The Rude Awakening
Wall Street, New York
Wednesday, November 8, 2006

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• Get ready for more controversy – Byron King is back
  with more global warming insights,
  
  
• The solar future – taking a more practical look at
  the next step in energy use,
  
  
• What to do when a little warming turns into a
  meltdown, all the market data and plenty more...

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Eric Fry, enjoying a chilled Chardonnay on a warm evening,
reports...

A little bit of global warming seems as pleasant and
innocuous as an evening glass of wine. (And the two in
combination are simply paradisiacal). But innocent vices
have a nasty way of progressing from moderation to excess.

Before you know it, the evening glass of wine becomes
five...martinis. And before you know it, that pleasant
little dose of global warming that coaxes daffodils from
the soil on New Year's Day will eventually coax the Pacific
coastline to the Nevada state line.

Global warming is already a big problem, and is quickly
becoming a bigger problem. As the esteemed Prof. Cameron
Wake observed at the recent annual meeting of the U.S.
Association for the Study of Peak Oil & Gas (ASPO-USA),
carbon dioxide (CO2) concentrations in the earth's
atmosphere are accelerating at a disturbing pace.

Most of us would know CO2 as the gas that gives a Coca-cola
its delightful effervescence. But CO2 is also one of the
"greenhouse gasses" that spews from the world's smokestacks
and tailpipes, and which, therefore, contributes to global
warming.

Our colleague, Byron King, spent a few presentation-packed
days up at the APSO conference in Boston. And we're happy
he did. Byron returned from the confab with "two legal pads
full of notes" and a wealth of insights. In yesterday's
column, Byron examined the connection between Peak Oil and
global warming. Today, he examines the connection between
global warming and renewable energy sources.

Byron's observations come to us courtesy of our friends
over at Whiskey and Gunpowder, where Byron is a regular
contributor. In fact, a version of today's column first
appeared in "Whiskey's" November 1, 2006 edition. Byron is
threatening to offer many more insights from the APSO
conference. So be sure to catch them all by checking out
the daily missives from Whiskey and Gunpowder.

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----------------------------

The Once and Future Planet Earth
By Byron W. King

You probably know that the world is running out of easily
accessible oil, which means that the price of the stuff
will be increasing dramatically in the coming years. 
Painful as the economic future might be, the increasing
price of oil is probably a good thing in the long view. 
Even if modern industrial societies were not exhausting the
Earth's inheritance of fossil fuels, mankind would require
an alternative energy source. A century of fossil fuel
consumption has contributed to the "global warming" effect
that threatens to lead the earth toward unknown, but
probably negative, climatic impacts. Increasingly,
therefore, alternative energy sources will become the ONLY
alternative.

During the past century, the industrial activities of
mankind have added immense amounts of carbon dioxide (CO2)
to the Earth's atmosphere through the burning of carbon-
based fossil fuels such as coal, oil, and natural gas. The
pace of adding CO2 to the atmosphere is increasing due to
worldwide industrial and other human activities.

It required tens of millions of years, if not hundreds of
millions of years, for the Earth's natural, dynamic
processes to remove almost incalculable quantities of CO2
from the atmosphere and sequester it underground in coal
beds, in other fossil fuel deposits (oil, gas, tar sand,
oil shale), and in rocks like limestone (which is calcium
carbonate). By digging up and releasing this buried carbon
and CO2 at the present rapid pace, mankind is reversing in
perhaps two centuries what Mother Nature required literally
geologic ages to accomplish.

So in the course of two centuries, the one just past and
the one upon which we are all about to embark, mankind may
well force the Earth's atmosphere to regress by about 30
million years from a post-Pleistocene (or "Holocene") state
of about 280 parts per million (ppm) of CO2, to an Eocene
state of nearly 1,000 ppm CO2. What will happen? Nobody
really knows, and that's the problem. Will the CO2 build-up
lead to global warming and severe climate changes? If we
wait to find out, we might learn to our eventual sorrow
that mankind has triggered atmospheric alterations that are
beyond the ability of anyone or any technology to control.
Whoops.

What is the solution? Actually, there are many. But the
first priority must be to control, and dramatically reduce
emissions of carbon into the atmosphere, particularly CO2
generated by burning fossil fuel. [To measure carbon
emissions, scientists calculate the "flux" or flow of
carbon matter through a specific volume of atmosphere].

The three major fossil fuels used worldwide are coal, oil,
and natural gas. At the risk of oversimplifying (and this
concept is not simple by any means), most coal is used to
generate electricity and to heat and power certain basic
industries such as the coke and steel business. Most oil is
used in the transportation sector as motor or engine fuel.
Most natural gas is used for space heating, with
significant amounts also used for petrochemicals (including
agricultural chemicals that enhance the production of food
and fiber). And a not insignificant amount of natural gas
is used for electricity generation. OK, for all of the
purists out there, I know that it is more complicated than
this. But this is a broad outline.

In essence, therefore, controlling carbon and CO2 emissions
requires means finding some other way to generate
electricity, to power vehicles, and to heat spaces.
Fortunately for the future of mankind, there are a plethora
of well-developed technologies in existence just waiting
for mankind to start using them on a vast scale. Following
the script of the ASPO-USA conference, I will discuss solar
and solar photovoltaic electricity production, as well as
wind power.

