and political factors that influence them.”[6] They also engage the public and companies, organizations, government, and media. However, they seem to have some significant bias toward climate alarmism. Climate alarmism and the precautionary principle are closely related. As the blogger Riskmonger noted, precaution is uncertainty management and uncertainty management is not risk management. It is risk avoidance. At the other extreme is ignoring risk, which is also not risk management. It is risk acceptance. We need a balanced approach to risk, of course.

 

 

Personal Quantification of Risk Involves Human Psychology and Neurobiology: Risk Perception

     Neuroscientists say that when we are confronted with potential harm, we are hard-wired for a fear-response before our logic kicks in. This is not true in all situations but can and often does affect how people respond to risk. One’s risk response is based on one’s risk perception. Often there is a gap between perceived risk and real risk. The gap can be influenced by our own amygdalar response system which is our ‘fight-flight-freeze’ instinct. It can also be influenced by current events, media portrayals, how the issue is framed, whether we can easily choose to avoid the perceived risk or not, cognitive biases, how well we can control our exposure to the risk, and whether the risk is natural or man-made. We also calculate risk based on our prevailing interpretation of the facts before us. The high-risk of Covid has certainly activated instinctual reactions as it is a real danger. Our prefrontal cortex is involved in our more logical approach to risk which we need to use to override the amygdalar, fight-flight-freeze system, which evolved to protect us from very real imminent threats, which we rarely encounter in modern times compared to past times.

     A great book exploring risk perception, including its cognitive and psychological aspects, is How Risky is It, Really? Why Our Fears Don’t Always Match the Facts, by David Ropeik. There are several risk perception factors. Ropeik notes that we are hardwired to fear first and think second. Often when making decisions about risks we must do so without having all the facts. When that is the case, we use mental shortcuts that include heuristics and biases. We each have a risk response that involves both facts and these mental shortcuts. How we view things often depends on how they are presented to us, especially by those we generally trust. How things are presented is often called “framing.” This is where the media and the extremism of both environmentalists and anti-environmentalists comes into play and is why headlines and narrative control are deemed so important. Those who control the headlines and narratives do the framing. The same data can have quite different effects on risk perception depending on how it is presented and how amenable the audiences are to those presentations. Trust is also an issue that can be manipulated. We can extrapolate that to companies too. If Monsanto and Exxon are regularly depicted as ruthless profit seekers who care little for people that might be affected by their products, then it is easy to distrust them. People also tend to distrust entities and situations in which they have no control or influence. Evidence suggests that perceived lack of control in a traumatic situation leads to higher rates of PTSD. Ropeik also notes that natural risks are tolerated easier than human-caused risks. We worry about man-made pesticides but not about natural pesticides, some of which can be far more dangerous. Genetic engineering is deemed unnatural and thus dangerous. Biolabs that work with pathogens are deemed risky, especially if groups like the Organic Consumers Association present them as having nefarious intentions verging on bioterrorism. New risks are often deemed more dangerous than familiar ones, especially if they are amplified by the media simply by focusing more on them. Risks that affect children or the poor and disadvantaged are deemed more dangerous. If a risk seems unfair, we tend to deem it more dangerous. Another risk perception factor is lack of control. We tend to distrust what we can’t control. This is perhaps why many perceive the risks from industrial activities to be more dangerous than they probably are. Its’s not something over which they can exert any control. If people feel powerless, they are more likely to overstate risks rather than understate risks.[7]

     There is also obvious evidence that risk perception is different for different people, at least for personal risk. Some people, so-called daredevils, thrive on personal risk while others avoid it. Most of us are somewhere in the middle of the spectrum in our approach to both novelty and risk.[8] It is also the case that favoring risk taking or risk aversion can be a function of ideology, education, parental and social training. To some extent we tend to take on the views of those around us. Those views may affect the risk perception gap between real risk and perceived risk in either direction. Strangely, microbial parasites and gut bacteria have also been suggested as affecting our level of risk-taking. The so-called reward system of the brain is also likely to be involved in risky behaviors such as dangerous addictions. As I mentioned above there are also cognitive biases like “loss aversion” where we tend to want to keep what we have (stasis) rather than risk it for something potentially better (dynamism). This can result in what psychologists call the “endowment effect,” where we can overvalue something we have acquired, particularly something we have struggled to acquire, or something involved in our evolutionary fitness. Another cognitive bias is the “negativity bias” whereby we tend to have a bigger bank of negative remembered experiences about things and events that involve uncertainty, so we are predisposed towards pessimism. Adam Thierer notes in his book Permissionless Innovation that “innate pessimism and survival instincts combined with poor risk-analysis skills” influence people to distrust technology to the point of inducing “technopanics.”[9] As mentioned above, the availability bias perpetuated by newsworthy negativity being ever-available, also psychologically primes us for pessimism. Strongly biased websites and news sources that let us scroll an echo-chamber parade of eco-pessimistic stories can put both negativity and availability biases into hyperdrive.  

