This week a study on peak oil by a German military think tank was leaked on the Internet. The document shows that the German government is closely studying the issue of peak oil, and is aware of the potential for serious consequences as oil production declines. The study is reminiscent of the Hirsch Report, commissioned by the U.S. Department of Energy, that warned of the risks posed by peak oil.

Europe's continued reliance on Russian oil and gas supplies may not be secure in the long term, according to the study.

The document warns of the potential for regional shortages, market failures, and a shift in political power toward those capable of exporting oil. This report describes potential outcomes that require planning and preparation. The scenarios outlined in the paper are exactly the kinds of drivers that lead me to advocate for greater regional energy self-sufficiency. The report clearly lays out just how vulnerable Europe will be because of its continuing dependence upon Russia for both oil and gas, and notes that Russia will be in a very strong political bargaining position as a result.

The report can be accessed from the popular German paper Der Spiegel in this story: Bundeswehr-Studie warnt vor dramatischer Ölkrise. The report is so far only available in German, and while Ich spreche ein wenig Deutsch (I speak a little German), I am not fluent enough to capture the essence of the report. (Der Spiegel has summarized the report in English now: Military Study Warns of a Potentially Drastic Oil Crisis).

However, I have a friend who is both fluent in German (his native tongue) and passionate about peak oil outreach. Given a week, I could probably translate the report. My friend (who didn’t want to be identified) did it overnight. Below is his translation of the major points in the report.

Peak Oil

Implications Of Resource Scarcity On (National) Security

Center for German Army Transformation, Group for “Future Studies”

July 2010

1.        Introduction

The focus of the document is on the topic of finite resources, using Peak Oil as an example. The report is part of a series of publications focused on long term (30 years) with the intent to enable the Ministry of Defense to take action early.

In the past, resources have always triggered conflicts, mostly of regional nature. For the future, the authors expect this to become a global problem, as scarcity (mainly of crude oil) will affect everybody.

The authors confirm multiple views on Peak Oil timing and concede that there will be Peak Oil eventually. The study isn’t about positioning the problem on a timeline, but instead about the consequences of a peak. They expect major consequences with a delay of 15-30 years after the peak has hit.

The report refers to the uncertainty of reserve statements mainly in OPEC countries based on the quota allocation method within OPEC but also refers to the possibility of better extraction technologies.

They suggest that it has become urgent to understand those consequences of an eventual peak now in order to have enough time to adapt.

2.        The Importance of Oil

2.1       Oil as a driver of globalization

95% of all industrial outputs is dependent on oil, in fuels, as a chemical base for polymer production etc. Oil has become a key driver of modern lifestyle and globalization.

Substantial oil price increases poses a systemic risk, not just for obvious things like transportation, but equally for other subsystems.

Thus, internationally, but equally nationally, there is a vital interest in securing access to oil, which is currently possible on world spot markets, with OPEC being cooperative due to a mutual dependency between key actors (and a massive presence of the U.S military in the gulf region).

Yet on the other hand, regional conflicts can always at least partially be attributed to resources, such as in the Caucasus region, the Middle East or in Nigeria, or they fuel conflicts due to the wealth they create (such as in Africa).

The report sees – within a timeframe until the year 2040 – a changed international security layout based on new risks (including transport risks for fuels) and new roles of actors in a possible conflict around the distribution of increasingly scarce resources.

2.2       German energy security

The term is defined narrowly as “reliable energy supply”, and then extended to include environmental objectives, technology transformation of societies, planning for energy demand and the long-term planning of a national strategy, tied in with international organizations

This expansion of the view is seen as required based on the globalization of energy markets. However, the report then narrows down the scope again to the possible risk from a supply shock, focusing on the key suppliers of oil: Russia, Norway and the U.K. It is noted that both European partners are already past their peak and that Germany is increasingly dependent on Russia, which currently is reliable but not necessarily so in the long term. Given the expected decline in German energy consumption, the Russian share will likely be 40% by 2025, with the Middle East, Africa and sources around the Caspian Sea making up for the increasing gap from declining European production.

3.        Possible Scenarios After Global Peak Oil

This chapter looks at gradual changes (3.1.) and the risk of disruptive changes (3.2) past a certain tipping point.

