EUROPA i6 MID 2010 LOTUS CONCEPT CAR

This is a concept from South African designer Idries Noah the Lotus Europa i6 which looks a bit like the Elise/ Exige.
The Europa i6 concept study is a mid-engined, rear wheel drive sports car inspired in terms of design by the classic Europa and Elite as well as by the latest Lotus models. The independent designer supports that ideally, the Europa i6 would weigh in at about 2,030 lbs (920 kg) with power coming from a 2.0-liter supercharged inline six-cylinder engine.
In theory, he says that the sports car would sprint from zero to 100 km/h (62mph) in 7 seconds and on to a top speed of 165 mph or 265 km/h. Leaving aside the theoretical technical specs, Idries’ take on a compact mid-engined Lotus sports coupe hits the spot. Too bad it exists only in the digital world.
“I really liked the old classic Europa with the high rear section. It had character. The latest version looks very similar to the Elise/ Exige, not quite Europa. I decided to give it my own take. Inspired by classic Lotus cars, Europa and Elite. Also taking some current Lotus trends into consideration. It’s called the 2010 Europa i6.” Idries Noah said.

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The Green Lawnmower

I have a new, unexpected hobby: mowing the lawn. For our first few years here in Virginia we opted to have a lawn service cut our grass, so my wife and I could focus on other things, including establishing our respective businesses in a new location. When the economy and stock market tanked, this became an obvious source of savings in our monthly budget, complicated by my determination not to buy a gasoline-powered lawn mower. Since our yard is a little too big for either a corded electric mower or a manual push mower to be practical, I focused on finding a suitable rechargeable mower. My experience so far has left me with decidedly mixed feelings about this relatively new technology. Some of these issues look applicable to plug-in electric cars, as well.

It might seem odd that someone with my industry background would shy away from a gas-powered mower. Among other reasons, small engines produce a disproportionate share of local air pollution, even after the implementation a few years ago of the EPA's Phase I rules for small spark-ignition engines. (Phase II and III are coming along in a few years.) I also gained a healthy respect for this fuel and its properties during my stint in Texaco's Los Angeles refinery (now owned by Tesoro) at the beginning of my career. I am a firm believer that the safest place to store gasoline at home is in your car's fuel tank, particularly in a warm climate. Second-best would be in a lockable shed a safe distance from the house. Lacking one of those and concerned mainly about my young and inquisitive child, I concluded that if I couldn't find a satisfactory rechargeable mower I would grit my teeth and continue to pay the lawn service. Happily, it turned out that several manufacturers now offer rechargeable mowers that aren't just toys.

After reading many reviews I chose the Solaris S21HB, made in Canada by Linamar Consumer Products. It is a beast, weighing about 110 lb. with batteries. Several family members remarked that pushing it around our yard would provide a nice alternative to one of my weekly gym workouts. I suspected that would be true even before I acquired my current familiarity with the actual grade of much of our lot. The main reason this machine is so heavy is directly relevant to a periodic topic on this blog: our old friend energy density. The Solaris's two 24V lead-acid batteries contribute about 30 lb. (The only Lithium-ion battery mower I could find, made by Bosch, is not yet sold in the US.) Their combined 40 Amp-hours of storage equate to the energy content of less than 4 ounces of gasoline. Even if it uses its stored energy 3-4 times more efficiently than a gasoline engine, the mower's range is still substantially less than from the typical 1-quart fuel capacity of a gas mower. As a result, I must adapt my lawn mowing to the limitations of my new, green device. Since I can't cut all the grass in one session, I have to split it into two tasks at least 8 hours apart, to allow enough time to recharge the batteries. My alternative is to invest $100 in a second set of batteries, which are currently out of stock.

