Power Hungry (19 page)

There are no clear answers to those questions. But
Energinet.dk
's environmental report holds some clues. It says that carbon dioxide emissions from power generation declined slightly in 2007, but that this decline was not due to wind power. Instead,
Energinet.dk
says, the decline was a result of the fact that 2007 “was a wet year in the Nordic region with massive hydropower production in Norway and Sweden.” It concluded that “the emissions level for 2007 followed the general trend
of low emissions following wet years.”
⁴⁷
The environmental report from
Energinet.dk
explains that Denmark sees higher levels of carbon dioxide emissions from the electric sector during dry years “because the generation at coal-fired power stations in particular is higher during dry years. The Danish emissions level is thus affected by whether it is a wet year or a dry year.”
⁴⁸

Nevertheless, give the Danes their due: They are doing some things right. Between 1999 and 2006 (the latest year for which data is available), Denmark's carbon intensity (that is, the amount of carbon dioxide emitted per unit of GDP) declined by nearly 11 percent.
⁴⁹
That's a pretty good result. Denmark is also reducing the overall energy intensity of its economy. According to the Danish Energy Agency, between 1990 and 2008 the Danish economy grew by more than 42 percent, but energy use increased by less than 5 percent. According to the agency, “This means that today Denmark uses 3 units of energy to produce the same goods as required 4 units of energy in 1990.”
⁵⁰
And the average Dane uses far less energy than the average American. Denmark's per-capita energy use is about 3.85 tons of oil equivalent per year, while the U.S. average is about 7.74 tons.
⁵¹

But the reality is that even amidst all the praise for Denmark's efforts, the United States is doing as well as—and in some cases, better than—Denmark in terms of carbon. Between 1999 and 2006, the carbon intensity of the U.S. economy decreased by nearly 13 percent—a rate about 2 percent better than the reduction rate seen in Denmark over that time period. Furthermore, in a longer time frame—1980 through 2006—America's carbon intensity declined by 43.7 percent; Denmark managed just slightly better, with a 47 percent decrease.
⁵²
Thus, the United States is largely keeping up with Denmark even though it hasn't made the same kind of massive investments in wind or made electricity exorbitantly expensive through punitive tax measures.

Although foreign journalists love to talk about Denmark's wind sector, they seldom look at the country's oil and gas business. If they were to do so, they'd be surprised by its size and by how reliant the Danes are on crude oil and natural gas.

Denmark has become largely self-sufficient in oil and gas, not because it's more virtuous or because it's using more alternative energy, but be-cause
it has fully committed to drilling in the North Sea. Between 1981 and 2007, the country's oil production jumped from less than 15,000 barrels per day to nearly 314,000 barrels per day—an increase of nearly 2,000 percent.
⁵³
The focus on sustained oil and gas exploration and production led to a corresponding increase in oil reserves, which jumped from about 500 million barrels to nearly 1.3 billion barrels.
⁵⁴
Denmark has had similar success with its natural gas production. In 1981, the country was producing no natural gas. By 2007, natural gas production was nearly 900 million cubic feet per day—enough to supply all of the country's own consumption needs and to allow for substantial exports.
⁵⁵

FIGURE 16
Danish Oil Production, 1981 to 2008

Source
: Energy Information Administration, “Denmark Energy Data,”
http://tonto.eia.doe.gov/country/excel.cfm?fips=DA
.

And the Danes are continuing their development of the North Sea. In 2008, Denmark signed a new exploration license for more offshore drilling, and two applications for additional licenses were submitted to the Danish Energy Agency. In early 2009, the agency accepted another application for drilling. That focus on oil and gas is paying dividends. In 2008, the
Danish government took in about $7.1 billion in taxes and fees from oil and gas companies operating in its offshore waters in the North Sea.
⁵⁶

So how does Denmark's oil and gas production compare with its wind production? As stated above, in 2007, Denmark's wind-power sector produced 7.1 billion kilowatt-hours of electricity, which works out to about 19,400 megawatt-hours per day.
⁵⁷
Remember that 1 barrel of oil is approximately equal to 1.64 megawatt-hours of electricity. Thus, in 2007, the total primary energy production from Danish wind was about 11,800 barrels of oil equivalent per day.

Now let's compare that to Denmark's oil and gas production. In 2007, the country's oil production was about 314,000 barrels per day. Natural gas production was almost 900 million cubic feet per day, or about 164,000 barrels of oil equivalent per day.
⁵⁸
Add in the 94,400 barrels of oil equivalent that the Danes use in the form of coal, and the math is clear: Denmark's hydrocarbon diet consists of about 572,400 barrels of oil equivalent per day. Although some of the country's oil and gas production is exported, here's the punch line: Hydrocarbons provide Denmark with about forty-eight times as much energy as the country gets from wind power.