3.1       General interdependencies driven by Peak Oil

3.1.1      Oil as a deciding factor in international relationships
With increasing scarcity, producers are increasingly in an advantageous position, both from high revenues and access to cheaper oil when compared to spot market prices. This partly reverts the trend to free oil markets which took place after the ’70s shocks, and gives those countries more control over the supply chain, with a risk of monopolies and nationalizations, and of “political pricing.”

Further, oil producers use increasing amounts of their production internally at lower prices, which increases domestic consumption and inefficiencies, accelerating the problem. [The authors miss out on the fact that high oil prices also bring more wealth to the country which AGAIN increases resource consumption].

The report then looks at increasing “strategic” moves by key actors including the Chinese CNPC (China National Petroleum Corporation), which tries to grab the sources that are still available (particularly in Asia and Africa), but often at relatively unattractive conditions.

The focus of risks is expected in the “strategic ellipse” region (a term used for the region East of Europe reaching from Saudi Arabia in the South to Russia and former Soviet Union countries in the North), because a majority of oil reserves are located in this area.

Overall, the authors expect a reduction of “free market” mechanisms in oil trade, and a rise in more protectionism, exchange deals, and political alliances between suppliers and customers, which could lead to significant geopolitical shifts. Equally, the authors expect this interdependency to shape foreign affairs of oil importers, making them more tolerant towards rogue behavior of suppliers out of sheer need.

Overall, higher volatility and loss of trust are seen as possible outcomes in a world where oil supplies are limited, increasing the need for “oil related diplomacy” and thus increasing risks for moral hazard among all actors, which in turn decreases overall global supply security.

The report then refers to already existing actions of the German government to tie close economic relationships with energy suppliers, and to the tendency of consuming countries to reduce oil dependency, trying to steer clear of risks of future supply shocks.

The Middle East is identified as a very dangerous region with high external involvement from many players and thus a very unstable overall situation.

Overall, the report expects a reduction of the importance of “Western values” related to democracy, and human rights in the context of politically motivated alliances, which increasingly are driven by emerging economies such as China – likely leading to double standards. Emerging economies are equally expected to receive higher recognition in international organizations, particularly those with strength in resources (such as Russia).

3.1.2      New security risks based on additional/alternative energy resources
New conflicts are potentially arising from oil exploration in international or disputed ocean waters, where multiple issues arise, particularly around the arctic circle, with further geopolitical risks for conflict.

Also, the shift to natural gas is reviewed as an extension of the “oil age”, because it might be able to replace crude oil as a bridging source until new solutions are found. The risks for problems from transporting gas (pipelines) and the related issues (as seen between Russia and its neighbors during the past years) are highlighted.

Equally, nuclear power as a potential source is highlighted – emphasizing the risk for safety and the proliferation of nuclear technology. This would also require an increasing shift towards electricity.

Equally, the competition between biofuel and food production is highlighted, showing the limits of biofuel outputs to compensate for reductions in oil availability, and also showing risks for water supply and soil degradation from excessive use.

Overall, the authors see a trend to increase the energy autonomy of entire regions from external supplies, both in the ability to generate alternative fuels (from biofuels and coal), but particularly in electricity generation.

3.1.3      A shift in roles between private and public actors
Based on the increasing importance of oil, governments are becoming more relevant in securing the benefits of oil, both on the supply and on the demand side. This puts a higher emphasis on political negotiations and deals, and increases the risks for nationalizations of resources and key exploration activities.

Exploration licenses are seen as a key area where bidding wars (including non-financial commitments) might emerge. Equally, increasing pressure to renegotiate or revoke already existing licenses might emerge. Ultimately, each country will try to secure sufficient oil to keep its standard of living.

On the other hand, private enterprises are seen on the rise in protecting infrastructure and ensuring production and transportation security in less developed regions, particularly if weaker countries become unable to keep their own services up.

The dependency on oil-related infrastructure (pipelines, refineries, harbors, key pathways on oceans) will increase, and thus the risk. Damaging infrastructure through hostile acts (sabotage, war) might become an attractive target for groups or countries with a tendency to use violence. The same is expected for electricity and natural gas-related infrastructure – they all might require higher protection.

Generally, the focus of risks is expected in the region which the authors consider the “strategic ellipse” (a term used for the region East of Europe reaching from Saudi Arabia in the South to Russia and former Soviet Union countries in the North), because a majority of oil reserves are located in this area.

