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Wednesday, October 27, 2010

Mining Royalties and Renewable Energy

Mining Royalties and Renewable Energy

Revenue from mining is a one off. Minerals are not renewable and once gone they can not be mined again. There is no justification whatsoever for mining our family jewels if we plan to waste this money on current consumption. All the revenue from mining must be used to set up infrastructure which will benefit future generations . These minerals belong to them just as much as they belong to us. One very good sector in which to invest this money is renewable energy. The benefits of having New Zealand totally independent of overseas energy are too obvious to warrant rehashing yet again and the benefit of energy independence extends far into the future to benefit our great great grandchildren.  Thankfully, our grandfathers built the hydro electric dams which provide us with half of our electricity today.

One thing must be guarded against. Mining revenue must not be used to displace money from other sources which otherwise would have been put into renewable energy. This is creative accounting at its worst. Mining revenue must be added to the other funds to add to our already high proportion of renewably generated energy. Such funds can be invested directly, in, for instance a State Owned Windfarm (SOE) or instead, can be leveraged by providing research funds or incentives which tip the viability of a renewable energy source towards economic feasibility.

Mining royalties have been reported as 1% of the sales value of the mineral sold. If this is the "whole story" then there is no justification for selling off our family jewels for a mess of pottage. I note the intention mentioned in the New Zealand Energy Strategy to review the royalty situation, presumably the way the Australian Rudd government recently attempted. This is good. Once sorted out, these increased royalties should be paid into the Mine Revenue Account for use in development which creates long term benefits. However, the bare royalty payment is not the whole story.

Does a mine pay income tax in addition to its royalty payment? If so, the tax must be credited to the Mine Revenue Account. Without the mine, this stream of revenue would not come to the government. Next, every employee of the mine pays income tax. This is a revenue stream  to the government which would not exist if the mine was not operating. Into the Mine Revenue Account also. Every purchase by the mine and its employees of everything from a new vehicle to a roll of toilet paper attracts GST at 12.5% (soon to rise). Into the Mine Revenue Account. And then there are the downstream effects. For instance, a mine employee buys his food at a local super market which pays taxes and whose employees pay taxes. Give this one to your resident math boffin. It is an infinite converging series with a finite sum. If you have a good mathematician on board, he will be able to work out how much more of the tax take should go into the Mine Revenue Account.

Looking at the above, it turns out that the revenue from a mine to the government goes far beyond the bare royalties and all this revenue should be used for development that benefits future generations. (in addition, remember, to funds that would have been spent on this if the mine didn't exist).

The next question is what we do with the minerals we have mined. Let's use iron sands as an example. Are we going to sell off the raw mineral with just the gangue (waste) removed the way Australia does. This is like selling off a
Fabergé egg for the price of the gold it contains. At the very least we should be selling refined ingots of steel but let's get more ambitious. How about selling railway lines, machine tools and even car parts. How about selling our own electric car with a difference.

We are fixated on the idea that we could never compete with the big boys overseas. We could never, for instance compete with Hollywood, could we? Well we could and we did. Lets not sell New Zealand short. By adding value to our mineral resources, far more money will go into the Mine Revenue Account to be used for renewable energy infrastructure and other long term development. If, at present, we are not able to beneficiate our mineral resources and sell value-added-products, let's leave them in the ground until we have achieved the necessary level of sophistication. They are only going to increase in value as the years go by and other countries use up their non-renewable resources.

However we use our minerals, let us use this windfall, one-off source of revenue to benefit future generations. We couldn't do better than to use this revenue to ensure New Zealand's energy independence.

Sunday, October 24, 2010

Terraforming New Zealand - Improving our water resources

Terraforming: To transform the landscape on another planet to resemble the landscape on earth. (wika dictionary)

And that is just about what has happened here in New Zealand. If there ever was a land that looked like another planet, it was pre-human New Zealand and we have terraformed most of it to resemble the northern hemisphere.

Before I start talking about continuing the terraforming, let me make one thing clear. I think that the efforts of Kiwis to turn back the clock to recreate, on islands, the pre-European or even pre-human flora and fauna is wonderful, amazing and very worthwhile. What a great shame we can't bring back the Moa the Hast Eagle and the sea birds.  And I don't confine the definition of islands to pieces of land surrounded by water. In Wellington, for instance, there are the NgaManu and Staglands nature reserves, both of which preserve and encourage native flora and fauna. They are land islands surrounded by pest proof fences in a sea of city and agriculture.