As much as I enjoy the relatively quiet and odor-free operation of the battery mower, I sometimes find myself envying my neighbor's gas mower and wondering if I made the right choice. While mowing the lawn recently it occurred to me that this situation appears similar to that of owning a plug-in electric car without an onboard backup engine. Battery technology is still not up to providing a driving range comparable to a car powered by liquid fuels at an acceptable cost or weight premium. Buyers of such cars face a choice between adapting their lifestyles to match these limitations or relying on future services such as the on-the-fly battery swapping model envisioned by Better Place. As a consumer, I doubt I'm up for either one. Barring the overnight commercialization of the latest fast-charging battery technology--which would still require truly enormous currents and voltages to deliver as much effective energy in a comparable interval as filling 10 gallons of gasoline--I'll lay odds that my next car will be either a diesel or a conventional hybrid. At this point, like it or not, petroleum remains the best energy carrier we have.

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CAFE Convergence

I would be badly remiss if I didn't comment on yesterday's announcement by President Obama of a comprehensive framework for vehicle fuel economy and greenhouse gas emissions. While I'm not sure I'd go quite as far as one Congressman, who compared it to solving the "energy and economic policy equivalent of a Rubik's Cube", this represents an important step for reducing our oil imports and improving our energy security. At the same time, the corporate average fuel economy standard (CAFE) remains more of a goal and tracking system than a mandate with sharp teeth. By itself, a stricter CAFE won't force Americans to buy different cars, though it will doubtless alter the slate of choices available to them. It's also a little less clear that this measure is quite such a big win on climate policy, as I'll explain, though it does neatly finesse California's emissions-based request for a precedent-setting waiver to effectively set its own CAFE standard. Car companies may not be delighted to have to deliver an average of 35.5 miles per gallon by 2016, but they must be relieved to face one consistent set of rules in all 50 US states.

The most important question to ask about a change of this magnitude is whether it can be accomplished in the required timeframe. In this case, the answer appears straightforward: 35.5 mpg and the accompanying emissions standard of 250 grams of CO2 per mile in 2016 are very close to the 160 g/km average that the European car industry meets today. Of course, it does so with a very different mix of cars from that sold here, with very few trucks and large SUVs. Our new 39 mpg passenger car target equates to around 142 g/km--equal to the current performance of the most efficient European brands, Fiat and Peugeot/Citroen. Europe is also helped greatly by the fact that half the cars sold there are diesels, which get around 1/3 better fuel economy than conventional gasoline cars. As keen as I am on them, I have a hard time imagining that half our new cars will be diesels in seven years--or hybrids, for that matter, considering that hybrids made up less than 3% of our mix last year. Many other technologies can help boost fuel economy, including gasoline direct injection, more energy-efficient transmissions, and more extensive use of turbocharging, a strategy that was widely employed here the first time the CAFE standards started to bite, in the 1980s. All of this costs money, and the US car industry, which stood shoulder-to-shoulder with the President yesterday, estimated an extra $600 per car from this rule, on top of $700 per car from changes already in the works. It's those costs that lead to a more objective assessment of yesterday's announcement.

To gauge the change in CAFE standards as energy or environmental policy, we must know our starting point, the status quo ante. According to the NHTSA CAFE database, the 2008 model year US new car fleet averaged 27 mpg. Compared to that, the average car would save around 890 gallons of gas under the new 2016 standard over 100,000 miles of use. At $1300 per car that works out to $1.46 per avoided gallon on an undiscounted basis. That looks pretty good from a consumer perspective. When expressed in barrels, at $61 it is less of a bargain but still compares favorably with the $79/bbl at which oil futures for 2016 were trading yesterday, though I hasten to remind my readers that futures prices shouldn't be construed as a forecast. After factoring in the likelihood that many cars will last longer than 100,000 miles, the cost trade-off looks even better.