3.1.4      Economical and political crises as a consequence of the transition to “post-fossil” societies
A number of risks of higher oil prices are seen for modern economies, particularly in transportation. Security risks are seen in resulting systemic crises.

A first direct consequence of higher oil prices and lower availability of fossil fuels is a possible reduction in transportation capacity, equally in individual transportation and in freight forwarding. This might lead to another “mobility crisis” for societies that heavily depend on cars and trucks.

Higher cost in commercial transportation markets might severely affect current supply chains, and no alternatives are in sight (electric trucks don’t exist yet). Particularly food might become a critical issue for countries that are a) highly dependent on imports and b) are susceptible to price-increases of food products, particularly affecting Africa, parts of Asia and Latin America, and the Middle East.

High oil prices would further affect almost all aspects of society, as it will also influence the cost of chemicals and all products derived from them, which might substantially alter the nature of value chains and make certain things uneconomical – ultimately leading to higher unemployment during a transformational phase away from an oil based economy. This might particularly affect the German car industry.

Limits in availability might also strengthen regulatory efforts, encourage the allocation of energy (oil) by rationing schemes and possible other actions limiting free markets.

Additionally, the changes and likely reduction in standard of living might render societies less stable and make them more attracted to extremist political positions and even trigger changes in government systems, as trust into key actors in politics will diminish. This might be a particular risk for the relatively young democratic countries in Eastern Europe.

3.1.5      More selective intervention – key actors overwhelmed
Overall, more expensive transportation and increasing problems “at home” might reduce the ability of larger countries to intervene internationally (politically and/or with military action), and also lower the readiness to provide help to poorer countries. The focus will be more on a country’s egotistic (energy) interest and not so much on an ideal of transferring Western values. The gap will likely not be filled by NGOs, as they will be affected by similar limits.

Overall, international institutions will be weakened, as they will have less resources to provide help and support, and it becomes equally possible that help will be attached to direct (energy) needs of the donors.

3.2      Systemic risks after reaching a “tipping point”

In addition to the gradual risks, there might be risks of non-linear events, where a reduction of economic output based on Peak Oil might affect market-driven economies in a way that they stop functioning altogether, leaving the range of a relatively steady downward trajectory.

Such a scenario could pan out by an initially slow decline of trade and economic activity, combined with higher stress on government budgets from lower tax income, higher social cost and growing investment into alternative technologies.

Investment will decline and debt service will be challenged, leading to a crash in financial markets, accompanied by a loss of trust into currencies and a break-up of value and supply chains – because trade is no longer possible. This would in turn lead to the collapse of economies, mass unemployment, government defaults and infrastructure breakdowns, ultimately followed by famines and total system collapse.

4.        Challenges for Germany

4.1      Risk of new dependencies for Germany

Oil as a new factor of global power would create significant dependencies for Germany, and in order to avoid supply issues, strong ties with suppliers are a must, but equally a diversification of supply relationships, taking into account that a supplier might intentionally reduce capacity to accomplish political objectives.

Among the key supplier countries is Russia (supplying 35% of German oil imports), where reliability risks are prevalent, given past experience. Natural gas, as a possible temporary substitute, bears the same risk (37% come from Russia). Thus, a diversification becomes essential.

4.2      Focus of politics on supply relationships

Germany needs strong and reliable ties to Russia and other Caspian Sea countries. This might create some challenges in international relations, particularly with smaller Eastern European countries [like Poland]. Thus, intensifying relationships to the Middle East might be equally relevant. However, all those relationships have an inherent risk of being instruments in conflicts, which puts a certain limit on treating all foreign partners the same.

4.3      More pragmatic foreign policy

The need to mitigate supply risks might require some compromises on foreign affairs topics (such as human rights). Equally, more active diplomatic efforts will be required with a focus of energy security in mind. This is more difficult given Germany’s reluctance to engage in political power play due to its history, but needs to be tackled in order to deal with the challenges ahead. The authors don’t want to encourage military solutions, but suggest a strong preventive development of political and diplomatic initiatives to tackle the problem.

4.4      Importance and freedom of industrial nations reduced

All industrial nations that depend on energy imports will become more dependent on new partners, both in emerging economies and supplier countries. This requires a new focus in foreign affairs, sometimes giving up standards in negotiations with countries that have different cultures and political systems.

