Tag Archives: ASPO

We Need More People With Cutting-Edge Energy Knowledge!

Richard Ha writes:

Hawai‘i should be sending more people to the Association for the Study of Peak Oil (ASPO) conference. The folks at ASPO are on the leading edge of energy data interpretation. We need more people with cutting -edge energy knowledge.

aspo logo

For example, for several years now ASPO folks have been utilizing Energy Return on Investment (EROI) as a tool to evaluate energy
options.

If HECO had understood the concept and its parameters, it
may not have committed to Aina Koa Pono’s biofuel project so wholeheartedly.

Biofuels, in general, have very low EROI ratios (net energy). It takes a ratioof 3 to 1 just to maintain society’s petroleum infrastructure. Biofuels, except for cane ethanol, are lower than 2 to 1.

If we can’t make money in Hawai‘i now with cane ethanol, what makes us think we can do cellulosic biofuels, which are more costly and more difficult?

Despite spending hundreds of millions of taxpayer dollars, there are zero commercial competitive cellulosic biofuels in production
today. Zero. We wish AKP well, but it should use its own money, not that of the rate payers.

The shale oil and shale gas story is probably only be an interim solution. Aubrey McClendon, the fracking cheerleader of Chesapeake Energy, has been removed as its Chairman and will soon resign as CEO. The ASPO folks have known for several years that shale oil and gas is a bunch of financial smoke and mirrors.

When HECO responded to Consumer Advocate questions about how it justified its pricing, the utility used the Energy Information Agency (EIA) 2012 AEO report’s high-case scenario for its long-term forecast.

But the EIA’s short-term forecast, just a couple of weeks ago, estimates the 2014 price of oil at $101/barrel – while HECO estimates that oil will cost $180/barrel in 2015. The rate payer wouldn’t care about this if they didn’t have to subsidize the biofuels at $200/barrel.

Putting a secret $200/barrel biofuel surcharge on rate payers, and then telling them, “Trust us, this won’t hurt much” – while raising the pay of top executives – stands in sharp contrast to the CEO of Japan Airlines, who insists on being treated exactly like his workers. Watch that short (2:20) video for a very different approach than we are used to. Really interesting.

My Testimony Against Resolution 42-18

Richard Ha writes:

I testified before the County Council against Resolution 42-18. That’s the resolution that asks the Legislature to repeal Act 97, which allows geothermal resource zones in certain land classifications.

This was my testimony:

I think we can make things work to everyone’s satisfaction by amending Act 97, instead of repealing it.

I am testifying as a farmer who has attended five Association for the Study of Peak Oil (ASPO) conferences. Most of the time, I was the only person there from Hawai‘i.

The world has been using two to three times the amount of oil as it had been finding, for 30 years. Oil is a finite resource and there will be consequences. It’s not a matter of if. It is just a matter of when.

More Information can be found at the ASPO website.

A report done by an economic research team of the IMF was presented at the last ASPO conference.

They modeled five declining oil scenarios. They found that under declining oil scenarios of between one and four percent – when oil price exceeds $200 per barrel of oil – it could not be modeled. That would be uncharted waters.

The report said when two of three of the following conditions occur, then all bets are off.

  1. If the minimum amount of oil necessary to maintain infrastructure is not met
  2. If a minimum amount of oil necessary to maintain essential technology is not met
  3. Or if the relationship of supply to demand exceeds 1-1, and the oil price rises faster than supply

If two or more of these issues occur simultaneously, the results could be dramatic or even downright implausible. These words in an economic report are very worrisome, especially for us living out here on an island.

We on the Big Island could be in jeopardy from outside forces. Robert Rapier, an International energy expert, lives right here on the Big Island. I highly recommend that the County Council ask him to give a presentation.

I also recommend that we start to focus on solutions. Just saying no is not enough.

Is HECO Seriously Damaging Its Credibility?

A proposed biofuels project that Hawaiian Electric Company (HECO) supports is going through PUC approval process right now.

HECO’s public relations people say that as a result of this new project going through, the average Hawai‘i rate payer’s electricity bill would increase by only about $1 per month.