Unfortunately, the news isn't quite as good in emissions terms, because of the thermodynamics of engines and CO2, for which there is most definitely no free lunch. Each gallon of gasoline saved spares just under 20 lb. of CO2 emissions at the tailpipe. That means that our $1300 per vehicle premium versus the status quo is effectively purchasing 8.9 tons of CO2 reductions. That works out to $146/ton, or about ten times the price of emissions permits that the administration and Congress have told us to expect in the same timeframe. Even if you only count the $600 estimated to be directly attributable to yesterday's announcement, the resulting $67/ton of CO2 still makes this a pretty expensive way to reduce emissions.

There's an asterisk on this assessment, however, related to enforcement. I haven't seen any details of what is being proposed in that department, but unless the system of fines in the current CAFE standard is overhauled, too, the cost of missing the target would remain pretty small. When I looked at this last year, it worked out to around $55 per car for each mpg over the annual goal. That adds up when spread out over hundreds of thousands or millions of vehicles, but it could still be lost in the rounding for an industry that even in this depressed year will sell on the order of $250 billion worth of product.

All in all, I regard the new CAFE standard as a positive development, although it doesn't stand on its own. The specifics of how it will be enforced will ultimately determine its success in altering the car-buying habits of Americans. At the same time, it's worth noting that future increments of fuel economy beyond 35.5 mpg will cost much more and save many fewer actual gallons, because of diminishing returns. The same European car industry that has demonstrated that our new standard can be met has estimated that the cost of going from their present level of 160 g/km to the EU's 120 g/km standard--equivalent to 46 mpg--would likely increase vehicle sticker prices by approximately $4,900 per car. When translated into dollars per barrel of oil saved or per ton of CO2 avoided, that looks prohibitively high. The implication is that yesterday's move on CAFE should be our last tweak to fuel economy standards until technology has changed dramatically.

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How Many Miracles?

Over the weekend I was catching up on articles, and one from Technology Review last week caught my attention. It was a brief interview with the new Secretary of Energy, Dr. Chu, covering nuclear power and fuel cells. In the back half, Secretary Chu explained why the DOE has cut funding for fuel cell R&D, suggesting that fuel cell cars were always a long shot, because they required "four miracles" to happen. Although I haven't mentioned fuel cells very frequently here in the last few years, I must say it's hard for me to consider the commercialization of something that I've already driven as requiring quite so many miracles as that. At the same time, I don't trivialize the obstacles that explain why fuel cell cars are still not available in large numbers, despite previous expectations--including my own--that they would be by now.

Dr. Chu helpfully breaks down the challenges facing fuel cells into four categories. Start with his concern about the principal source of hydrogen (H2) today, via extraction from natural gas. This route certainly undermines the "zero emissions" claim often attached to fuel cells. In practice, that means zero tailpipe emissions, but hardly zero emissions overall. Still, it's worth considering what else we could do with the natural gas in question. We could compress it and burn it in a modified internal combustion engine (ICE). T. Boone Pickens is quite fond of that idea, and it's not as foolish as some suggest, since it can displace a lot of petroleum and reduce emissions by 15-20% compared to a conventional car, on a well-to-wheels lifecycle basis. We could also use the Fischer-Tropsch process to convert natural gas to top-quality synthetic diesel at a somewhat smaller emissions savings, because the higher efficiency of a diesel engine is largely offset by the energy lost in fuel synthesis. Or we could produce H2, which as Dr. Chu notes involves throwing away about a third of the original energy in the gas by the time we've compressed the resulting H2. Yet the latter is the only one of these pathways that, despite the high energy price paid in producing H2, affords the opportunity to cut our overall lifecycle vehicle emissions in half, because producing electricity in a fuel cell is inherently so much more efficient than burning a fuel in an internal combustion engine. It's not perfect, but it's far from awful--unless you put the H2 into an ICE--and no miracles at all are required to make the H2.