4.5      Help in stabilizing supplier countries at risk

Some supplier countries (and surrounding regions) might be destabilized by the force of higher resource prices. This is an area where Germany needs to help by providing support for nation building and conflict resolution on the national and international level. This is in conflict with the lower economic power likely to result from Peak Oil, which might make interventions less likely and requires new approaches of “stabilization with lower effort.”

4.6      Growing conflict potential concerning the Arctic Circle

Germany might have to take positions in case of an upcoming conflict regarding resources in the Arctic Circle, where multiple countries (including Russia) have open claims for accessing oil and gas fields. This requires further research.

4.7      Nuclear technology proliferation

The risk for nuclear technology proliferation and thus more countries with the potential for nuclear weapons (and the risk for terrorists having access to nuclear material) is growing due to the proliferation of nuclear technology for energy generation. Equally, risks for terrorist attacks and accidents on German soil are rising. Both scenarios require more surveillance, intelligence and preventive action.

4.8      Higher conflict potential regarding critical infrastructure

Energy delivery infrastructure for all sources including electricity will have a higher importance in an oil constrained world, thus, securing its reliability, security and availability becomes mission-critical. International cooperation is needed to secure large international supply paths (pipelines, sea routes).

4.9      Larger “energy regions” change international alliances

The expectation of stronger connections between suppliers and consumers across continents creates different settings for current international alliances and security risks. DESERTEC (a large power production system in Northern Africa based on CSP) would require different settings even for military strategies.

4.10   Peak Oil for armed forces

Armed forces would also be significantly affected by fossil fuel limits, as they are very dependent on oil products. Significant investments in alternative energy procurement technologies (biofuels, coal-to-liquids – Fischer-Tropsch) and applications (electric and hybrid vehicles) would be required, with long transition times. Further, local energy-independence of stationary troop infrastructure (like military bases) using more renewable sources would be beneficial. Long term objective would be to fully convert Germany’s armed forces to only use renewable energy sources by 2100.

4.11   Crude Oil as a systemic risk

For scenarios which end with a complete destabilization of societies, Germany is at a significant risk given its strong participation in a globalized economy. Being still able to act requires a number of basic infrastructures to keep functioning, both for the country and its armed forces. Work is required to look into redundancy, high-resilience of infrastructure and local self-organization approaches.

5.        Summary

The report sees significant risks arising from an unavoidable peak in oil production, which go beyond gradual shifts in energy systems and economies. This will likely lead to economic change and new geopolitical risks that affect much more than just what we can anticipate. The overall ability to describe exact outcomes is very limited, as many scenarios are possible, and further research is required.

Overall, more emphasis needs to be put on understanding and shaping international relationships in respect to energy security, anticipating and integrating the ongoing shift to different players in a resource-constrained world.

In any case, Germany has to identify and implement alternatives to the current transportation technologies that require oil, and put a similar emphasis on avoiding other dependencies, for example concerning rare earths.

For armed forces, Peak Oil creates significant risks, both from a mobility standpoint as well as from dependencies on other societal services. Understanding those risks requires further analysis and likely a very different approach in the future.

In general, more preparation is required for society and army to make sure that problems are recognized and solutions are actively implemented.

Global economic recession drove energy consumption lower in 2009 — the first such decline since 1982. Take a look at the world’s energy consumption as a factor of renewable and non-renewable energy resources, courtesy of our friends at the Travel Insurance Blog.

Click image for full-sized version

Source: Travel Insurance Blog

Europe's largest wind farm, with 140 turbines, operated at less than a quarter of its capacity in 2009.

Researcher says that government subsidies are to blame.

More than half of Britain’s wind farms are operating at less than 25 percent capacity because they’re installed in areas without a continuous breeze, according to an academic study reported by the Daily Mail.

The study was based on official data provided by energy regulator Ofgem.

The worst locations cited in the study were a 9-turbine wind farm at Blyth Harbour in Northumberland, northern England, which managed to reach only 4.9 percent of its capacity, and a 4-turbine operation at Chelker reservoir in North Yorkshire operating at 5.3 percent capacity.

More than $400,000 a year can be earned in subsidies from one turbine operating at 30%.

Europe’s largest wind farm, located near Glasgow, ran at less than 25 percent capacity, according to research of the data from 2009.