There are also some unlikely types of islands. There are fenced road verges.   In England, they have been found not only to be refuges of plants and animals that are disappearing from farm lands but are corridors for migration. There are military reserves all over the world. Tanks and armoured personnel carriers churn up the soil and practice shooting in these areas so you wouldn't usually think of them as nature reserves. However, people are not allowed in for fear of unexploded ordinance and people are much more destructive than tanks. All manner of species flourish in military reserves. I should imagine that road verges and military ranges in New Zealand also have these benefits.

Potentially, you also have places like wind farms. Put a pest proof fence around a wind farm and let a university come in and eliminate introduced species and bring in natives and you can have islands of native flora and fauna all over New Zealand. This is possible because with a "going concern" (the wind farm) on site with very little impact on the environment, you have enough money to maintain the essential fence. Last but not least, there are home gardens. Plant native trees or bushes and you have many little islands in an urban environment. They provide shelter, leaves for browsing and pollen and nectar for native and also for introduced birds and animals.

All these are great and very worthwhile endeavors but the fact remains that most of the two main islands of New Zealand have been terraformed. If we wanted to turn back the clock we would have to grub up virtually all our forage crops, eliminate cattle sheep and deer, poison our domestic bee, get rid of the earthworms, cut down all our fruit trees and most of our lumber trees and stop growing all of our vegetables. For vegetables we would be left with fern heads and cabbage trees. So lets continue to terraform New Zealand but lets do it slowly, carefully, and with all the precautions we can manage. We have the flora and fauna of all the world to choose from#.

# Have a look at p34 in New Scientist, Jan15,2011 for a take on exotics.

We have to be cautious. We have been stung by the introduction of the rabbit, stoat, weasel, cat, possum gorse and broom. Some would decry the introduction of the many species of deer, the Tahr and the Chamois and the introduction of radiata pine and Douglas fir. We do have a tendency, though, to only see the empty half of the glass.

The rabbit is a huge opportunity for someone who can trap them in large numbers and sell canned curried rabbit to India and canned sweet and sour rabbit to China. Gorse and broom are fantastic nursery species for the planting of forest trees and both fix nitrogen. Deer, Tar and Chamois provide New Zealand with the best hunting in the world. Possum are a source of about the best fur in the world and, mixed with Marino wool  makes the most incredibly tactile sweaters you simply can't keep your hands off of. Our introduced trees provide much of the material for the construction of our houses and support an export industry. For all of that, great caution in introducing new species into New Zealand is of the greatest importance.

And let's say for the sake of the argument that we wanted to bring in a large hunting eagle to nobble up the rabbits.  The black eagle of South Africa would be a likely candidate.  His main quarry is the Dasie.  We would have great trepidations that they would also take lambs.  What to do.  Well, we could bring in ten or so but all males or all females or we could bring in mixed pairs but neuter them.  Give the males a vasectomy so that they would behave completely normally but couldn't have young.

My own favorite candidate for the next introduction is the Canadian beaver. One unique characteristic of this animal is that you know exactly where every beaver is. They build dams and lodges and cut down trees; mainly willows.  If it became necessary for some unforeseen reason to eliminate them, it is relatively easy to do so.  Moreover beavers are self limiting.  When introduced into a new area they overshoot slightly and then fall back to the carrying capacity of the stream.  However, these aren't  reasons to introduce an animal. It only counters two reasons not to introduce them. You can't say with beavers "Oh but if it turns out badly, we will never be able to get rid of them". You also can't say what if the population explodes.  It doesn't happen with beavers. So what are the reasons 'to' introduce them. The reasons are many and varied.

Water Management
Here in Canterbury where I live, we are on a huge alluvial plane which has been created by the out-wash from our high mountains (alps) to the West.   Rivers drop their bed load as they leave the mountains and drop their silt and clay wherever the stream is slow enough. Historically, beds of rivers have filled up with this material, jumped their banks and start to deposit material in a new location. Our rivers act like giant grouting machines spreading material back and forth across the plains. In the 'modern' era we have stopped this process by building levies on either side of the rivers and by allowing companies to extract gravel (shingle) from the river beds.   Underlying much of Canterbury are alternate layers of shingle  and clay.  When we have high rainfall events in our mountains, within two or three days the river rises, the water rushes out to sea and the river falls again. Canterbury itself, while hardly a desert, is on the dry side of the island. This makes it ideal for agriculture as long as water is available. It has been proposed to build great numbers of small concrete dams in the feeder streams all through the headwaters of our rivers. This is to retain water during periods of high availability and release it when water is scarce. Small dams also hold the water longer on the land and increase aquafer recharge. Why not let the beavers do it for free.