Miracle number two involves H2 storage, and this looks a bit tougher. I am not keen on carrying around compressed gases at 5,000 or 10,000 psi in the same vehicle with my family, and that is no irrational fear. In my refinery days I saw examples of how much mechanical energy even 2,000 psi held, and I will never trust a Kevlar-wrapped tank enough to be fully comfortable with this option. Moreover, I don't think Dr. Chu is entirely correct that "compressed hydrogen is the best mechanism." ECD, a company that my former employer once invested in, has a technology for storing H2 via chemical absorption in metal hydrides, and you can buy canisters that use their technology today. The advantage of this system is that it doesn't involve high pressure. The disadvantage is that these hydrides are heavy, a drawback shared by the nickel-metal-hydride batteries (same basic technology) used in the Toyota Prius and other non-plug-in hybrids. None of these systems yet stores energy at the equivalent density (and thus driving range) of gasoline, but then neither do Lithium-ion batteries.

The third challenge concerns distribution, and this is a doozy. Transporting H2 in tube-trailers is fine for servicing demonstration refueling stations, but can't be scaled up to handle millions of cars. That may not be necessary, because the "reformers" that extract H2 from natural gas can be built on a scale that fits into a service station dispenser, drawing feedstock from local gas lines and delivering fuel without any need to transport it as H2, other than in the car. Installing such devices in thousands of locations would be a massive undertaking, but frankly the same can be said for the goal of installing E85 pumps at 10% of service stations, compared to about 2000 today. To me, cost-effective H2 distribution is a matter of engineering and economics, not scientific breakthroughs.

That leaves us with the one item on Dr. Chu's list that might qualify as requiring a genuine miracle: bringing the cost of a fuel cell stack down to a level comparable to an internal combustion engine, or at least to a point not so much more expensive as to render a fuel cell car inherently unaffordable. Fuel cells still cost over $1,000/kW--implying that just the fuel cell stack for a real car would cost more than an entire luxury car today. Forecasts that this would fall to anywhere near the roughly $35/kW of today's car engines remain theoretical, relying mostly on learning-curve effects analogized from other industries. Given the current state of the car industry, manufacturers will struggle enough just absorbing the initial high cost of low-volume plug-in hybrid car production, without taking on tens of thousands of dollars in losses per car for vehicles like the Honda FCX Clarity. Absent a breakthrough, an investment like that might truly require a miracle.

Whether making fuel cell cars a practical reality requires four miracles or only one, I have to agree with Dr. Chu's conclusion that their commercialization looks neither imminent nor assured. It's important to recall that hydrogen is merely another energy carrier, like electricity, rather than an energy source like petroleum or biofuels. The smart money today is on battery-electric cars, including plug-in hybrids. In order to beat them an automotive fuel cell stack must cost less than the battery pack required to give drivers the 250-300 mile range they seem to want, because in every other respect that matters a fuel cell vehicle is an electric car. However, we must keep in mind that the smart money is not always right. Cutting back federal R&D on fuel cells to a level that puts a higher priority on other options that can deliver meaningful results sooner seems prudent, as long as we don't abandon this option entirely, or cede our competitive position to others.

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Auto Restructuring Implications

An article in this week's Economist does a good job of explaining the global nature of the restructuring of the automobile industry, and in particular the role that Fiat wishes to play in aligning with the weakest US carmaker, Chrysler, and GM's ailing European arm, centered on Adam Opel GmbH in Germany. Fiat sees a global consolidation coming, driven by the need to rationalize vehicle manufacturing overcapacity. The enthusiasm of the US government for this match-up is driven by factors that go beyond Fiat's apparently providing the only viable option for extracting Chrysler's assets and employment base from Chapter 11, rather than progressing to liquidation. We've heard a lot about Fiat's fuel efficiency technology, with little specificity about what that means, other than the occasional photo of Fiat's cute retro-style 500 model. I believe the US government, with its new focus on climate change, sees the opportunity to transform America's least energy-efficient domestic car line into its greenest. That seems at least partially feasible, though it depends as much on changing Chrysler's US sales mix as on the infusion of technology the carmaker could probably have acquired just as easily from third-party vendors such as Bosch.

