free html hit counter Peak Oil Debunked: 170. ELECTRICITY IN MEXICO

Sunday, November 20, 2005

170. ELECTRICITY IN MEXICO

The U.S. is the Saudi Arabia of coal, and this is one of the main reasons the U.S. will retain its strength going forward. In terms of fossil fuel, it is clear the U.S. will be the last man standing, even after both peak oil (2010-2020?) and peak gas (2030, Lahererre(pdf)).

However, it is too simple to just point at the U.S. coal reserve, and say "problem solved". Lots of people are putting dibs on U.S. coal -- too many people if you ask me. For example, it's very clear that the U.S. military will stake a claim. And of course there is the existing claim on U.S. coal by the electric power industry (50% of U.S. electricity is generated by burning coal). The electric car advocates are staking a claim on coal, by promoting plug-ins. The synthetic liquids advocates also say we'll turn to coal to fuel our vehicles. People in the U.S. switching from gas/oil to electric heating are also (more likely than not) turning to coal.

In the U.S., there are really only two near-term options for large-scale power generation: coal and nuclear. Natural gas is declining, and some relief may be available from LNG, but LNG will not be fueling the U.S. power grid any time soon. Neither will renewables. The path of least resistance is clearly to burn more coal, and that's what will be powering the electric vehicles of the near-term future.

But that's not the end of it. Mexico too will put demands on U.S. coal. Check this out from the latest DOE Country Analysis Brief on Mexico:
In 2002, Mexico ’s installed electric power generating capacity was 42.3 gigawatts. In the same year, the country generated an estimated 198.6 billion kilowatthours (Bkwh) of electricity, of which thermal (oil, natural gas, and coal) electricity generation account for 81%. According to Sener, total power generating capacity as of May 2004 was 50.7 gigawatts. Oil-fired power plants accounted for the largest share of Mexico 's thermal electricity generation, but many of these plants are being converted to natural gas. According to Sener, fuel oil accounted for 49.4% of thermal feedstock in 2002. Currently, only about 6% of electrical generating capacity is coal-fired. By 2012, natural gas is forecast to account for 63% of Mexico 's power output while fuel oil's share is expected to drop to 24.2%. In 2002, hydropower accounted for 12% of Mexico 's total electricity generation, followed by nuclear with 4.5% and geothermal with 2.5%. Mexico also has one wind-power installation in Oaxaca , which generated 0.005% of the country's total electricity generation. There are plans to increase Mexico 's wind capacity, which has not been added to since 1999.
Notice that oil accounted for 40% of Mexico's power generation in 2002. In the 1990s, Mexico had the highest percentage of oil-fired generation in the OECD (59% of electricity generated from oil). This is in a country where oil is currently peaking (or will do so shortly). Notice also that NG-fired capacity is increasing, in a continent where NG is also in decline.

So it's not really a question of whether the lights can be kept on in the U.S. That's not in doubt because oil only accounts for about 3% of U.S. power generation. The question is how to keep the lights on Mexico. (We should also note in passing that the electric grid of northern Mexico is connected to the grid of the southwestern U.S.)

Henry Groppe has mentioned the idea of freeing up oil for vehicles by switching oil-fired electricity nations like Mexico to another fuel source:
On the supply side, he believes oil is pretty much at peak and will flatten out and then start declining. But what caught my attention was his opinion on the demand side. He believes that something like 20mbpd of the current 84mbpd of oil demand is going for heat and power generation primarily in developing countries. He thinks that with oil in the $50-$60 range, all of this will get converted to coal or natural gas, and that, along with vehicle fuel efficiency, will be the main initial responses to peaking, and will keep us out of serious economic pain for a decade or so.
I'm skeptical about the idea of converting Mexico to natural gas because North American NG is peaking. We're getting too many claims on a shrinking North American NG pie. I don't see massive LNG imports being a solution for Mexico either. It's hard enough trying to switch the U.S. to LNG, let alone switch the U.S. and Mexico at the same time. (Then again, Mexico may be the place to locate LNG ports due to U.S. NIMBYism.) At any rate, Mexico and the U.S. will be joined at the hip on the NG front, no matter how events pan out.