Not only will they build the dams but will maintain them forever. No maintenance needed. No expense. And while concrete dams stop the free movement of various plants and animals along the streams, beaver dams do not.  Better still, our rivers have been primed for the introduction of beavers.  Many of them are full of Willows and Willow bark is a favorite food  of the beaver and the remaining branches, their favorite construction material.

Extending the Life of Man Made Dams
As soon as a hydro dam is built it starts to silt up. Bed load forms a delta wherever a stream flows into the dam and finer material settles all over the bottom. Beaver dams catch all this material before it arrives in a hydro-electric or irrigation dam and extends its life. For hydro-electric dams there is another effect.

Increasing the Electricity Generated from a Hydro Dam
One of the largest reducers  of the total energy which can be produced from a hydro dam is uneven water flow. If heavy rainfall occurs in the dam's catchment, water has to be let out over the spillway rather than going through the generators. This water is wasted. With beavers in a catchment, water is retained during high flows and released during low flows#. The flow of the water into the hydro dam is evened out, increasing the amount of power which can be generated from the same total amount of water flowing through the hydro lake.

# Read Three Against the Wilderness by Eric Collier.  Especially Chapter 27.  It goes beyond belief the extent to which beaver dams can moderate flood events. Available in the Amberley and the Christchurch libraries.
Creating Wetlands

The value of wetlands is too well known to need rehashing. Beaver dams create wetlands as the ponds fill up with silt and organic material. Water plants grow in the pond, die and sink to the bottom and  shore plants encroach from the sides until the pond is transformed into a wetland. Trees eventually colonize the wetland and another colony of beavers establishes itself and the cycle repeats itself. Over time, the valley bottom becomes higher and higher with a ever deepening water holding sponge. The water storage and release function of the beavers handiwork increases over time, further evening out water flow. Wetlands themselves catch silt and bottom load almost as well as the original beaver pond.

Clearing the Water
There are distinct advantages to clear water. Many fish, including trout and salmon prefer clear water, water plants can grow attached to the bottom when sunlight can penetrate and water treatment for human use is less expensive when there is no suspended sediment. Beaver ponds are very good at trapping bed load and suspended sediment.

Removing Nutrients
When too great a quantity of agricultural runoff seeps into a stream, it can become eutrophic* and inimical to normal flora and fauna. Beaver ponds create a detritus cycle which captures nutrients in a form which is excellent food for a wide range of animals while at the same time keeping the water clear. The detritus cycle depends on all the bits of cellulose (wood chips, twigs, leaves) that collect in beaver dams. Beaver dams also increase the surface area of a stream and hence the amount of sun it collects and therefore the amount of photosynthesis from phytoplankton and rooted plants. Photosynthesis also removes nutrients from the water.

*when nutrient levels are so high that toxic blooms of algae occur, die and poison the water.

Ecological Diversification
If you have a forest with a stream running through it, you have two sorts of environment available for plants and animals - namely the stream and the forest.  Add a beaver pond and you have, of course the pond. You also have an area around the dam which is opened up to sunshine which encourages the growth of herbs, grasses and shrubs.   The cleared area can be as much as a hundred meters from the shore although usually much less.    You create two new environments for plants and animals.

Fish Nurturing
Salmon hatch in gravel beds in streams and many salmon species search out quiet areas to grow before they return to the sea. If they have to fight currents all the time, all the energy from their food goes into swimming instead of growing. Beaver ponds are the ideal nurseries for the Salmon family. Moreover, adult salmon, after spawning, die and are held in beaver dams. The beaver dams catch this huge pulse of nutrients which comes up from the sea and stores it in the surrounding ecology. the food, thus created,  is available to the juvenile salmon when they hatch. Beaver dams greatly enhance salmon runs. They also provide quiet pools for trout.  If you have seen National Geographic films of salmon leaping high water falls with a single bound, you will understand that a beaver dam is no barrier to a migrating salmon intent on his once in a life time act of procreation.

If there was ever an animal that would benefit New Zealand it is the beaver.

Sunday, October 10, 2010

Forget Climate Change

Do I think the climate is changing?  

Do I think humans are responsible?  
Pretty much. The basic physics is pretty simple.

And could the climate change rather quickly?  
Very possibly. It's done so before.