A quick review of the March 2009 corporate average fuel economy data on the NHTSA website reveals that for model year 2008, Chrysler had the lowest fleet average of the Big 3 at 25.4 mpg, compared to 26.3 for Ford and 25.8 for GM. Although final sales for the 2009 model year aren't in yet, the gap appears to have widened, with GM and Ford's passenger car lines improving by about 1 mpg, while Chrysler's fell from 29.5 to 28.3 mpg. Although they have all focused heavily on trucks and large SUVs in recent years, GM and Ford also had a better selection of more frugal models for consumers to shift to, when fuel prices spiked last year. Compare that to Fiat's fleet fuel economy for 2007 of roughly 42 mpg, and the appeal of the Fiat/Chrysler transaction for the US administration seems clear.

In fact in the latest report I found, Fiat tied Peugeot/Citroen for the best fuel economy in Europe, although it's not reported in quite those terms. Instead of fuel economy standards, the EU has tailpipe CO2 emission standards. They have been coming down steadily, from the recent voluntary standard of 160 grams CO2 per 100 kilometers to 140 and eventually to a mandated level of 120 g/100 km--equating to an average of 49 mpg. Fiat's 2007 performance on this measure was 141 g/100 km, and GM-Europe came in at 156 (37.9 mpg). So far, so good. But when you look at how these companies achieve these levels of efficiency, it's not so obvious how much of that will be transferable. Start with size. Fiat sells a wide range of cars in Europe, but few of them are as big as the most popular models Chrysler has been selling, like the 300 sedan--a very well-behaved car that I've enjoyed as a rental--Dodge Caravan mini-van, Durango SUV, and Ram trucks. Fiat's line includes a few larger, van-type models like the Doblo and the 26 mpg (combined city/highway, after converting to US gallons) Multipla, but it is strongly skewed towards the compact and sub-compact classes. Does the White House imagine a future Chrysler model range that looks like this?

Next, consider engine technology. The number one fuel efficiency strategy in Europe has been dieselization. I've commented on this periodically, highlighting the excellent performance and near-hybrid fuel economy improvements enabled by the common-rail turbocharged diesels in wide use there. But converting American consumers to diesel still looks like a tall order, other than for brands with a loyal diesel following like VW, or for large pick-up trucks, where it's prized for its towing torque. Diesel fuel is widely available, and Ford and GM could have brought this technology over from Europe--where half their sales are diesels--any time they wanted. I have yet to hear either one announce a diesel passenger car model for the US, and I can only wonder what their consumer research on this topic has told them. (And by the way, recent losses by Toyota and Nissan should put paid to the notion that US carmakers have been uniquely myopic about market trends.)

So what should we and our leaders realistically expect from a marriage between Fiat and Chrysler? First and foremost, we ought to see a leaner company that is more attuned to younger car buyers, exemplified by Fiat's clever "eco-drive" software that monitors driving habits. We're also likely to find a much deeper infusion of European design and fuel economy philosophy than Chrysler received from Daimler-Benz, which currently ranks worst of European makers on their grams CO2/100 km scale. It's not clear whether Fiat could qualify any of its current models for sale in the US faster than it could remake Chrysler's model line, but in any case the end result will probably include a bit of both. However, the hybrid company will still be selling into a US market that until quite recently has chosen acceleration and roominess over gas mileage, hands down. We also can't forget that Fiat left the US market in the 1980s with an abysmal reputation for quality and reliability. How far the ultimate outcome of this deal will go towards delivering on the government's apparent expectation of a new, green Chrysler will depend heavily on consumer preferences, and on whether the folks who have bought the company's distinctive offerings in the past will see its new Italian flair as appealing or off-putting.

