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RTA fails to present business case for M2 widening (part 1)

In its latest document the RTA fails to present energy calculations to support a business case for the M2 widening. Banks who consider financing this project need first to find out which fuels and energies will drive cars (and trucks) in the next, say 10 years. This article lists 40 questions banks have to work on (PDF file available at end of article)

m2_upgrade_animation

http://www.hillsm2upgrade.com.au/files/M2_Upgrade_Animation.wmv

The M2 Upgrade SUBMISSIONS AND PREFERRED PROJECT REPORT recently published on this site http://www.hillsm2upgrade.com.au/ again fails to calculate which fuels and which primary energies will be available when and in which quantities for the vehicles using the M2 over the 30 year period of the benefit cost analysis (which is meaningless without such energy calculations). Banks, superannuation funds and other investors who consider financing the M2 widening should therefore do their own assessment before they commit themselves.  The following  questions can be used as TOR (terms of reference) for such an analysis.

The RTA acknowledges that “peak oil may happen” but does not inform potential investors that:

(1)   Australian oil production has already peaked in the year 2000

(2)   Global crude oil production started to peak in the year 2005 at around 74 mb/d

(3)   Global oil exports are shrinking

(4)   Australia will therefore face an oil import crisis in the next years – as already advised by the Federal Resource Minister in early 2008

The report assumes and argues, but does not quantitatively prove, that fuel efficiency and alternative fuels will offset oil decline. However, such calculations would have to be a pre-condition for any investor to even consider financing the widening of the M2.

In relation to future traffic volumes the RTA offers a contradictory outlook. When it comes to calculating CO2 emissions net traffic is seen declining slightly (page 229) but when trying to find arguments against rail solutions, the final report again refers to chapter 3 on project alternatives:

Even with a rail link to Sydney’s north west, the M2 Motorway would still be subject to growth in traffic volumes over time with many trip origins and destinations of M2 Motorway users not effectively served by the selected route.” (page 28, chapter 3.1.3)

No wonder that this inconsistent thinking leads to following amazing statement in the final report:

“The results show that the provision of heavy rail options, for example, would not result in decreased congestion or VKT on the M2 Motorway. The Transperth model (road and rail in the same corridor) is not a feasible alternative to the M2 Upgrade project.”

kwinana_fwy_transperth

Note that the “results” were obtained by writing just 1 page, without any calculations.

My submission “Primary Energy Dilemma for Cars” dated 19/6/2010 can be found here:

http://www.crudeoilpeak.com/?p=1631

The RTA final report refers to the issues raised in my submission under Chapter 3.3.20 “Climate change” (there is no separate chapter on oil, fuels and energy!)

3.3.20.1 “Impacts” (page 228)

“b) The viability of the M2 Upgrade project is questioned due to potential future fuel shortages and the need to reduce oil consumption and dependency. The environmental assessment does not consider long-term energy requirements to sustain private vehicle use and traffic forecasts with the future availability of energy supplies and risks of shortages.

Recommendations included the preparation of an energy availability assessment to confirm the economic and environmental feasibility of the M2 Upgrade project and the consideration of additional project alternatives such as the Transperth model and the use of electronic buses and vehicles.”

The response is on page 229:

“b) Governments and industry are taking the view that it is prudent to consider that oil production may peak and then decline. This could increase the cost and reduce the availability of transport fuels and construction materials derived from oil.”

“may peak”?

Question 1: In which year did Australian oil production peak?

A: _________________________

Question 2: When did global crude oil production peak?

In terms of annual production?

A: _________________________

In terms of monthly production?

A: _________________________

Question 3: How did peak oil impact on the global financial system and the economy?

A: ___________________________________________________________________

Question 4: What does the principle of prudence mean for the widening of the M2?

A: ___________________________________________________________________

Question 5: What are the annual decline rates of crude oil production in Australia in the next 10 years?

A: _________________________

Question 6: From which countries will Australia import its oil and in which years has oil production peaked in those countries? By how many percent will their consumption increase?

A: ___________________________________________________________________

Question 7: What will be the global oil export volumes in the next 10 years?

A: _________________________

Question 8: Which Australian oil refineries will survive the period up to 2020? Write down the names and the capacities including possible sources of refinery feedstock, both local and overseas:

A: _________________________

Question 9: What are the current inventories of transport fuels in terms of days of imports and net imports? Which fuels are more critical: petrol, diesel or aviation fuel?

A: _________________________

Question 10: What will happen when the next oil war starts in the Middle East? How will the administration of the Liquid Fuels Emergency Act impact on toll-revenue?