Would this be so bad?  
Sure would!! If climatic zones change and with them the wheat, rice and corn growing zones, we will have epic scale starvation*. Even more fun, when the Arctic ocean becomes ice free, it becomes a massive solar collector. Just watch Greenland melt as  the Arctic becomes more and more ice free each year . Watch the subways of New York and London flood.  Even more fun, if enough melting occurs in Greenland in a given year, it could shut down the Gulf Stream and lead to temperatures on the European coast equivalent to the temperatures at the same latitude on the American coast.  That's an irony for you.  Global warming causing severe freezing in Europe. 

*Once we had mountains of wheat, butter, eggs etc stored up - a year or two of food for the world.  Now it is down to less than two months.

So what's all this about forgetting climate change?
The fact is that there are a whole raft of other reasons to take the very measure that would also address climate change. You don't believe in climate change?? You don't believe that we are causing it??  Fine!  Lets look at some other reasons to stop using fossil fuel.  Many of these are the very reasons that would appeal to your isolationist, religious fundamentalist, right wing, American politician

Selling off Our Countries for Fuel
In order to keep our cars and trucks running, we buy huge amounts of crude oil overseas. Oil flows towards us, money the other way. What do these countries do with this money. They buy up the infrastructure of our countries. They buy up our sea ports and air ports, our businesses, our real estate, wall street and main street. All over the so called 'developed world' we are becoming tenants in our own land. All so that we can run our cars when we should be taking public transport. All so we can drive a huge car with boasting rights rather than a smaller car that does everything a car should do. All so we can run gas guzzlers instead of electric cars charged from renewable energy.

And what else do they do with the money.  They finance radical groups who we call terrorists from our side of the fence, who give us 9/11 and other similar events.   It is a moot point whether they do this from belief or simply to buy off these groups so that they won't attack them but the result is the same.

It's time we stopped being grashoppers and become ants (Aesops Fables).  It's time we got serious about installing wind turbines and solar panels.  It's time we backed down the Car companies and oil companies and insisted on decent reasonably priced electric cars.  What's ironic is that if we do this, the demand for oil will drop off, it's price will come down and the incentive to switch to electric cars will be greatly reduced. In fact, just recently I read an article about one of the Saudi Princes stating that they must keep the price of Crude down so that the world will have no incentive to change to renewables.  At least he understands how the system works.

  Anyway, with a typically human lack of foresight we will be flick flacking back and forth from 'buy the electric car' - to - 'buy the petrol car'. It reminds me of the prince in Shreck trying to decide which princess to pursue.

Strategic vulnerability
Needing huge quantities of oil to keep our society going, we are very vulnerable to the suppliers shutting us off*. If we are shut off, the west will precipitate yet another war to ensure supply and to guarantee the next generation of terrorists. If all our domestic fleet changed to electric cars running on renewable electricity, we would probably have enough oil internally to power the remaining vehicles which are far harder to power with electricity such as earth moving machinery and large trucks. For that matter, we could ship most things by electric rail in containers and deliver them locally by electric trucks. Just think for a moment which countries control our oil supplies. Not the countries we want to hand over our sovereignty to**.

On the flip side, our lust for oil is causing the bully of the world, the USA, to foment war and depose democratically elected leaders in country after country to keep control of the oil rich areas.  This pushes the people into the arms of radical terrorist groups, often of a religious fundamentalist bent,  and makes it necessary to impose all sorts of measures that reduce our democratic freedoms. 

* We are also vulnerable to China cutting off our REM's but that is another story.
**I just heard the news (12/12/10) that America has borrowed $700b from China!!!  Jeeessshhh! And now China is about to "invest" 6b in New Zealand!!!!

Acidifying the Oceans
Much (~50%) of the carbon dioxide which is being produced is being taken up by the oceans and the sea is not yet in equilibrium with the air.  If we stopped releasing carbon dioxide today, the oceans would still absorb more. The Carbon dioxide is acidifying the oceans. Sea water is buffered system which means it can absorb acid without much change in pH (measure of acidity). However, when the first buffer is used up, a little more Carbon dioxide will rapidly drop the pH. At some point in this rapid drop in pH, aragonite and calcite (two forms of calcium carbonate) will become the buffer and the shells of corals, oysters, clams and so forth will start to dissolve.  In a couple of areas of the ocean this process is already under way, caused by natural processes exacerbated by man made Carbon dioxide.

This will be the beginning of the end of the oceans as we know them. Gone will be whole food chains and shelter for a huge number of animals. Something will take over. There will still the same amount of plankton available - the same amount of sun energy. Who knows. Maybe we will have a sea dominated by jelly fish. The turtles should be happy.  Incidentally, it has already been observed that jelly fish are increasing and this has a double effect.  Jelly fish hoover up large numbers of larvae of other species including of many commercial species.  It's a hugely negative, positive-feed-back system.