But let’s look at that in a little more depth. HECO is seeking approval to pay Aina Koa Pono (AKP) $200/barrel for the biofuel it produces on the Big Island at Ka‘ū, and would pass on any extra cost (beyond what oil actually costs at the time) to its rate payers, both on the Big Island and on O‘ahu.

HECO has kept that $200/barrel price secret – they are still keeping it secret – but the Big Island Community Coalition folks figured out the price, and how the “$1/month rate increase” was determined.

Using the Energy Information Agency’s (EIA) Annual Energy Outlook (AEO-2012), one can see that HECO is using the highest price scenario, which projects an oil price close to $180/barrel in 2015. In the AKP discussion, it was said that the price of oil would exceed the actual price projected at the end of the period.

We can see that the line hits $200/barrel in 2035. Since they assume that oil will be $180 in 2015, they can therefore say that the difference (between the actual and projected price) would be very small: Hence, an increase of only perhaps $1/month for the average rate payer.

However, it follows that if the actual price of oil is much lower than $180/barrel, rate payers will be paying the difference between that amount and $200. What if the actual cost of oil in 2015 is $120/barrel? That would cause rates to go up much more than $1/month – especially for high-power users.

I cannot help but think that HECO is damaging its credibility immensely by pushing this project. HECO is spending hundreds of
thousands of dollars on public relations to convince us that it is trying to lower people’s rates – when, in secret, it appears to be doing exactly the opposite.

By the way, HECO says the hundreds of thousands of dollars it spends on PR comes from its shareholders. How can rate payers tell when HECO is speaking on behalf of its shareholders, and when it’s speaking on behalf of its customers?

This Aina Koa Pono project needs to be rejected because it will make our electricity rates rise. Rising electricity rates act like a giant regressive tax, because as folks who are able to leave get off the grid, those who cannot afford to are left to pay for the grid.

This results in farmers and other business folks having higher operating costs. For everyone else, it takes away discretionary income. And we know that two-thirds of our economy is made up of consumer spending.

There are also problems with the project itself. Fuel has never actually been produced using the process and feedstock that Aina Koa Pono proposes. AKP does not know what it is going to grow. So far, the feedstock it is testing experimentally is white pine. The Micro Dee technology that AKP wants to use is still experimental.

There is also a risk that this process might use more energy than it generates. Generating electricity is generally about boiling water and making steam that turns a turbine. It is cheapest to burn the stuff, boil water and make steam.

But Aina Koa Pono’s proposed process is extremely energy-intensive and expensive: It would make electricity to make microwaves to vaporize the cellulose to get the liquid and then take the pyrolysis oil, refine it to make it burnable, and then haul it down to Keahole in tanker trucks to make steam. Why should the rate payer pay for all that?

Cellulosic biofuels are not yet a cost-effective technology. On the mainland, in the middle of last year, the Environmental Protection Agency drastically decreased its 2011 estimate for cellulosic biofuel from 250 million gallons to a paltry 6 million gallons.

In 2010, cellulosic biofuel companies on the mainland needed to buy their feedstock for $45/ton. But because farmers were earning $100/ton for hay, the biofuel firms received a $45/ton subsidy.

I asked how much AKP expected to pay for feedstock, and the AECOM Technology Corporation consultant said between $55 and $65/ton. The problem there is that Hawai‘i farmers have been earning $200/ton for hay for 10 years now.

There is an agricultural production risk, as well. Palm oil is the only industrial-scale biofuel that can compete with petroleum oil. AKP has 12,000 acres and it says it will produce 18 million gallons of biofuel annually, and another 6 million gallons of drop-in diesel. So it will produce 24 million gallons using 12,000 acres. That is 2,000 gallons per acre, and that is four times the production of palm oil. More likely they would need at least four times as much land, or 48,000 acres. But where?

Consider too that Ka‘ū Sugar relied on natural rainfall, and it was one of the least productive of the sugar companies. There is a drought right now. And at 22 degrees N latitude, the area has less sun energy than the palm oil producers located on the equator.