A: ___________________________________________________________________

Question 11: Why did the Lane Cove tunnel and the Cross City tunnel collapse financially?

A: ___________________________________________________________________

Question 12: What is the performance of the Clem7 tunnel in terms of traffic volumes?

A: ___________________________________________________________________

“For transport, the solutions to the problem of “peak oil” are similar to those for climate change.”

Question 13: So are these climate change solutions implemented in a timely manner?

A: _________________________

Question 14: What will happen to the M2 traffic if the solutions are delayed in the same way as is now happening in relation to climate change?

A: _________________________

“Alternatives to fossil fuels need to be found and transport must become more energy efficient. There are moves to establish alternatives to oil as a fuel for transport and to improve energy efficiency.

Question 15: What are these alternative fuels, in which quantities will they come to the market and when? Name the projects, companies and capacities in barrels per day or mega litres pa. See detailed questions below.

A: ___________________________________________________________________

Question 16: What were the fuel efficiency gains of the Australian car fleet in the last 10 years in % per annum? Taking latest car sales figures and the growth of the vehicle fleet, will overall petrol and diesel demand in Australia increase or decrease over the next 10 years?

A: ___________________________________________________________________

Question 17: Using the results from Q 15 and 16, what are the quantities of alternative fuels and savings in mega litres over the next 10 years compared to the calculations from Q 5-7? Will they be sufficient to compensate crude oil decline and possible loss of oil import volumes?

A: ___________________________________________________________________

Let’s go through some alternative fuels:

LPG

The past conversion capacity to LPG was around 100,000 cars pa. but could be increased to 150,000 pa.

Question 18: How many cars can be converted to LPG by 2020? Are there enough licensed gas mechanics? How long will it take to train them? Would there be sufficient local propane supplies and butane storage facilities along the East coast?

A: ___________________________________________________________________

CNG – compressed natural gas

Question 19: How many NGV cars are being manufactured in Australia? How many NGV refilling stations are there? How many cars could be manufactured, imported and/or converted by 2020? In the catchment area of the M2: Is the domestic gas supply infrastructure (where it exists) sufficient to cope with increasing numbers of motorists refilling their NGV cars at home?

A: ___________________________________________________________________

Biofuels

State governments have started to introduce E10.

Question 20: Who is supplying this ethanol? How much is imported? What are the future expansion projects and when will they start to produce? What feedstock is being used?

A: ___________________________________________________________________

Question 21: Which quantities of bio diesel are being produced? What is the supply forecast for the next 10 years? How will this impact on food supply?

A: ___________________________________________________________________

Hydrogen cars

Question 22: What is the current status of fuel cell cars?

A: ___________________________________________________________________

Question 23: What is the current status of hydrogen cars using internal combustion engines? What is the timing of bringing these cars on the market?

A: ___________________________________________________________________

Question 24: Which primary energy will be used to produce hydrogen? What hydrogen supply infrastructure has to be built up? Who will finance this? Which companies are interested? Do they get government support?

A: ___________________________________________________________________

Electric cars

Question 25: How many electric cars will be on Australia’s roads by 2020? Given the enormous inertia in our existing ICE car fleet, where is the transition model for EVs? Will there be enough car loans available?  Where will the primary energy come from to re-charge the batteries? If EV’s are allowed tax free, where will the money for road maintenance come from?

A: ___________________________________________________________________

Question 26: What is the average daily driving distance of motorists on the M2? Will batteries by large enough? Will the local electricity supply grid cope with the re-charging?

A: ___________________________________________________________________

With reference to the M2 Upgrade project, traffic modelling across the Sydney network indicated that the proposed Upgrade would result in a slight net decrease in annual VKT across the Sydney network…… This net decrease in annual VKT leads to an associated decrease in the quantity of fuel consumed by private vehicles……

Question 27: What is the amount in mega litres? Is that net decrease sufficient to compensate for the results from Q 17?

A: ___________________________________________________________________

“……. and a subsequent reduction in the quantity of emissions produced. As noted in Section 10.10.3 of the environmental assessment, it is estimated that by 2013, savings in operations emissions would be greater than the estimated emissions generated during construction of the M2 Upgrade project. Furthermore, it is estimated that total operational emission savings of around 1.75 Mt CO2-e would be achieved over a thirty year period when compared against the ‘do nothing’ scenario.

Question 28: What are the emission savings in the next 30 years in %  pa?

A: ___________________________________________________________________

Question 29: What would be the CO2 saving if a Transperth solution were implemented?