     Folk wisdom, or folk psychology, also often involves health, safety prevention, preparation, and risk. Common sayings like “to err on the side of caution,” “a stitch in time saves nine,” “better safe than sorry,” and even “if there’s three let it be” regarding poison ivy leaves, are a few of many examples. We have these sayings because way back in time someone figured out the advantages of being prepared and preventing unnecessary harm. It also seems very likely that natural selection would favor preparation and detailed knowledge about dangers. We memorize safety protocols and sayings are a convenient way to memorize. We are wired to survive, often through knowledge about our relationships to the specific environments we encounter. Thus, we quantify risk all the time. However, we do it both rationally and irrationally due to our neurobiological circuits, our logic, our social dispositions, and our psychology. Often the folk wisdom is correct, but it can also be incorrect at times leading to bias and even danger. Most people in a community do not have accurate and detailed knowledge of industrial and technological processes so this makes their risk assessments generally inadequate. It also makes it easier to inflate risks and less often to deflate risks. Adequate risk assessment requires the assessors to be as knowledgeable as possible.

     The irrationality of risk has played out recently with conspiracy theories about the dangers of 5G communications technology, which like 3G and 4G before it, puts out some harmless non-ionizing radiation, well within limits that could cause any damage. Long before the beginning of the rollout, alarmists were warning about the dangers of 5G and even before that the long-term use of cell phones was suspected by many as being potentially carcinogenic. As the rollout began, in some places amidst the beginnings of the coronavirus pandemic, anti-5G activism was stoked in online groups, apparently influenced by Russian trolls, on both the right and left fringes of the political spectrum and culminated in vandalizing and burning new cell towers in many places in Europe and other places.[10] One reason for that was a conspiracy theory that took hold that 5G was somehow spreading the Covid or lowering immunity or even that it was all a plot by Bill Gates and the World Health Organization to infect us so they could vaccinate us, or something to that effect. This is obviously just ignorance and fear. Dr. Eric van Rongen, vice chair at the International Commission on Non‐Ionizing Radiation Protection, which sets the global guidelines for phone makers and telecommunications companies on how much radiation is safe for humans, says those fears are baseless and the dangers of 5G are equivalent to the heat dangers of having a cup of tea every two hours.[11]

     There are people all along the spectrum from being risk tolerant to being risk averse. Daredevils are risk tolerant. Others will decidedly avoid high-risk situations. Norwegian polar explorer Erling Kagge suggests that exposing oneself to risk helps to make life more meaningful and helps one to develop a more mindful presence approach to life. If we habitually avoid risk, we may have more regrets. Risk perception plays a part here too. Kagge notes that one of his heroes, the famed mountain climber Tenzin Norgay, didn’t die on a mountain but died from lung cancer due to smoking. Thus, we may get good at mitigating one kind of risk but fare poorly in mitigating other kinds of risk. Kagge seems to suggest that too much risk avoidance is a kind of laziness that may give us regrets and other kinds of less evident risks.[12]

     A recent article in Undark Magazine unpacks some interesting ideas about risk perception related to the January 6 Capitol riots. The article notes that research has shown that risk perception changes for those that see threats to their status or identity and that it varies according to demographics, particularly for white males who are more willing to take risks to preserve their status or identity. Intense support sometimes verging on fanaticism is given for a president who supports their concerns and elevates their status and identity crises. The article notes research from 1994 led by Paul Slovic that asked 1500 Americans how they perceive different risks. The results showed that white males differed in risk perception from white females and from both non-white males and females. In every threat category white males perceived the risks as smaller and more acceptable than the others. They dubbed the findings “the white male effect.” Subsequent studies have confirmed the effect in America and suggested that differences in cultural identity, socioeconomic security, and different attitudes toward egalitarianism and community are involved. Some have attributed this to white privilege, or more specifically to white male privilege. More recently came the term “white nationalist privilege.” A similar study done in Sweden in 2011 showed no discernible difference between men and women in risk perception and thus no white male effect there. Equality between the sexes is thought to be very good in Sweden. However, they did find that risk perception was significantly higher in Sweden among those with foreign origins and ethnicities. Those non-native Swedes have less privilege and less of a sense of equality in that society than native Swedes. The researchers concluded that the white male effect observed in America was really a subset of what they proposed as the “societal inequality effect.”[13] [14]