According to Energy Expert Robert Hirsch, in his book The Impending World Energy Mess, the best model for biofuel production is a circular one, where processing is done in the
center of a field (which does not exceed a radius of 50 miles) consisting of flat land and deep fertile soil with irrigation and lots of sun energy. This situation exists in Central Maui, where Hawaiian Commercial & Sugar Company (HC&S) is located. It explains exactly why HC&S is the sole surviving Hawai‘i sugar plantation.

To compete heads up in the world market would require the best possible combination of production factors. These are not them.

It’s also important to consider that locking ourselves into a 20-year contract now would preclude lower cost alternatives. Geothermal, for example, is the equivalent of oil at $57/barrel. Ocean thermal has the possibility of being significantly lower in price than $200/barrel oil.  LNG is on the radar and so is biomass gasification. Who knows what else would come up in 20 years?

Paul Brewbaker and Carl Bonham, both highly respected Council of Revenue members, have said, very emphatically and for a while now, that low energy cost is critical. We should listen to them.

The International Monetary Fund team modeled different oil supply scenarios and did a presentation at the Association for the Study of Peak Oil (ASPO) conference a month and a half ago. They could not model a constant $200/barrel oil. Those would be uncharted waters; and ones, by the way, that would devastate Hawai‘i’s tourist industry. Why should we start paying $200/barrel for oil in 2015 if we don’t have to?

Five people from Hawai‘i attended this year’s ASPO conference. Notably, Kamehameha Schools sent two high-level people. Next year, Hawai‘i should send 20 people to learn what’s happening with oil prices and energy.

In the meantime, the amount of risk involved in the AKP biofuels proposal is just far too great. In the investment world, reward is generally commensurate with risk. Except for protection from $200/barrel oil in later years, the AKP project would provide little reward for all the risk we rate payers would assume.

This is a very, very bad deal for consumers.

Big Island electricity rates have been 25 percent higher than O‘ahu’s for as long as anyone can remember. This probably adds to the reason why the Big Island has the lowest median family income in the state, as well as the social ills that go with it. We need lower rates, not higher rates!

Although this is not an official Big Island Community Coalition (BICC) communication, I would like to point out that the BICC has been very instrumental in getting lots of people to stand up and say, “Enough is enough.”

The BICC is a bare-bones, grass roots citizen group with some of the most recognizable names on the Big Island on its steering committee: Dave DeLuz Jr., John E K Dill, Rockne Freitas, Michelle Galimba, Richard Ha, Wallace Ishibashi Sr., Ku‘ulei Kealoha Cooper, D. Noelani Kalipi, Ka‘iu Kimura, Robert Lindsey, H M Monty Richards, Marcia Sakai, Kumu Lehua Veincent and William Walter.

What I Gleaned From This Year’s Peak Oil Conference

Richard Ha writes:

I’ve found it takes about a month for me to assess what I learn at Association for the Study of Peak Oil (ASPO) conferences. And it’s been about a month now since I returned from the most recent conference, my fifth one.

As we start a new year, I can say that I am very optimistic about our prospects on the Big Island. Our new County Council is thinking about the whole island, not just East vs. West. The Big Island Community Coalition has shown that people can indeed draw a line in the sand and make a difference on electricity price issues.

This is truly about all of us; not just a few of us. Instead of focusing on the thousand reasons why “No can,” we need to form into communities of people who agree on the one reason why CAN:

For the greater good.

The U.S. shale, gas and oil boom will not last forever. But it does give us some time to position the Big Island to be a better place for future generations. It is about utilizing low cost options, and it is about taking care of our community. Doing these things will make all of us more prosperous.

Navigating a New Energy Reality

Richard Ha writes:

Here in Hawai‘i, Robert Rapier is probably our foremost resource for energy knowledge, and I tell that to as many policy people as I can. He’s a good friend of mine.

Robert rapier

He has the important ability to break down complex issues so the average person understands it. He was the lead speaker on the second day of this year’s Association for the Study of Peak Oil (ASPO) conference.

Robert is fearless. He calls it like it is.