The analysis was carried out by Michael Jefferson, a professor of international business and sustainability at the London Metropolitan Business School.

Jefferson placed the blame squarely on government subsidies, which he says encourage firms to site their operations badly because of their rush to take advantage of financial incentives. British consumers currently pay an extra £1 billion ($1.56 billion) per year on their fuel bills in order to subsidize the government’s push toward it’s renewable energy goals.

“There is a political motivation to drive non-fossil fuel energy, which I very much respect, but we need more focus,” Jefferson said. He suggests that stimulus funds should be reserved only for the windiest of projects in order to ensure that taxpayers are getting the most bang for their buck.

Operations that fall below 25 per cent should be deemed ineligible for renewable subsidies. “That would focus the mind to put them in a sensible place,” he said.

Britain has 2,906 wind turbines spread over 264 sites with a further 7,000 turbines planned for the next 12 years.

Jefferson has written extensively on energy policy, including contributions to various UN bodies. He was the Deputy Secretary-General of the World Energy Council for 10 years, where his work with the Intergovernmental Panel on Climate Change led to a certificate for his contributions to their award of a Nobel prize.

China has knocked the U.S. out of the top spot –a position it held for more than a century– as the world’s biggest energy consumer, according to new data from the International Energy Agency.

China consumed 2,252 million tons of ‘oil equivalent’ last year, which is about 4 percent more than the 2,170 million tons the U.S. consumed. Oil equivalent is the term used by the IEA to bring all forms of energy into a comparable form, including crude oil, coal, natural gas, nuclear, hydropower, wind and solar power.

Projections were for China not to overtake the U.S. for another 5 years, but the takeover occured faster than expected with the effects of the global recesssion causing the U.S. economy to decline at a time that the Chinese economy was continuing to expand at a double-digit pace. Energy consumption in the U.S. flatlined while China continued to consume more.

Energy consumption in the U.S. was double that of China’s just a decade ago.

The U.S. still remains the world’s largest energy consumer per capita, with the average American using 5 times more energy than the average Chinese citizen.

“The fact that China overtook the U.S. as the world’s largest energy consumer symbolizes the start of a new age in the history of energy,” IEA chief economist Fatih Birol was quoted as saying by the Wall Street Journal.

China relies on coal for much of its electricity generation, which accounts for why China already passed the U.S. as the world’s largest polluter several years ago.

The U.S. still remains comfortably in the lead in terms of crude oil consumption, with a consumption rate of 19 million barrels of oil per day. China currently consumes only nine million barrels of oil per day, although their consumption rate continues to climb.

Over the next 15 years, China’s electricity demand is expected to increase by 1,000 GW – equivalent to the total U.S. electricity output today.

Nissan is hoping to elbow its way in to the luxury hybrid market by providing a cheaper and more fuel efficient technology.

Nissan Motor Co. announced on Tuesday that their new gasoline-electric hybrid engine on the Infiniti M35 luxury sedan will likely be up to 90% more fuel efficient than it’s gasoline-powered counterpart.

“We expect (fuel efficiency) to improve by 60%-90%” over the conventional model, Koichi Hayasaki, chief engineer of Nissan’s hybrid system, said at a meeting briefing. The M35 Hybrid, known as Fuga in Japan, will have mileage in the range normally seen in compact cars, Hayasaki added.

The hybrid will be able to travel roughly 45 MPG, compared to the gasoline version which gets about 23 MPG. Nissan says that their hybrid will outdo the Toyota and Lexus luxury hybrids which get between 33 and 38 MPG.

Unlike the hybrid Nissan Altima, which is powered by Toyota’s hybrid technology, the M35 runs on Nissan hybrid technology and will be the company’s first full scale roll-out of its own hybrid engine.

Nissan’s hybrid system contains fewer components than Toyota’s system, which therefore makes it lighter and less expensive than Toyota’s, according to Hayasaki. He attributed this to a simple design structure in the 3.5 liter V6 engine and electric motor that make up Nissan’s hybrid system.

The hybrid will go on sale as the Fuga in Japan later this year and as the M35 in the U.S. and Europe next year.