Polluting the atmosphere
Our burning of fossil fuels is producing acid rain from the oxides of sulphur and nitrogen.  It produces p10's (small particles of carbon which are bad for health) and  carbon monoxide. Also produced are oxides of nitrogen which are health hazards.  Burning coal releases mercury and releases far more radioactivity than a similar sized nuclear power station. All this causes suffering and medical costs. Phasing out the combustion of fossil fuels would remove much of this pollution. We would still be left with pollution from burning wood and animal dung but, in time, perhaps we can replace these with electricity. Here is another irony for you.

Scientists refer to all the particulate material, solid and liquid,  as aerosols and estimate that if all the aerosols disappeared, we would have a jump in temperature of about 2 degrees. Aerosols have a life time of weeks in the atmosphere so this effect could happen rather rapidly if we clean up our act. An interesting effect was seen when planes stopped flying for a few days after 9/11. It is ironic that one type of pollution (aerosols) is keeping us from feeling the full effect of the other form of pollution (carbon dioxide).  Now we are talking about engineering a solution!!!!

For instance the idea has been floated of putting a bunch of mini mirrors between us and the sun at one of  the Legrange points.  These need constant renewal.  Just imagine the impact at the next economic crisis when maintaining the Legrange mirrors is cut from the budget and we are at, say, 500ppm Carbon dioxide.

At present Asia is contributing massive amounts of pollution to the atmosphere.  Her crops are failing because of the pollution.  It will be interesting what will happen when she finally cleans up her act.  Her people are beginning to demand it just as westerners did as their pollution reached toxic levels.  In addition, while China has been building massive numbers of coal fired power stations to power her economy, she is also the leader in the world in installing solar and wind generation.  She doesn't want to be dependent on fossil fuel, much of it from the western world so over the next few decades, her pollution will rapidly decrease.

Trashing Nature
No need to bring up the oil leak in the Gulf of Mexico. It is fresh in every one's mind but how about mountain top removal. In parts of the States, this is the preferred method of getting to seams of coal. You strip off the top of the mountain dumping it into a river valley until you come to the coal. When you finish the first seam, you strip off the next layer of gangue and dump it into the valley to get to the next seam and so forth. You could have put wind turbines on the top of the mountain and over time produced more energy than is contained in the coal. The  river valley would have been left in its pristine condition for future generations. While you are mining this way, you often expose a lot of iron pyrites (FeS) to the air and water. It breaks down and produces sulphuric acid (H2SO4) which trashes the streams below where you dump the fill

Using a resource which is far to valuable to burn
Coal and oil are extremely valuable feed stocks for a whole raft of industries. If they were used as feed stocks rather than as fuel, they would last for Millennia instead of decades. The rate of Carbon dioxide production would sharply decrease. With less demand, the price of fossil fuel would come down and along with it, all the products produced from coal and oil.   It is just plain silly to burn such a valuable resource when renewables are available and economic*.

*Wind generated electricity is (2010 prices) coming in at around 8.3 cents per kWh at present.  Domestic consumers pay around 20c per kWh.  Lots of profit at those prices.

* An item in the news 23Nov, 2016.  Mexico is putting in a solar electric system that they estimate will bring the price of electricity down to 2.4c per kWh

Destroying the societies in other countries
Great wealth has a totally disruptive effect on countries. This is sometimes referred to as the resource curse. Nigeria is a case in point. The wealth is fed into these developing countries to the top brass (the mafia) in order to corrupt them and keep them on the side of the exploiting country*. The Mafia uses this wealth to suppress their own people. For instance, despite having no oil, the people in the countries surrounding Nigeria are far better off than the citizens of Nigeria.

*Read Hoodwinked by John Perkins

Propping up the Corporatocracy Which is Trashing our Economies, our Ecology and our chance of survival
Again read Hoodwinked by John Perkins. He says it far better than I could.

Oil is getting more expensive
The price of crude and hence petrol and diesel is going one way. I bet the next peak hits well above the previous $140 per barrel and the next trough is higher than the previous $75 a barrel. At the same time, as we mount the technological curve, renewable are getting cheaper*. Its a no brainer.

*Boy, I got this one wrong - at least in the short term (2015).  OPEC realized that her high oil prices were creating a push toward renewables and has upped the supply of oil to keep prices down.  Just now we have had an announcement of Sanctions being removed from Iran (July 2015) so more oil may enter the market.

Even if you don't think Global warming is happening or that if it is happening, we are not doing it, it is still worthwhile to slash our use of fossil fuels.