The 2011 ASPO conference video is still current and it makes common sense. In it, Robert talks about why field-grown biofuels are likely not a solution to our energy problems. The video is well worth watching:

Robert Rapier: Navigating a New Energy Reality – Concepts and Principles

Robert has three main tenets.

  1. We must transition from fossil fuel with urgency. For electricity, the Big Island’s best bet is geothermal and biomass-firewood.
  2. We need to develop systems with a much lower fossil fuel dependency. That is why field-grown biofuel crops are such a problem. They depend on fossil fuels so much that their breakeven point moves further away as oil price rise. People who analyze field-grown biofuels call that “the receding horizon.
  3. We must take care of our topsoil.

It sounds simple, but there is a lot of deep thought behind what Robert says.

Read more detail about his three tenets here: Setting the Ethanol Record Straight

Food and energy are intimately intertwined. What solves our electricity problems are biomass and geothermal; both result in stable, low-cost electricity that is not tied to fossil fuel. Low-cost base power for electricity beats high cost electricity every time.

Things may change in the future. But for now we need to remember that proven technology is proven.

Hawaii Contingent at the Peak Oil Conference

Richard Ha writes:

The most important thing about this year’s Association for the Study of Peak Oil (ASPO) conference was that we had a whole Hawai‘i contingent. I believe we made the point that Hawai‘i is serious.

Neil Hannahs, Senior Assets Manager for Kamehameha Schools (KS), is a visionary. Any thought about Kamehameha Schools being a slow-moving institution mired in inertia is not true in this area. In fact, KS is making major changes across a wide front.

I was especially pleased that Giorgio Calderone, Regional Asset Manager for KS, pointed out how impressive the academic rigour of the conference presentations was. I thought so too, and it was good to hear confirmation.

Big Island Community Coalition steering committee member Noe Kalipi is a smart, action-oriented young leader who knows what is going on. I cannot be happier that she made the decision to attend on her own.  Photo

Noe Kalipi and Giorgio Calderone. Not pictured: Jason Jeremiah, Kamehameha Schools Cultural Resource Manager.

I attended the first annual ASPO conference because my farm costs were rising, due to oil. I wanted to learn about oil so we could position our farm for the future. It was a matter of survival.

But by the second ASPO conference, it was apparent that this situation was bigger than me or Hamakua Springs farm. I learned that for the past 30 years, the world had been using two to three times as much oil as it had been finding—and there were going to be consequences.

More than just being talkers, we need to be doers. What can we do?

  1. There are a thousand reasons why no can. We must find the one reason why CAN!
  2. It is about cost! We need to find the lowest-cost, proven technology, environmentally responsible solution to our problem.
  3. It is about all of us—not just a few of us.
  4. The energy our society has available to use is what’s left over after energy is used to obtain the energy in the first place. Another way to phrase this: the net energy left over from the effort to get energy, minus the energy to get our food, equals our lifestyle.
  5. The Big Island Community Coalition’s goal – of lowering the Big Island’s electricity rates so they are lowest in the state – accomplishes our mission. This is the most important thing we can do.

View descriptions of this year’s conference topics.

Best Possible Odds & How To Determine Them

Richard Ha writes:

I just attended my fifth Association for the Study of Peak Oil (ASPO) conference, which was at the University of Texas at Austin. I attend these conferences in order to figure out how to give our farming operation the best possible odds of succeeding in this world of finite resources.

Determining this requires understanding the main drivers in the world energy situation, how it all affects the U.S., and then how it affects Hawai‘i’s unique situation. When we understand that, we can determine how we need to move our farm to be relevant in a rapidly changing future.

Presentations at the ASPO conference are data-driven. None of them are based on any predetermined philosophy. It’s all about adapting to physical change and resisting B.S. Good data and a little bit of common sense keeps everything in its proper perspective.

In one sense, this is like a chess game. There will be winners and losers. The rules of physical science determine how things operate. Warren Buffett once observed that nine women cannot each have a baby in one month.

But unlike in chess, not everything is clear.  As Robert Hirsch said about Saudi Arabian oil reserves on Friday, some of the information is unknowable, and in those situations we must operate on best available information.

