Energy Literacy Advocates Newsroom

It is well documented that global warming, through CO2 and other gas emissions, is occurring and is a threat to humankind. Amid concern about this climate change the trafficking of “carbon offsets” has emerged, principally by for-profit companies. The theory is that if an individual or company is unwilling to reduce their own emissions through conservation, they can pay someone else to reduce their “net emissions”.

Reducing “net emissions” falls into 3 categories:
1. Sequestering or absorbing CO2, such as planting trees;
2. Allegedly “using” zero-emissions sources of power, such as wind power;
3. Reducing current sources of emissions, such as methane combustion.

After carefully researching the field of carbon offsets, the inevitable conclusion is that, at best, the concept is flawed but does little damage. At worst, it is a scam that both fleeces consumers and breeds dangerous complacency. The fact is, there is no substitute for conservation—reducing the usage of fossil fuels.

Confusion and Dissembling
To properly assess the global carbon offset industry, we must consider three scenarios:
1. Reducing global warming;
2. Reducing the GROWTH of CO2 emissions;
3. Reducing future Net Gas Emissions (which may or may not reduce global warming).

At present, the world economy is spewing over 27 billion metric tons of CO2 into the atmosphere annually. For global warming to be reduced or stopped, this tonnage must be reduced immediately. But most efforts to reduce CO2 emissions, and carbon offsets in particular, are geared around reducing growth or future emissions, not present emissions.

Example 1: Tree Planting
While a mature tree may absorb a significant amount of CO2, planting a seedling (which is the closest approximation to a legitimate carbon offset programs commission) absorbs a negligible amount of CO2 in the near term. Tree planting, at best, reduces net CO2 emissions at some future date—10-25 years from now depending upon the type of tree and where it is planted. Additionally, while at some future date a seedling- turned-tree may absorb CO2, it is debatable whether that absorption decreases global warming. A recent study showed the dark surfaces of trees absorb sunlight, which potentially increases warming.

Example 2: Wind Power
Wind-generated power does not exacerbate the problem of global warming, but it does not as yet reduce the problem as marketed by brokers of carbon offsets. Only if new wind power farms were used to retire existing fossil fuel power generation, such as coal plants, would they help ameliorate global warming. This has not been the case currently for two reasons: 1) fossil fuel plants must be maintained for the periods when wind power farms are not operating for lack of wind, and, 2) wind power farms to date have only addressed incremental, or increasing, power requirements. Finally, while some states have provided energy credits to wind farms which the wind farms have then sold to carbon offset companies, the money received simply goes into the pocket of the existing wind farm owner. It does not create more wind power, much less reduce global warming.

Lack of Verification and Transparency
So unfortunately, “carbon offset” actions do little, if anything, to reduce global warming. The one and only offset-type project which may reduce global warming are systems that reduce the methane generated by farm animals or landfills.

As we move forward, some key questions need to be answered in order to provide transparency and accountability in the carbon offset market:

• What percentage of the money that the carbon offset company receives actually reaches the project?
• If it does reach the project, is the money crucial for its execution or does it simply increase the return and profits of the owners?
• Are these projects already required by existing laws or regulations?
• Even if the project passes the tests above, how can one quantify its impact upon global warming?

Innocuous or Damaging – Indulgences versus Conservation
Even if the carbon offset industry does little if anything to reduce global warming, the question still arises: So what? What’s the harm? The answer: There is significant harm:
1. The money that goes into promoting and sustaining the carbon offset industry and “green” marketing could be used for true conservation;
2. Carbon offsets breed complacency—it’s the environmental equivalent of ecclesiastical indulgences in the Middle Ages -- go ahead and sin as much as you want as long as you pay the Pope for it!

In the final analysis, there just simply is NO SUBSTITUTE FOR CONSERVATION. The only honest and sure way to make a significant contribution to the reduction of greenhouse gas emissions is to cut our use of fossil fuels through either more energy efficiency or a greater sacrifice of creature comforts, or both.

Robert Stetson
Board Chairman – Energy Literacy Advocates
July 2007

In response to our growing energy supply crisis, Chevron and BioSelect have partnered to develop one of the first large-scale biodiesel production facilities in North America...