Atlantic Monthly
's Joshua Green trumpeted Denmark's freedom from imported oil, but he didn't mention the country's coal imports. Nor did he mention the country's ongoing drilling programs in the North Sea. Thomas Friedman said the United States should be “as energy smart as Denmark!” but he didn't bother to compare the country's wind power production to its hydrocarbon use.
⁵⁹

Nevertheless, the facts—not the hype—show that the Danes are about as reliant on hydrocarbons as the United States and other countries are. In some ways, they are worse off than the United States when it comes to energy. The Danes themselves have begun to take note of the high cost of wind power and its inability to make significant reductions in carbon dioxide emissions. The September 2009 study by CEPOS said that Denmark's wind industry “saves neither fossil fuel consumption nor carbon dioxide emissions.”
⁶⁰
The final page of the report even offers a warning for the United States: “The Danish experience also suggests that a strong US wind expansion would not benefit the overall economy. It would entail substantial costs to the consumer and industry, and only to
a lesser degree benefit a small part of the economy, namely wind turbine owners, wind shareholders and those employed in the sector.”
⁶¹

FIGURE 17
Wind Power Versus Hydrocarbons: Denmark's Consumption in 2007

Sources
: Energy Information Administration, “Denmark Energy Data,”
http://tonto.eia.doe.gov/country/excel.cfm?fips=DA
; Danish Energy Agency, “Energy Statistics 2007,”
http://www.ens.dk/en-US/Info/FactsAndFigures/Energy_statistics_and_indicators/Annual%20Statistics/Sider/Forside.aspx
.

The conclusion to be drawn is clear: Although Denmark has repeatedly been held up as a model to be copied, the numbers tell a markedly different story. But then, few policymakers have bothered to look closely at what has actually happened in Denmark. Instead, they've been seduced by the easy charms of Dallas billionaire T. Boone Pickens, who has launched a multimillion-dollar media campaign aimed at promoting, well, T. Boone Pickens.

The incredible media success of Pickens brings to mind a saying coined by another promoter, P. T. Barnum: “There's a sucker born every minute.” Given the credulity with which politicians and media types gobbled up the Pickens Plan, it's obvious that old P.T.B. would be proud of T.B.P.

T. Boone Pickens Has a Plan (or a ClHue)

F
OR A FEW MONTHS, T. Boone Pickens was, once again, a rock star.

On July 4, 2008, Pickens unveiled his blueprint to rescue America from the evil clutches of foreign oil. Within days he was everywhere. He posed for the cover of
Texas Monthly
, sitting in the back of a vintage Rolls Royce kitted out like James Dean in the movie
Giant
.
¹
The cover text boomed in huge black capital letters: BOONE. Below that, in smaller type: “He saved himself. Can he save America?” Inside the magazine, writer Skip Hollandsworth lauded Pickens as “the most famous wildcatter in Texas history.”

Hollandsworth reported that when he caught up with Pickens in New York City on July 8, just four days after the launch of the Pickens Plan, “Boone had spent more than an hour that morning chatting about the plan on CNBC, and he had also appeared on ABC's
Good Morning America
and NPR's
Morning Edition
. Later that day, he was scheduled to meet with CNN, Fox, and the BBC, followed by visits to the offices of the Associated Press, the
Wall Street Journal
,” and other news outlets.

About that same time, Slate named Pickens as number three in its ranking of the eighty most powerful octogenarians in America, behind only U.S. Supreme Court Justice John Paul Stevens and billionaire corporate raider Kirk Kerkorian.
²
Pickens testified on Capitol Hill, had private meetings with Al Gore and Barack Obama (then a senator), and was a near-constant
presence on television—appearing on
The Jay Leno Show
, and
CBS Evening News with Katie Couric
, to name just a few.
³
Reporters swarmed the Dallas-based billionaire. They gushed over his money, his private jet—the leather seats are monogrammed!—and his ambitious plan to build the world's largest wind farm, a 4,000-megawatt project in the Texas Panhandle.
⁴

Pickens' media team spent lavishly to court the public and the media. They covered all the new media bases, with presences on Twitter, My-Space, LinkedIn, and YouTube.
⁵
By November 2009, the Pickens Plan had close to 31,000 fans on Facebook.
⁶

Politicians flocked to Pickens, straining themselves to amp up the hyperbole. In August 2009, at a “National Clean Energy Summit” in Las Vegas, Senate Majority Leader Harry Reid, the Democrat from Nevada, declared, “I now belong to the Pickens church. We're very thankful to have him here, he's been a good friend and a real visionary.” At the same meeting, former president Bill Clinton extended a “special word of thanks to Boone Pickens,” conveniently ignoring Pickens' lifelong support for Republicans and his financial support for the Swift Boat campaign against John Kerry in 2004. Former vice president Al Gore also chimed in, saying “I honest to God wish that more business leaders of your experience would care as much as you do, and throw themselves into this fight for the future of our country the way you are doing.”
⁷

Of course, seeing the rangy native of Holdenville, Oklahoma, in the limelight was nothing new. He's the energy industry's only rock star. Not even during Enron's heyday (and downfall) was Ken Lay as visible as Pickens has been over the past few years. Pickens loves the attention. He's friendly and cordial with reporters. And make no mistake, he's a savvy operator. Pickens is among a rare breed of entrepreneurs who just knows how to make money. And over the past few decades, he has applied that ability, as an oil man, corporate raider, dealmaker, and money manager, to amass a fortune that
Forbes
has estimated at $3.1 billion.
⁸
And those billions further burnish his rock-star credentials.

Unfortunately for Pickens, though, rock stars don't have a very long shelf life. Just a few months after Pickens rolled out his grand plan, the
Wall Street Journal
reported that two investment funds managed by Pickens had lost about $1 billion of his investors' money.
⁹
And exactly one year after Pickens launched his much-ballyhooed plan, he was forced to admit
that his vision for the wind business was in tatters. In July 2009, Pickens told Elizabeth Souder of the
Dallas Morning News
that his wind-power project turned out to be “a little more complicated than we thought.”
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