This is when we must use common sense. Even small kids know that when you’re in a pasture picking guavas and you hear hoofbeats, you don’t gather and have a meeting. You run!

Stay tuned and I will be writing about what makes sense for us, living out in the middle of the Pacific, and on the Big Island in particular. 

What Happened to $200 Oil?

Richard Ha writes:

Whatever happened to $200 oil?

For the last few years, supply side thinking was the most prevalent way of considering the world’s oil supply. But in this last year,
something changed. Commentators started to ask about the demand side.

Specifically, they started asking, “What happens if demand goes up and prices start to rise – eventually killing demand?” In that scenario, the rising price of oil contains the seed of its own destruction.

In May of this year, Jeff Rubin, who had been the most outspoken expert warning of $200 oil, changed his mind. He calls what is happening “the end of growth.”

Whatever Happened to $200 Oil?
by Jeff Rubin on May 23rd, 2012

Four years ago, when I was still chief economist at CIBC World Markets, I forecast that global economic growth was on pace to send oil prices to $200 a barrel by 2012. In short, the argument was based on a supply-driven analysis that weighed the sources of future oil supply against the prices that would be needed to make the extraction and processing of that oil economically viable…. Read the rest  

If Jeff and many others are right, we are not looking at a rapid climb of the price of oil to $200/barrel. It may not get to that price for 20 years.

And if that’s true, HECO’s request to pay $200 per barrel for Aina Koa Pono’s biofuel will be a tremendous mistake. All that will be
accomplished is a massive transfer of wealth.

This is why I am so pleased that Kamehameha Schools (on the
recommendation of Neil Hannah, Kamehameha’s Director of the Land Assets Division) is sending two senior level management folks to the upcoming Peak Oil conference. Things are moving quickly in the world energy field, and policy makers need to be up on current information.

That HECO is betting on the high side of the 2012 AEO cost curve shows they are not aware that thinking has changed. Had they sent people to past Peak Oil conferences, they would have seen the shift.

Including myself, there are now five people from Hawai‘i going to the ASPO conference. We have the makings of a delegation. Robert Rapier will also be going, too, but I am not counting him because he is a national/international commentator and he will be presenting.

This will be my fifth ASPO conference. I cannot be happier that there are other people from Hawai‘i going, besides myself, and educating themselves on this very important subject.

Plan Ahead: Peak Oil Conference at Univ of Texas Nov. 30

Richard Ha writes:

This year's annual Peak Oil conference is coming up. It's at the University of Texas at Austin from November 30 to December 2, 2012, and I recommend that lots of folks from Hawai‘i attend – especially our future leaders. 

Our changing world energy environment is going to strongly affect Hawai‘i. At this year's conference, there will be a full discussion of natural gas issues in addition to the world oil situation. This information and knowledge will be very beneficial to decision makers in every aspect of Hawai‘i's economy. 

This will be my fifth Peak Oil conference. I was very impressed with how many investment advisers attended the first meeting. They are interested in getting the most current knowledge possible so they can stay ahead of the pack in their field. 

Read more about the upcoming Peak Oil conference.

Peak Oil in the Rear View Mirror; Geothermal in the Headlights

Last week Wally Ishibashi and I gave a presentation to the Hawaii County Council. There’s a video of our talk up now on local channel 52, where it will repeat from time to time.

Wally spoke about the Geothermal Working Group Report we gave to the legislature. I talked about “Peak Oil in the Rear View Mirror,” from the perspective of having been the only person from Hawai‘i to attend four Peak Oil conferences.

On Monday, I gave an essay presentation to the Social Science Association of Hawai‘i, whose members are prominent members of our community. This organization has been in operation since the 1800s.

From Kamehameha School Archives, 1886 January 21 -1892. Bishop becomes a member of the Social Science Association of Honolulu. All Bishop Estate Trustees and the first principal of Kamehameha Schools, William B. Oleson, are members. Members meet monthly to discuss topics concerning the well-being of society.

And yesterday I gave a “Peak Oil in the Rear View Mirror” presentation to the Office of Hawaiian Affairs’ Beneficiary Advocacy and Empowerment (BAE) Committee.