The chart below illustrates the global venture capital investment trend that followed:

The trend was also complemented by public, private and government investment such that total commitments have consistently exceeded $100 billion on an annual basis.  Companies and governments all over the world are racing to find cleaner, greener energy substitutes to end our society’s addiction to fossil fuels and cut down on the greenhouse gas emissions that cause global warming.

There are seven significant factors that are driving the enormous growth potential for clean, renewable energy:

1) The rising cost for today’s leading sources of energy;

2) The realization that fossil fuel sources are declining at an increasing rate;

3) Environmental costs are on the verge of being accurately calculated when determining total cost;

4) Increasing global demand for energy from developing countries;

5) Growing public awareness for climate change issues and causes;

6) The extraordinary investment by governments, large corporations and the venture capital industry, and

7) Investments are fueling the creation and development of a variety of very promising technologies.

The mathematics are simple.  This sector is primed for compounded growth.

With demand assured, where should a prudent investor put his capital to profit from the Green Revolution?  Recent deal activity in the VC market would seem to suggest that the Solar sector is “hot”, no pun intended.

Green companies are no longer a mix of startups and emerging growth companies.  Quite to the contrary, there are several companies that have substantial revenue streams and stable business models.  In fact, many of these Green sector businesses outperformed the S&P 500’s gain of 28.8% for 2009, many with multiples of that figure. Mutual and index funds dedicated to this sector also participated in this success as interest gathered for this “non-traditional” form of investment.

However, in the rush and tumult of new developments and optimistic predictions, it’s hard to separate the hype from real hope.  The hype in the renewables industry, a natural response due to competition for funding and customers, has led to claims that stretch the boundaries of scientific acceptability.  The industry risk profile remains high for this reason.  Selecting individual companies that may be future winners is therefore a hit and miss proposition at best.

Another key issue is the timing of your market entry.  You may need a forex course to follow the strength of the Dollar.  For various reasons the Dollar has been strengthening this year, and oil prices tend to move in opposite correlation to the Dollar, as do all energy stocks.  The entire energy sector has a dependency that requires attention.

Investments in the renewables space have been frenetic over recent years, both domestically and on a global basis.  Industry pundits are quick to point out that much more investment is necessary if we are to reach our energy goals of 2030.  However, a wise investor, after appraising the present sector risk, may wish to diversify his holdings by investing in options designed for that purpose.  There are several Exchange Traded Funds, devoted specifically to cleantech, that have performed admirably and may offer the best risk-based approach for new Green investors.  Do your homework, check your timing, and review with your adviser before investing.

By Lauren Frohne – UNC’s Powering A Nation

Powering a Nation’s reporters spent about two weeks in communities with nuclear power plants asking questions, getting opinions and weighing the facts to gain a better perspective on the nuclear issue. Hoping to see the inner-workings of a plant, they had an opportunity to tour Vermont Yankee Nuclear Power Plant in Vernon, Vermont. Larry Smith, the plant’s official tour guide, agreed to show them around.

Vermont Yankee Nuclear Power Plant as seen from across the Connecticut River. Photo by Lauren Frohne

The security

Not only were the reporters allowed to tour the plant, they were also permitted to bring cameras. But there were things that could not be photographed.

The radiation monitor that provides a live reading of exposure while touring the plant. Photo by Lauren Frohne

Namely, it was not possible to take pictures of any of the security measures implemented at the plant, including the perimeter fences, cameras and screening equipment.

 Since security is such an important part of a plant, the reporters first had to go through a screening similar to what you might experience at an airport. The security guard went through camera bags thoroughly. Then they received visitor badges, scanned their palms, and entered the plant through a tall, subway-like turnstile.

The first building inside the plant was a staging area where a plant worker (the only one the reporters saw until they exited the reactor building) was in charge of reading visitor responsibilities and setting up radiation monitors.

Reporters wore two monitors: one provided a live reading of their exposure while in the plant, the other recorded a more precise measurement to be mailed to them later. Also equipped with a hard hat, safety glasses and earplugs, the reporters began the tour.

The heat, the noise

As the journalists entered the reactor building, they were struck by the noise. A constant, brain-scrambling hum. At times, it got so loud they could only communicate with Larry through hand gestures. The turbine room was the loudest place in the entire plant. The heat was difficult to adjust to, as well. It was 100 degrees or hotter throughout the entire reactor building. Some places featured a “Do Not Linger” label in the hottest spots because the heat was a result of radioactive steam.