According to solar energy authority Steve Strong
(www.solardesign.com), solar power has the immediate
ability to replace immense amounts of fossil fuel that are
now being burned for electricity, heat, and transportation.
Strong has been in the solar business for about 30 years,
and has a very long list of accomplishments to back up his
claims. "If something exists, it cannot be technically
impossible to build it," he stated several times, usually
as he flashed a slide on the screen of some solar-powered
structure or another, often as not, one that he or his
company built.

According to Strong, if only the roof area of every
shopping mall in the U.S. were used to gather photovoltaic
electric power, it would be possible to provide electricity
to every home in the country. As this implies, Strong's
focus is on harvesting the sunlight that falls on otherwise
underutilized real estate. He does not advocate
constructing massive, dedicated, stand-alone photovoltaic
collection grids, particularly if such grids would cover
otherwise arable land. Instead, his idea is to place solar
collection technology atop existing foundations and
structures, such as on rooftops and walls that have an
exposure to sunlight.

Strong showed numerous examples of innovative solar
collectors, both photovoltaic and solar-thermal, on home
roofs and walls, on office buildings, and on industrial
structures. These are coupled with highly adapted,
environmentally responsive architectural design. Even the
tops of the "sound walls" that line many highways can be
used to collect sunlight. Strong showed parking lots and
garages that currently support photovoltaic collection
systems, and in the process prevent the direct sunlight
from fading the paint on peoples' nice new SUVs. In
Germany, the crash barriers along some stretches of the
Autobahn support solar photovoltaic collector grids, as do
many of the fences that line the German national railroad
rights of way. Wherever there is sunlight falling on some
structure or another, Strong advocates designing a system
and capturing the energy.

By day, of course, solar photovoltaic power can power the
house or office building or industrial structure beneath,
and any electricity surplus feeds into the larger-scale
power grid. But it is also possible to store this sunlight-
generated electricity in batteries, for use at night or
during periods of overcast weather. Strong showed many
examples of structures that require no electrical power
from the power grid (some are not even hooked up to the
grid), and other examples of structures that are in fact
"net-positive" contributors to the grid over given periods
of time.

In recent years, as production of photovoltaic cells has
increased, the costs have come down to where solar
photovoltaic technology is cost competitive with coal-
generated electricity. (In the event that "carbon taxes"
become commonplace, photovoltaic systems will be among the
relatively cheapest sources of electricity.) Yes, a
photovoltaic system requires more upfront cost, but it
should last for 25 years or more under normal service
demands. So after a payback period of between four to six
years, the subsequent electricity is "free" to the owner
for the next 20 years or so, if it is not "sold" back into
the grid at a profit to the owner.

Thus are both the technology and the market-based economics
in place to support a growing switch away from the
traditional, coal-fired (or oil- or gas-fired) electric
generation paradigm to a solar photovoltaic paradigm. This
would mark the beginning of the end, over the long term, of
using large amounts of fossil fuel to generate electricity,
with the reduction of the accompanying carbon load that is
otherwise being added to the atmosphere. If you use the
electricity to charge the batteries in an electric vehicle,
this also reduces demand for liquid fuels.

But the status quo is the status quo because it works for
somebody. So there is still quite a bit of legislative,
regulatory, and market resistance to adopting an entirely
different approach to generating electricity and heating
spaces with solar systems. People know what they are used
to using, and the coal-fired electric plant is simply part
of the modern mind-set. So the future will be one of
education and growing awareness of solar options, and of
developing a level of public acceptance of the utility and
safety of solar energy generation. At the same time,
investors would do well to remember that the installed base
of solar photovoltaic systems is so low that even a
relatively modest level of growth and market penetration
would represent a significant, long-term business
opportunity.

[Joel's Note: The topic of global warming is one that has
been generating a media firestorm lately and one that will
not likely lose its fire anytime soon. After Part I of
Byron's essay appeared in yesterday's Rude pages, we
received a more than a wee smattering of emails from
readers, both convinced and incredulous about this rather
controversial topic. Be sure to check out this coming
Monday Mailbag for a sample of some well-informed reader
missives.

While the debate rages on and tempers flare, we thought it
might be a good time to take a look at what is going on in
the world of "old" energy, or, oil. It appears there is a
major power shift underway that could send prices soaring.

The report below may shock you...but we here at Rude H.Q.
believe it is better to be shocked and prepared...than left
behind.

The Four Horsemen – Sending Oil Skywards
http://www.isecureonline.com/Reports/OST/EOSTGB09

--- Special ---

Countdown to a Full-on Oil War
Prepare Your Portfolio for $150 Crude Before Spring 2007

Ninety years ago, a single assassin's bullet triggered the
First World War.

Now today, another assassination has marked the beginning
of an even bigger event - a chain of events that could push
oil prices higher than ever before.

Discover the proof... and arm yourself with the facts you
need to invest and protect your wealth in the troubles
ahead. But don't wait. Events are moving quickly - and you
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http://www.isecureonline.com/Reports/OST/EOSTGB09

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And the Markets...