I was interested to note that the Hawaii County Council, the Social Science Association of Hawaii and OHA’s BAE committee were all overwhelmingly in favor of stabilizing electricity rates. It was clear to everyone that we in Hawai‘i are extremely vulnerable, and also so lucky to have a game-changing alternative.

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Hawaii is the world’s most remote population in excess of 500,000 people. Almost everybody and everything that comes to Hawaii comes via ship or airplane using oil as fuel. As isolated as we are, we are vulnerable to the changing nature of oil supply and demand. There is trouble in paradise.

I explained how it was that a banana farmer came to be standing in front of them giving a presentation about energy.

My story started way back when I was 10 years old. I remember Pop talking about impossible situations, and suddenly he would pound the dinner table with his fist, the dishes would bounce, and he would point in the air. “Not no can, CAN!” And at other times: “Get thousand reasons why no can, I only looking for the one reason why can.” He would say, “For every problem, find three solutions …. And then find one more just in case.”

Once he said, “Earthquake coming. You can hear it and see the trees whipping back and forth and see the ground rippling.” He gave a hint: “If you are in the air you won’t fall down. What you going do?”

I said, “Jump in the air.” He said yes, and do a half turn. I asked why.

He said, “Because after a couple of jumps you see everything.”

Lots of lessons in what he told a 10-year-old kid. Nothing is impossible. Plan in advance.

I made my way through high school and applied to the University of Hawai‘i. But I came from small town Hilo, and there were too many places to go, people to see and beers to drink. I flunked out of school.

It was during the Vietnam era, and if you flunked out of school you were drafted. Making the best of the situation, I applied for Officers Candidate School and volunteered to go to Vietnam.

I found myself in the jungle with a hundred other soldiers. It was apparent that if we got in trouble, no one was close enough to help us. The unwritten rule we lived by was that “We all come back, or no one comes back.” I liked that idea and have kept it ever since.

I returned to Hawai‘i and reentered the UH. I wanted to go into business, so I majored in accounting in order to keep score.

Pop asked if I would come and run the family chicken farm. I did, and soon realized that there would be an opportunity growing bananas. Chiquita was growing the banana market and we felt that we could gain significant market share if we moved fast. But, having no money, we needed to be resourceful. So we traded chicken manure for banana keiki.

A little bit at a time we expanded, and after a bunch of transformations, we became the largest banana farm in the state. Then about 20 years ago we purchased 600 acres at Pepe‘ekeo and we got into hydroponic tomato farming.

Approximately seven years ago, we noticed that our farm input costs were rising steadily, and I found out that it was related to rising oil prices. So in 2007, I went to the Association for the Study of Peak Oil (ASPO) conference to learn about oil. What I learned at that first ASPO conference was that the world had been using more oil than it was finding, and that it had been going on for a while.

Screen shot 2012-02-09 at 11.25.05 PM

In addition to using more than we were finding, it was also apparent that the natural decline rate of the world’s cumulative oil fields needed to be accounted for. The International Energy Association (IEA) estimates that this decline rate is around 5 percent annually. This amounts to a natural decline of 4 million gallons per year. We will need to find the equivalent of a Saudi Arabia every two and a half years. Clearly we are not doing that, and will never do that.

At the second ASPO conference I attended, in Denver in 2009, I learned that the concept of Energy Return on Investment (EROI) was becoming more and more relevant. It takes energy to get energy, and the net energy that results is what is available for society to use. In the 1930s, getting 100 barrels of oil out of the ground took the energy in one of those barrels. In 1970, it was 30 to 1 and now it is close to 10-1.

Tar sands is approximately 4 to 1, while some biofuels are a little more than 1 to 1. And, frequently, fossil fuel is used to make biofuels. That causes the break-even point to “recede into the horizon.”

But the EROI for geothermal appears to be around 10 to 1. And its cost won’t rise for 500,000 to a million years.

Screen shot 2012-02-09 at 11.25.25 PM

After the oil shocks of the early 1970s, the cost of oil per barrel was around the mid-$20 per barrel. That lasted for nearly 30 years.