Switching the Mexican grid to Mexican coal isn't an option. If Mexico generated as much electricity from coal as the U.S., their reserves would run out in a little over a year. So that leaves two near-term options: U.S. coal and nuclear. I take it nuclear is out because: a) nuclear accounted for only 4.5% of Mexican power generation in 2002, and b) the U.S. may not be comfortable with a massively nuclear Mexico.

So that leaves coal, and now we've got another nation making a claim on U.S. coal, and as a member of NAFTA they certainly have a right to it. We might also wonder whether coal will be the solution for Mexican motoring as well. Will Mexicans be driving electric cars fueled by U.S. coal? Or high-efficiency hybrids fueled by U.S. coal? Or will they just keep it basic, and try to keep the lights on?

And Mexico isn't alone. According to Oil & Gas Journal, lots of countries have no oil, gas or coal: Costa Rica, El Salvador, Guatemala, Haiti, Hondurus, Jamaica, Panama, Paraguay, Puerto Rico, Uruguay etc. Are they all going to turn to massive capital projects like LNG and nuclear? Or are they just going to give up electricity?

It's obvious what needs to give in this equation. Electricity is necessary to live a first-world standard of living, cars are not. Cars are a low priority compared to maintaining the status quo in electric power.
-- by JD

12 Comments:

At Monday, November 21, 2005 at 5:11:00 AM PST, Anonymous Anonymous said...

Adding in oil shale, which may enter commercial production in the next decade, the US is clearly going to replace Saudi Arabia as the world's energy savior in a post Peak Oil world. The best thing for the US to do is turn to nuclear for her electricity needs, and then sell the coal to others to keep them from building nukes. But I agree with you that cars are largely frivolous, and owning a car in 2020 will be the equivalent of owning large a motor home today.

 
At Monday, November 21, 2005 at 5:20:00 AM PST, Blogger JD said...

Roland:
You definitely have a much larger reserves/population ratio. You could fuel your entire grid (at current power levels) for about 766 years with Aussie coal. The U.S. could only fuel its entire grid (at current power levels) for about 130 years with U.S. coal.

In raw numbers though, the U.S. has 3 times the coal reserves of Australia (US: 270,718 million short tons, AUS: 86,531 million short tons). So the yanks get the honorary sheik's headdress. ;-)

It takes about 7 short tons to provide all the electricity consumed by the average American in one year.

 
At Monday, November 21, 2005 at 8:38:00 AM PST, Anonymous Anonymous said...

Chris - If there are going to be cars, EVs are a better option than anything else that's out there...if we start building more nuke plants, windfarms, etc, they WOULD be promoting renewable energy. They require electricity, they don't care where it comes from. It will just surely be coal for a while. They're surely a better idea than hydrogen cars or anything reliable on smaller amounts of oil like hybrids.

 
At Monday, November 21, 2005 at 8:40:00 AM PST, Anonymous Anonymous said...

I think the mexican border will probably get renewed interest once they start demanding a big piece of our energy pie, depending on who is in office when peak oil hits.

After all, the US will be too busy short term after peak oil to worry about anything but itself.

 
At Monday, November 21, 2005 at 1:12:00 PM PST, Anonymous Anonymous said...

It's not like we weren't going to mine the coal if we didn't build the EVs. I also didn't say cars were required. I just said IF THERE ARE CARS. There is absolutely nothing about an EV that is more environmentally destructive than our current society.

And there are going to be cars. Maybe only a small segment of the population will still have them, but there is absolutely no chance that all forms of cars will go extinct in the next 100 years unless there's an apocalypse. Some people are not going to give them up no matter what, and you will need some kind of vehicles to transport goods from specific locations to train tracks or whatever you're advocating for primary transportation. I'd rather have electric trucks than coal powered crappers like will probably happen otherwise.

 
At Monday, November 21, 2005 at 1:16:00 PM PST, Anonymous Anonymous said...