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The Non-Tax Tax

When President Obama campaigned in 2007 and 2008, cap & trade was the centerpiece of his strategy on climate change. The latest iteration of cap & trade legislation is being developed by the House Energy and Commerce Committee, within the broader Waxman-Markey Bill. After numerous hearings and comments, the revised bill is expected to be released later this week and put to a committee vote by Memorial Day. In the process, its approach to cap & trade has apparently evolved from an assumption that 100% of the emissions permits would be auctioned, to the current expectation that a large fraction of them would be allocated for some period at no cost to current emitters, particularly in the electric power sector. In some quarters, the potential impact of this change on the federal deficit is being viewed with alarm and treated as tantamount to a tax cut--never mind that the tax being reduced does not yet exist. For that matter, many politicians can't even agree on whether cap & trade constitutes a tax. I'm sympathetic, because while it has many of the same effects and features of a tax, it differs in at least one important respect: the revenue it raises is incidental to achieving its primary purpose.

One key feature of taxation shared by cap & trade is its potential to transfer large sums of money from taxpayers to the government. In that respect, cap & trade fits many people's definition of a tax. Since it would fall heaviest on consumers and productive industries, both of which are reeling from the effects of the current recession, I've argued for deferring its collection until economic growth has resumed. Even then, the more of its proceeds are recycled back to taxpayers in the form of relief on other taxes or simple rebates, the better the chances that it would not undermine a fragile recovery. Granting free allowances to current emitters--a form of temporary grandfathering--merely reduces the amount that would need to be recycled, as well as the risk that large portions would be diverted to other purposes. Although conventional wisdom has it that a similar allocation to the power sector and other industries in the first phase of the European Emissions Trading Scheme resulted in a windfall for utilities, the same result is far from certain here, because the structure of our power sector is different. But whether the value of these permits is captured by industry, government, or no one at all is ultimately immaterial to the real purpose of cap & trade, which is to put a tangible price on the marginal unit of carbon emitted. That's what will alter investment decisions and consumer behavior.

This is where cap & trade differs most from its first cousin, the simple carbon tax. A carbon tax would apply the same price--set by the government--to every ton of CO2 and other greenhouse gases (GHG). Since the US emitted 7.2 billion tons of GHG in 2007, the most recent year for which we have data, a carbon tax wouldn't have to be very high to raise a lot of money--but it also couldn't be so low that it didn't influence behavior. A tax of $20/metric ton of CO2-equivalent would add on average about $0.22 per gallon of gasoline and $0.012/kWh of electricity, while raising nearly $150 billion per year. If it took $100/ton to achieve the desired emissions reductions, that revenue could swell to over $700 billion per year--almost enough to close the budget gap, but also enough to be a serious drag on the economy. Cap & trade could deliver the same marginal cost of carbon, but with a significantly smaller net burden on the economy, by allocating a portion of the allowances at no cost.

The key to making that work would be to ensure that the total number of allowances auctioned and allocated each year created a shortage in the market; that's why you do this, anyway, as a means of shrinking emissions year after year. That shortage is what gives the allowances their value. If you issued exactly as many allowances as the tons of GHG we expected to emit next year, their value would be zero. But you also need to make sure that you don't grandfather so many emissions that no one needs to buy or sell allowances. If everyone can meet the target themselves, allowances would become worthless. So the trick is to give out just enough free allowances--reducing this allocation annually--to avoid creating a shock analogous to an oil price spike, but not so many to any participant or sector that they can opt out of trading and deprive the aftermarket of the liquidity it needs to function properly.

The problem today is that we already have a federal budget built upon the assumption of a certain level of revenue ($646 billion over the next 10 years) from the auctioning of emissions permits from a new system, the enactment of which remains uncertain. Once that revenue is in the budget, even if it has never been collected before, anything that reduces it risks throwing the whole edifice into disarray. This bit of aggressive planning has empowered two powerful constituencies: those who see cap & trade as a massive, and thus undesirable new tax, and those who see any weakening of it as a threat to fiscal stability. I will be watching with great interest as these groups grapple with cap & trade in the weeks ahead.