In this graph above, one can see that oil would have cost around $35 per barrel in 2011, had inflation been the only influencer of oil price.

The cost of oil spiked in 2008, contributing to or causing the worst recession in history. In fact the last 10 recessions were related to spiking oil prices.

From late 2008 until mid-2009, the price of oil dropped as demand collapsed for a short time. But demand picked back up and the price of oil has climbed back to $100 per barrel – in a recession.

It is important to note that we in the U.S. use 26 barrels of oil per person per year, while in China each person uses only two barrels per person per year. Whereas we go into a recession when oil costs more than $100 per barrel, China keeps on growing. This is a zero sum game as we move per capita oil usage toward each other.

What might the consequences be as China and the U.S. meet toward the middle at 13 barrels of oil per person?

People are having a tough time right now due to rising energy-related costs. Two thirds of the economy is made up of consumer spending. If the consumer does not have money, he/she cannot spend.

Screen shot 2012-02-09 at 11.25.37 PM

How will we keep the lights on and avoid flickering lights? Eighty percent of electricity needs to be firm, steady power. The other 20 percent can be unsteady and intermittent, like wind and solar. So the largest amount of electricity produced needs to have firm power characteristics.

There are four main alternatives being discussed today.

  1. Oil is worrisome because oil prices will likely keep on rising.
  2. Biofuels is expensive and largely an unproven technology. The EPA changed its estimation of cellulosic biofuel in 2011 from 250 million gallons to just 6.5 million gallons because cellulosic biofuels were not ready for commercial production.
  3. Biomass or firewood is a proven technology. Burn firewood, boil water, make steam, turn a generator – that’s a proven technology. It is limited because you cannot keep on burning the trees; they must be replenished. And it’s not clear where that equilibrium point is. There are also other environmental issues.
  4. That leaves geothermal.

The chain of islands that have drifted over the Pacific hotspot extends all the way up to Alaska. This has been going on for over 85 million years.

It’s estimated that the Big Island, which is over the hot spot now, will be sitting atop that hot spot for 500,000 to a million more years.

Of all the various base power solutions, geothermal is most affordable. Right now it costs around 10 cents per Kilowatt hour to produce electricity using geothermal, while oil at $100 per barrel costs twice as much. The cost of geothermal-produced electricity will stay steady. Allowing for inflation, geothermal generated electricity will stay stable for 500,000 to a million years, while oil price will rise to unprecedented heights in the near future.

Geothermal is proven technology. The first plant in Italy is 100 years old. Iceland uses cheap hydro and geothermal. It uses cheap electricity to convert bauxite to aluminum and sells it competitively on the world market. With the resulting hard currency, it buys the food that it cannot grow.

Iceland is more energy- and food-secure than we are in Hawai‘i. Ormoc City in the Philippines, which has a population similar to the Big Island, produces 700MW of electricity with its geothermal resource, compared to our 30 MW. Ormoc City shares the excess with other islands in the Philippines.

Geothermal is environmentally benign. It is a closed loop system and has a small footprint. A 30 MW geothermal plant sits on maybe 100 acres, while a similarly sized biomass project might take up 10,000 acres.

In addition, geothermal can produce cheap H2 hydrogen when people are sleeping. It is done by running an electric current through water releasing hydrogen and oxygen gas. One can make NH3 ammonia by taking the hydrogen and combining it with nitrogen in the air. That ammonia can be used for agriculture. NH3 ammonia is a better carrier of hydrogen that H2 hydrogen.

The extra H atom makes NH3 one third more energy-dense than H2 hydrogen. It can be shipped at ambient temperature in the propane infrastructure.

The use of geothermal can put future generations in a position to win when the use of hydrogen becomes more mature.

If we use geothermal for most of our base power requirements for electric generation, as oil prices rise we will become more competitive to the rest of the world. And our standard of living will rise relative to the rest of the world.

Then, because two thirds of GDP is made up of consumer spending, our people will have jobs and we will not have to export our most precious of all our resources – our children.

In addition, people will have discretionary income and will be able to support local farmers, and that will help us ensure food security.