     We are wired to detect and respond to threats. Our pre-logical threat circuits can be triggered easily, especially when we are in a hyped-up state. They can also be manipulated by shrewd politicians or activists of any orientation. Human rights activist, lawyer, and author Zach Norris writes about these human tendencies regarding threats and safety and how they are manipulated. He gives a general framework “Us vs. Them” scenario where “they,” the proposed perceived enemy, are typically dehumanized and compared to diseases in terms like “contagions, germs, pollutants, infections.” These are things we must act against to remain safe. He thinks the US under-invested in social welfare and over-invested in punishment. He argues for a care-based model of public safety rather than a fear-based model. I tend to agree to a point.[15]       

---

[1] National Research Council (US) Committee on the Institutional Means for Assessment of Risks to Public Health. Washington (DC): National Academies Press (US); 1983.  Risk Assessment in the Federal Government: Managing the Process. https://www.ncbi.nlm.nih.gov/books/NBK216628/

 [2] Committee on Risk Assessment of Hazardous Air Pollutants. Board on Environmental Studies and Toxicology. Commission on Life Sciences. National Research Council, 1994. Science and Judgement in Risk Assessment. National Academy Press.

 [3] Wikipedia entry – ‘Risk Management.’ Accessed Sept. 2020. https://en.wikipedia.org/wiki/Risk_management

 [4] Ibid.

 [5] National Research Council (US) Committee on the Institutional Means for Assessment of Risks to Public Health. Washington (DC): National Academies Press (US); 1983.  Risk Assessment in the Federal Government: Managing the Process. https://www.ncbi.nlm.nih.gov/books/NBK216628/

 [6] Yale Program on Climate Change Communication. https://climatecommunication.yale.edu/

 [7] Ropeik, David, 2010. How Risky Is It, Really? Why Our Fears Don’t Always Match the Facts. McGraw-Hill.

[8] Gallagher, Winifred, 2011. New: Understanding Our Need for Novelty and Change. Penguin Books.

[9] Thierer, Adam, 2014, 2016. Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom. Mercatus Center at George Mason University.

[10] Satariano, Adam and Alba, Davey, April 11, 2020. Burning Cell Towers, Out of Baseless Fear They Spread the Virus. New York Times. https://www.nytimes.com/2020/04/10/technology/coronavirus-5g-uk.html/

[11] Van Rongen, Dr. Eric (as told to Elle Hardy), June 23, 2020. I'm the scientist who sets the global guidelines on 5G safety. Take it from me: 5G doesn't cause cancer or spread COVID-19. Business Insider. https://www.msn.com/en-us/news/technology/im-the-scientist-who-sets-the-global-guidelines-on-5g-safety-take-it-from-me-5g-doesnt-cause-cancer-or-spread-covid-19/ar-BB15S0Ty

[12] Kagge, Erling, April 16, 2020. Polar explorer Erling Kagge: Why risk makes life meaningful. Big Think. How to be happy, with polar explorer Erling Kagge - Big Think

 [13] Buni, Catherine and  Chemaly, Soraya, January 7, 2020. The Science That Explains Trump’s Grip on White Males. Undark. https://undark.org/2021/01/07/science-trump-grip-white-male-effect/

 [14] Olofsson A, Rashid S. The white (male) effect and risk perception: can equality make a difference? Risk Anal. 2011 Jun;31(6):1016-32. doi: 10.1111/j.1539-6924.2010.01566.x. Epub 2011 Jan 14. PMID: 21232063. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1539-6924.2010.01566.x

 [15] Norris, Zach, January 11, 2021. From Anxiety to Authoritarianism. Yes Magazine. https://www.yesmagazine.org/democracy/2021/01/11/anxiety-authoritarianism-culture-of-care/?fbclid=IwAR0nLaV1hsuR2SgV0CxjWIUY1W7-EI8rOlUnhbLRJn39Cp2_xxBP6dkLFPY