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Offshore Wind Potential

Last month the Interior Department issued its framework for developing the offshore wind potential of the US Outer Continental Shelf (OCS.) In a speech on Earth Day Interior Secretary Salazar highlighted the enormous opportunity that offshore wind represents, tapping a perpetually renewable resource to provide large increments of low-emission electricity, particularly in proximity to the populous East Coast, where the National Renewable Energy Laboratory of the DOE has apparently identified a million megawatts of developable wind potential. Offshore wind could provide an important segment of the renewable energy growth necessary to reduce US greenhouse gas emissions and achieve the ambitious goals of the proposed federal Renewable Electricity Standard. At the same time, it's essential to put this potential into perspective, particularly if the development of offshore wind and offshore oil and gas resources should conflict in the future. While offshore wind offers a somewhat more reliable supply option than its onshore cousin, its energy contribution is still significantly less than that of the conventional sources it is intended to displace.

In remarks early in April Secretary Salazar suggested that a million MW from offshore wind would dwarf the power currently generated by coal-fired power plants. Last year the US generated just under 2 trillion kilowatt-hours of electricity from coal, from power plants with a combined capacity of 336,000 MW. Generating the same number of kWhs from wind at a typical average capacity factor of 33% would require nearly 700,000 MW of wind capacity. So if we ignored the distinction between baseload power and the intermittent output of wind turbines, we might say that the Secretary only slightly exaggerated the potential of offshore wind, which appears to be on roughly the same order of magnitude as coal. But this comparison becomes more suspect when you break down wind's potential contribution into realistic projects, such as the much-delayed Cape Wind project in Nantucket Sound. Cape Wind would consist of 130 turbines with a total capacity of 420 MW. Replacing coal with offshore wind would require no less than 1,642 offshore projects the size of Cape Wind. To put that in perspective, consider that the UK Crown Estate--roughly equivalent to our Minerals Management Service (MMS)--is currently evaluating 40 bids for projects totaling 25,000 MW, to add to the roughly 1,100 MW of offshore wind currently on line or under construction there. That would lead Europe's offshore wind sector. I'll let you draw your own conclusions about the feasibility of replacing coal power with offshore wind anytime soon.

Since the MMS will administer the new offshore wind leasing program in parallel to its long-standing oil and gas leasing on the OCS, we must trust that they also have a firm handle on the relative energy contribution of these resources and would factor this into any future offshore resource conflicts. Consider Cape Wind, again. The approximately 1.2 billion kWh of electricity its 420 MW should generate annually could displace gas-fired power generation consuming roughly 10 trillion BTUs of natural gas per year. That sounds simply enormous, until you convert it to barrel of oil equivalents (BOE). It works out to about 4600 barrels per day, about what a single well on an offshore oil platform might produce. Compare that to Chevron's new Gulf of Mexico platform, Tahiti, which just began production and is expected to ramp up to 137,000 BOE per day. (Disclosure: I am a Chevron shareholder.) Tahiti apparently cost $2.7 billion to build. Wind farms capable of producing a comparable amount of energy (via displacement of natural gas at a gas turbine heat rate of 8,000 BTU/kWh) would cost somewhere on the order of $25 billion.

Now, these comparisons are somewhat simplified, and I've completely ignored the greenhouse gas emissions from the conventional power plants that offshore wind would displace. However, there's no imaginable cost of carbon that could close the value gap between offshore wind and the energy and economic contribution of offshore oil and gas projects. While I'm not suggesting that offshore wind inherently conflicts with oil & gas, I do think it would be helpful for the administration to temper some of its hyperbole on renewable energy with the kind of pragmatic, numbers-based analysis of which the staffs at both the Interior Department and the Department of Energy are capable. Offshore wind promises to be a useful element of our future energy mix, but it is still a very long way from replacing the primary energy sources upon which we rely today.

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