For the most part, the plant is a concrete building with all kinds of pipes and valves, slate-gray containers and warning signs. Few people occupied the premises. From what Larry told reporters, the plant bustles with workers more during their scheduled outage periods, which occur every 18 months and lasts about 30 days. During that time, the reactor shuts down and contractors come to the plant to perform maintenance and swap out fuel bundles. They recently completed their outage month, so the plant was mostly deserted during our visit.

Warning signs featured throughout the Vermont Yankee Plant. Photos by Lauren Frohne

The pool

The highlight of the tour was seeing the spent fuel pool. Spent fuel pools are where the majority of the spent fuel from a plant’s entire operational history is kept. Vermont Yankee houses about 38 years of spent fuel. 

Spent fuel is still extremely radioactive, but anti-proliferation laws prevent plants from reprocessing it and using more of their radioactive energy. The bundles are kept in pools that are about 40 feet deep (about the height of a four-story building) and enclosed in several feet of concrete. The water keeps the radiation contained and the fuel cool.

The pool is deep and serene. It moves gently. What at first seemed like a reflecting pool eventually revealed hundreds of canisters of spent fuel rods. Standing over so much radioactive material left journalists with a bizarre feeling: a little nerve-wracking, a little daring. Larry was the most nervous, though. He reiterated that people aren’t usually allowed to get that close to the pool for that long, let alone with a camera.

The “clean side”

The pool was the last stop on the tour of the interior of the plant. The reporters weaved their way back through the tunnels and stairways and reinforced doors back to the staging area, which also serves as the the radiation screening area.

On their way out, their possessions had to go through a radiation detector, and then placed on the “clean side.” The “clean side” was literally on the other side of the small turnstile through which we had entered the reactor building.

Then it was the reporters’ turn. They had to stand in two different machines that scanned their entire bodies for radiation. These machines require you to stand still while a female, British voice counts down from 10 or 15. Despite some small exposure, the journalists were deemed acceptably clean.

Before the crew explored the exterior of the plant, one of the reporters would make a little mistake that would later have them hustled out of the plant.

The dry storage

The first stop outside was the above-ground, dry cask storage. These five giant, concrete and steel casks were assembled because the spent fuel pool is reaching capacity and Vermont Yankee anticipated being able to send some of their radioactive waste to Yucca Mountain. That plan has now been canceled. Many plants in the U.S. will need to resort to dry cask storage soon as many are reaching capacity in their spent fuel pools as well. The storage and transport of radioactive nuclear waste is a major, hot-button issue in the nuclear debate. The thought of having nuclear waste, which will continue to be radioactive for over 100,000 years, sitting out in a cask (that has a registered use of only 100 years) with nowhere to go, is somewhat unsettling.

The dry cask storage units outside of the Vermont Yankee plant. Photo by Lauren Frohne

Next, the crew visited the low-level radioactive waste that is kept in large, steel shipping containers. This includes things like papers, office supplies, radiation suits and other things that might have been exposed to radiation at some point. This is also radioactive matter that is sitting out, waiting to ship, with nowhere to go. Like many plants in the U.S., Vermont Yankee used to send this low-level waste to a waste storage facility in Barnwell, South Carolina. However, this facility recently stopped accepting waste from the 14 states from which it used to accept waste. Plant Vogtle also has this same issue to deal with.

The last stop was the location where the plant takes in water from the Connecticut River. Most nuclear power plants are positioned on a major river because of the huge amount of water required to cool the process. Larry said that this reactor uses 365,000 gallons of water a minute.

Setting up a last shot of the river’s rushing water, the reporters were approached by a security guard with a machine gun slung around his back. The armed guard escorted them out as Larry speculated nervously about the quick exit. He told them how they had been watched from the very moment they entered the plant.

Fortunately, it was an innocent mistake. When they were turning in radiation monitors, one of them discarded her visitor badge. Without a badge, she was breaching the plant’s security protocol, which requires all visitors to carry proper identification. The crew hustled back to the welcome center.

On the way, they convinced Larry to let them linger around the cooling towers to shoot video, while he talked nervously with his supervisor on the phone. Their towers are induced-draft cooling towers, not the traditional hyperboloid towers so often associated with nuclear power. The plant, which is across the street from an elementary school and a residential neighborhood, chose to use less visible towers.