Bioselect and Chevron Unveil Fully Operational Biodiesel Plant in Galveston, Texas

BioSelect and Chevron Develop One of the First Large-Scale Biodiesel Production Facilities in North America

SAN RAMON, Calif. and HOUSTON, Texas, May 29, 2007 -- BioSelect Fuels LLC, a division of Standard Renewable Energy LLC, and Chevron Technology Ventures, a division of Chevron USA, unveiled their biodiesel plant in Galveston, Texas today. The plant is one of the first large-scale biodiesel production facilities in North America and is now producing clean-burning biodiesel from renewable resources.

Galveston Bay Biodiesel, LP (GBB) is the initial project of BioSelect Fuels, a Houston-based developer and operator of biodiesel facilities. The facility will initially produce 20 million gallons of biodiesel per year and has the capability to expand operations to produce 110 million gallons per year.

U.S. Senator Kay Bailey Hutchison, U.S. Representatives Ron Paul (14th district of Texas) and Nick Lampson (22nd district of Texas), Galveston Mayor Lyda Ann Thomas and Tobin Harvey, senior advisor with the U.S Department of Energy, christened the facility at a ribbon-cutting ceremony today.

Chevron USA, through its subsidiary, Chevron Technology Ventures, has a 22 percent equity position in GBB. "Chevron's investment is a tangible manifestation of the company's strategy to invest in renewable energy technologies," said Donald Paul, vice president and chief technology officer, Chevron. "Biofuels are playing an increasingly important role in diversifying our nation's energy portfolio. With growing demand, the nation needs all the sources of energy to contribute to supply. Our involvement with BioSelect Galveston will allow us to apply our world-class capabilities in transportation fuel manufacturing and distribution while expanding our knowledge and experience in large-scale biofuels production," said Paul.

"Chevron is setting an example for the energy industry by constant innovation and proactive leadership to create new energy sources, like the added domestic fuel production capacity at BioSelect, which is critical in meeting growing demand," said John Berger, Chairman and CEO of Standard Renewable Energy.

BioSelect Galveston will produce biodiesel from soybeans and other renewable feedstocks. The biodiesel will be sold to the marine, commercial, trucking and industrial markets for use as pure biodiesel or biodiesel blended with off-road or on-road diesel. The facility has multiple transportation options due to its rail, barge and deep water access and is located in the heart of the U.S. energy infrastructure.

BioSelect is targeting aggressive expansion plans across multiple large-scale sites nationwide, with plans for capacity of 470 million annual gallons by 2010.

About Biodiesel:

Biodiesel is a clean-burning, biodegradable and renewable fuel made from a variety of feedstocks. According to the National Biodiesel Board, U.S. biodiesel production more than doubled last year to an estimated 225 million gallons.

The U.S. Department of Energy estimates that biodiesel could account for 10 percent of the U.S. petroleum diesel market by 2015. The U.S. diesel and distillate market was 60 billion gallons in 2005.

Key benefits of biodiesel include:
-- It can be transported through traditional fuel pipelines.
-- Biodiesel can be used in most diesel engines with little or no modification. Many leading automotive manufactures have approved B20 in their commercial, military and government vehicles.
-- Biodiesel has a lubricity improvement over petroleum diesel fuel, leading to extended engine life.
-- Rapidly expanding availability, with over 700 current retail sources.

To its credit, the U.S. Oil Industry acknowledges the fact that we have a global energy supply crisis on our hands that will impose difficult consequences on the global and U.S. economy, especially if we do not act now for significantly greater energy conservation, transportation efficiency, and the development of a supplemental energy source portfolio. This acknowledgement follows the recently published International Energy Agency report, which projects a supply-squeeze hit by 2012. Please read this article and pass it on to everyone you know who is concerned about our national and global economic well-being.

Potential Energy Crunch May Bring Other Fuels to Fore
By BHUSHAN BAHREE, July 16, 2007; Page A2

World oil and gas supplies from conventional sources are unlikely to keep up with rising global demand over the next 25 years, the U.S. petroleum industry says in a draft report of a study commissioned by the government.

In the draft report, oil-industry leaders acknowledge the world will need to develop all the supplemental sources of energy it can -- ranging from biofuels to nuclear power to oil extracted by unconventional means from the oil sands of Canada -- to meet soaring demand. The surge in demand is expected to arise from rapid economic growth in such fast-developing countries as China and India, as well as mounting consumption in the U.S., the world's biggest energy market.