Oh, and finally I never said we'd power them exclusively with renewables. I completely agree we can't power anywhere close to everything, even just normal electricity generation, with current renewable technology. Nuclear is full capable of providing all the electricity we get now and more for hundreds (if not thousands) of years. Any objections you may have to the technology isn't going to change that fact, or the fact that we're going to start building more plants sooner or later unless some ridiculous apocalypse happens that will make it impossible.

 
At Monday, November 21, 2005 at 7:57:00 PM PST, Anonymous Anonymous said...

Are you saying you'd rather all new cars continue to burn gasoline instead of be EVs? I just think that if we're going to continue producing cars they should be as gas-independent as possible, cause we need the oil for more important things. I don't see how you could disagree with all NEW cars being EVs instead, I guess. Although I guess if you were trying to avoid the possibility of car culture rebuilding itself as EVs instead of ICE vehicles you would.

 
At Tuesday, November 22, 2005 at 2:37:00 AM PST, Blogger Markku said...

In Finland, car tax is 133%. As a result, our car fleet is still more than 2 million for a population of 5 million. I shudder to think how large the car fleet would be without the high tax. Also, because of the fuel tax, petrol (95E) costs almost $6 per gallon. Diesel is about 20% cheaper. Thanks to the combination of high car and fuel taxes, the average car mileage is pretty good.

 
At Tuesday, November 22, 2005 at 5:16:00 AM PST, Anonymous Anonymous said...

JD wrote "I take it nuclear is out because: a) nuclear accounted for only 4.5% of Mexican power generation in 2002, and b) the U.S. may not be comfortable with a massively nuclear Mexico."

That nuclear acconted for only 4,5 % of Mexican power is just because they only have one nuclear power plant. This might seem to be a bad thing, but it rather is a very good thing, because it means the Mexicans already have nuclear competence.
To say it another way. Nuclear acconuted for similar portions in France in 1970, and look where they are now.

And why would the US "not be comfortable with" a nuclear Mexico? And what does the US have to do with domestic Mexican power issues?

If you ask me, building 20 big reactors in Mexico would be one of the best ways to save massive amounts of oil, while avoiding massive GHG emissions.

 
At Tuesday, November 22, 2005 at 6:16:00 AM PST, Blogger JD said...

Good points Starvid.

And why would the US "not be comfortable with" a nuclear Mexico?

Partly prejudice, I think. "Nuclear Mexico" sounds like a joke. Americans wonder about the integrity and soundness of Mexican government institutions.

It's also NIMBYism. Can Mexico be trusted not to goof up and blow a Chernobyl cloud over Phoenix or LA? Could Mexico handle a nuclear emergency if one occurred? How about Mexican security for radioactive material? Remember, people are only now warming up to nuclear energy. Most people still think it is insanely dangerous, even in the U.S., let alone in Mexico.

On the other hand, NIMBYism might also be a good reason to put U.S. nuclear plants in Mexico, due to looser regulation.

And what does the US have to do with domestic Mexican power issues?

Good question. Are the Mexicans capable of building a nuclear grid without American cooperation?

Also, Mexico is not alone (as I pointed out in the post). There are lots of countries in the world with no oil, gas or coal. Many of them are burning oil to generate electricity, but they don't have nuclear capability like Mexico. What do we do about them? Coal seems to be the obvious answer.

 
At Tuesday, November 22, 2005 at 2:17:00 PM PST, Anonymous Anonymous said...

Argentina has sold an experimental nuclear reactor to Australia.

Argentina has two nuclear reactors and is building a third one (almost).

Venezuela is seeking cooperation from Argentina regarding expeerimental nuclear reactors.

I don't see why Mexico couldn't build and manage nuclear power plants, just because they are "latins".

 
At Tuesday, November 22, 2005 at 7:14:00 PM PST, Blogger JD said...

I don't see why Mexico couldn't build and manage nuclear power plants, just because they are "latins".

I agree with you. I'm just stating well-known U.S. prejudices against Mexico and nuclear power which might surface if (for example) the U.S. Congress moved to aid Mexico in nuclear development.

 

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