Exhausted, sweaty and with 0.7 milliren of radiation exposure, their tour of Vermont Yankee Nuclear Plant came to a close. From a journalistic standpoint, it was an amazing experience and something that not many people get to see or photograph.

The induced-draft cooling towers at Vermont Yankee. Photo by Lauren Frohne

Written by Lauren Frohne under the auspicies of UNC’s Powering A Nation and shared with Consumer Energy Report.

"We will not rest until justice is done," said U.S. Attorney General Eric Holder.

BP stock drops 15%, sheds $20 billion in value, as the market reacts to the continuing turmoil in the aftermath of the Gulf of Mexico oil spill.

U.S. Attorney General Eric Holder announced that the Justice Department has launched a criminal probe of the BP oil spill. “We will prosecute to the fullest extent of the law anyone who has violated the law,” Holder told reporters today in New Orleans. “We will not rest until justice is done.”

Federal agencies, including the FBI, are participating in the probe.

Among the many statutes the DOJ is reviewing are:

• The Clean Water Act, which carries civil penalties and fines as well as criminal penalties;
• The Oil Pollution Act of 1990, which can be used to hold parties liable for cleanup costs and reimbursement for government efforts;
• The Migratory Bird Treaty Act and Endangered Species Acts, which provide penalties for injury and death to wildlife and bird species; and,
• Other traditional criminal statutes.

“There is one thing I will not let be forgotten in this incident: In addition to the extensive costs being borne by our environment and by communities along the Gulf Coast, the initial explosion and fire also took the lives of 11 rig workers. Eleven innocent lives lost,” Holder said in a prepared statement. “As we examine the causes of the explosion and subsequent spill, I want to assure the American people that we will not forget the price those workers paid.”

According to government estimates, the spill has already leaked between 20 and 44 million gallons of oil.

“If we find evidence of illegal behavior, we will be forceful in our response,” he said.

The Justice Department has already demanded that the involved parties, including BP, Transocean and Halliburton, preserve all documents related to the disaster.

BP's stock has fallen dramatically since the April 20 explosion on one of its oil rigs in the Gulf of Mexico.

The aftermath of the April 20 explosion which took place on the BP-operated Horizon Deepwater rig was labeled as the “greatest environmental disaster of its kind in our history” by President Barack Obama today.

Shareholder Reaction

The companies involved in the oil spill witnessed a sharp selloff of their shares today in response to the criminal probe. BP and Halliburton each suffered a loss of nearly 15 percent, while Transocean saw their shares plummet nearly 12 percent.

BP shares have fallen 40 percent since the explosion, erasing nearly $75 billion of value in the process. Shares in BP shed $20 billion today alone.

Analysts estimate that BP will suffer between $4 billion to $25 billion in losses when all is said and done. The total bill will vary greatly depending on the length of time it takes to cap the spill.

The Charter Street Heating plant has plenty of producers ready to provide bio-mass when its conversion from coal is complete.

Contemplating converting its Charter Street Heating Plant from coal based to bio-mass based fuel, the State of Wisconsin commissioned a survey of 59 local business which indicated that they are capable of providing more than 13 times its expected annual requirements.

“The message is clear: we have biomass businesses right here in our own state that want to grow,” says Gov. Jim Doyle. “This is an enormous economic opportunity for our state to keep the money we spend on energy in the local economy and create green jobs in the area.”

According to the Department of Administration the respondents came from forest products (in northern Wisconsin), agriculture and waste materials industries (in central and southern Wisconsin).  Approximately 50% of the respondents were forestry based businesses, 25% agriculture and 25% waste oriented.

Governor Doyle hopes to begin the plant conversion next year and to complete the conversion into operating exclusively on bio-mass and natural gas fuel by 2013.  In preparation for that change, the State wanted to ensure that the newly configured plant would have an adequate supply of resources.

While the plant would require 250,000 tons of biomass, local businesses collectively indicated that 3.4 million tons would be available.

The findings of the survey further indicated that:

• Bio-mass would range in cost from $2-$11 per million BTU’s;
• Roughly half of the suppliers had access to rail transportation or could develop access; and
  
• Businesses of widely varying sizes (offering between 1000 and 590,00 tons) had an interest in supplying bio-mass.

In August, the State intends to issue a follow-up survey with more specific information requested.