A: ___________________________________________________________________

3.3.20.3 “Ecologically sustainable development” (page 231)

“b) It was requested that Transurban and RTA demonstrate transparently and accurately where the carbon free primary energy will be sourced to operate cars for the next 30 years and make public its risk assessment findings and recommendations.”

Question 30: So where is this assessment as a PDF file? The report just repeats, sentence by sentence, the response presented above, with all these open questions.

Web-link: ________________________________________________________________

“• Address distortions that create incentives for greater private vehicle use.”

Question 31: If these distortions were removed, what would be the impact on traffic of the M2 in VKT?  “Address” means legislation. What chance is there in Parliament?

A: ___________________________________________________________________

“In Chapter 3 of the environmental assessment, project alternatives are considered, including increased provision of public transport within the M2 Motorway catchment. The environmental assessment includes consideration of both rail (light and heavy rail) and road-based (bus and park and ride) public transport alternatives. The results show that the provision of heavy rail options, for example, would not result in decreased congestion or VKT on the M2 Motorway. The Transperth model (road and rail in the same corridor) is not a feasible alternative to the M2 Upgrade project.”

http://www.hillsm2upgrade.com.au/files/m2upgradesubmissionsandpreferredprojectreport.pdf

Question 32: In chapter 3 there is only 1 page on this rail topic, not really seriously investigated. How much effort was put into researching for rail alternatives in man-hrs compared to the total time spent for the report?

A: _________________________

This is from Chapter 3.1.3 (page 27)

“The main public transport destinations for users within the M2 Motorway catchment are Macquarie Park and the CBD. In 2009, a rail line between Epping and Chatswood was completed with new train stations introduced at Macquarie University, Macquarie Park and North Ryde. This project involved major upgrades to Chatswood and Epping junction stations, and the rail line has increased the accessibility of Macquarie Park and the CBD to commuters from Sydney’s north west.”

Question 33: How do commuters reach the Epping train station, the closest to the M2 catchment area? What will happen to CBD buses when there are diesel shortages?

A: ___________________________________________________________________

Question 34: How do commuters from Castle Hill go to Macquarie Park by train? How many years will they have to wait for the North West Rail Tunnel? Where are the funds for an expensive tunnel? To be completed in 2024? What is the Australian crude oil production in that year?

A: ___________________________________________________________________

“Even with a rail link to Sydney’s north west, the M2 Motorway would still be subject to growth in traffic volumes over time with many trip origins and destinations of M2 Motorway users not effectively served by the selected route.”

Question 35: Why would there be traffic growth when it was argued that the net VKT is decreasing (page 228, when calculating fuel consumption and emissions)? Would residential densities not require park& ride or bus feeders to rail stations anyway?

A: ___________________________________________________________________

Question 36: Why is a Transperth solution not feasible if it was successful in Perth? What is the difference between Perth and Sydney? Why does M2 Hills not seize that commercial opportunity?

A: ___________________________________________________________________

General questions:

Question 37: What is the Federal government’s assessment on peak oil and our oil vulnerability? Does the draft of the energy white paper deal with this problem? Is there an alternative fuels supply scenario in the white paper?

A: ___________________________________________________________________

Question 38: By how many % will the “green” cars initiative reduce fuel consumption in Australia? How does that compare numerically with the results from questions 5-7?

A: ___________________________________________________________________

Question 39: What did the NSW government do in relation to a peak oil response plan tabled in Parliament?

A: ___________________________________________________________________

Question 40: In summary, in order to manage oil decline, do governments have a concrete plan including legislation, a portfolio of  properly sequenced projects and, above all, party political and public support for these measures?

A: ___________________________________________________________________

On the last questions, consider this new book:

The impending World Energy Mess

Robert Hirsch: “The current and the previous U.S. administration tried hard to minimize discussion of “peak oil,” because it’s really bad news. When the public consciousness is raised on this subject, the public will be furious with governments: why didn’t you tell us about this and what are you doing about it?”

http://www.energybulletin.net/stories/2010-09-13/interview-bob-hirsch-his-team%E2%80%99s-new-book%E2%80%94%E2%80%9C-impending-world-energy-mess%E2%80%9D

Q: What happened after you published your report

http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf

on ‘peak oil’ for the US Department of Energy (DoE) ?

Hirsch : The people that I was dealing with said : « No more work on peak oil, no more talk about it. »    http://www.energybulletin.net/stories/2010-09-16/exclusive-interview-robert-hirsch

Conclusion: Investors would first have to find answers to those 40 questions (and all the other questions coming up when trying to answer them) before even considering to spend 1 single dollar on the M2 widening (not to mention all the other toll-way projects in the pipeline)

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