• Tight Times: World oil and natural-gas supplies are unlikely to keep up with rising demand over the next 25 years, the U.S. petroleum industry says in a draft report.
• Needed Alternatives: The world will need supplemental sources like biofuels and nuclear power to meet demand, the report says.
• Price Pressure: The findings suggest high energy prices are likely for decades to come.

The findings suggest that, far from being temporary, high energy prices are likely for decades to come.

"It is a hard truth that the global supply of oil and natural gas from the conventional sources relied upon historically is unlikely to meet projected 50% to 60% growth in demand over the next 25 years," says the draft report, titled "Facing the Hard Truths About Energy."

"In geoeconomic terms, the biggest impact will come from increasing demand for oil and natural gas from developing countries," said the draft report, a copy of which was reviewed by The Wall Street Journal. "This demand may outpace timely development of new supply sources, thereby pressuring prices to rise."

The study, which was requested by U.S. Energy Secretary Samuel Bodman in October 2005, was conducted by the National Petroleum Council, an industry group that advises the secretary.

The conclusions appear to be the first explicit concession by the petroleum industry that it alone can't meet burgeoning global demand for oil, which may rise to as much as 120 million barrels a day by 2030 from about 84 million barrels a day currently, according to some projections. (U.S. gasoline prices are on the rise. See related article.)

These conclusions follow hard on the heels of a medium-term outlook by the Paris-based International Energy Agency this month, which suggested a supply squeeze will hit by 2012. The fact that the American petroleum industry is warning of a crunch could have an even greater impact on the debate over energy policy.

The draft report proposed that the U.S. work not only to increase output of oil, gas and other fuels, but to cut energy use by improving car and truck mileage standards and implementing stricter building and appliance requirements.

"Whether we are effort-constrained or resource-constrained won't become clear until it is too late," said Larry Goldstein, director of the Energy Policy Research Foundation, an industry-funded, nonprofit research organization based in Washington. Policy makers must assume supply constraints, Mr. Goldstein said, declining to comment directly on the study.

The National Petroleum Council has about 175 members, picked by the energy secretary, with extensive participation by the energy industry and other industries and government officials and with help from foreign countries and institutions. The NPC is slated to vote on adopting the draft, which runs more than 450 pages, including annexes, at a meeting Wednesday in Washington to be led by Exxon Mobil Corp. former Chairman and Chief Executive Officer Lee R. Raymond.

Some people who participated in the report declined to comment on the findings until the results were published. Besides Mr. Raymond, leaders of the study included David J. O'Reilly, chairman and chief executive of Chevron Corp.; Andrew Gould, chairman and CEO of Schlumberger Ltd.; and Daniel H. Yergin, chairman of Cambridge Energy Research Associates.

Michael Lynch, president of Strategic Energy and Economic Research, said this is perhaps the first time the NPC, which was founded at President Harry Truman's request in 1946, has taken a global overview. The conclusion seems to be "the situation is serious, but not critical," Mr. Lynch said.

Still, drastically increasing the supply of oil and gas could be difficult. "The oil industry was gutted between 1985 and 2000 because of low prices," said J. Robinson West, chairman of PFC Energy, an industry consulting concern in Washington. "It will be difficult now for it to meaningfully increase its production capacity."

"The fact is there is lots of oil in the world, but the industry and international capital can't reach it," Mr. West said, noting limits imposed on Western companies by holders of oil reserves in the Mideast and elsewhere.

Houston investment banker Matthew Simmons takes a pessimistic view. He believes the world should be preparing for sharply lower oil production. He points out the NPC study didn't squarely address one important issue raised by Mr. Bodman in requesting the study: the point at which global oil production will plateau and then begin to decline, often referred to by the shorthand term "peak oil."

"We should be preparing for a time when, in 10, 15 or 20 years, oil production is likely to be 40 million barrels a day to 60 million barrels a day, not 120 million," he said.

The NPC study noted that total global endowment of fossil fuels appears to be huge, but only a fraction of those estimated volumes can be produced, because of technical constraints. It said the Earth's underground stores of oil were estimated at 13 trillion barrels to 15 trillion barrels.

The International Energy Agency (IEA) released a report today that speaks to the crunch in oil supplies expected over the next five years. This is significant in that this quasi-governmental organization is acknowledging both the strong possibility of short supplies as well as the economic ramifications of such a supply constriction. To learn more read the article here.