Geysers and Energy (GEYSER)

          CASE NUMBER:        182
          CASE MNEMONIC:      GEYSER
          CASE NAME:          Geysers and Energy
A.   Identification
1.        The Issue
     Geothermal reserves are found around the world in zones where
"recent" volcanic activity has taken place. Volcanos are prevalent
in areas where the Earth's plates are pressing against each other.
"Magmatic activity on the global scale can be located and
delineated within the framework of plate tectonics, which allows
one to delimit broad geographical areas of geothermal potential."
1 Significant geothermal reserves are present in the Western United
States, Italy, New Zealand, Japan, Western Latin America, Iceland, 
the Philippines, Indonesia, Eastern Africa, Egypt, France, the
Portuguese Azores, India, Turkey, Greece, Israel, Iran, Taiwan,
Eastern Europe and the former Soviet Union.  "According to a
conservative estimate, it is expected that by the end of the
present century 100,000 megawatts (MW) of electric power would be
generated from geothermal resources. " Geothermal power has been
lauded by many as an "environmentally friendly"
 alternative to the burning of fossil fuels to generate
electricity. However, the process of drilling for and harnessing
geothermal reserves is not environmentally benign. "Carbon
dioxide (C02) is the main incondensable gas accompanying the
geothermal fluids."3  Hydrogen sulfide (H2S) emissions and hot
brine liberated by drilling have to be carefully managed to prevent
human and ecological damage. Ground subsidence, or sinking, in
areas where geothermal reserves are mined must be regularly
surveyed to prevent  landscape collapse and pollution of the
aquifer with geothermal brine.   The escalation of fossil fuel
prices in the 1970s made exploring geothermal  resources much more
attractive economically . Calculating the economic viability of
geothermal reserves has been somewhat problematic. However, through
government incentives, improved technology and enhanced geological
surveying methods, the financial risks of geothermal exploration
and generation have been assuaged. "It costs a minimum
of $1 million to drill a geothermal well, and in order for the
investment to be economically viable it must provide geothermal
emissions for 20 to 30 years after the initial testing."4
In recent years there has been an increase in the number of
geothermal power plants being built world-wide. However, the great
majority of geothermal exploration and new plant construction is
taking place in Asia, where economic growth is now greatest.
2.   Description
     Energy development in the Philippines become a national
preoccupation to overcome perpetual "brown outs", which have
plagued the major population centers resulting in an average of two
hours worth of power outages a day. 5 The government has courted
business and development banks to facilitate its exploration.  An
average of 42 geothermal wells are programmed to drilled annually
until 1996.  For the period 1993-2000, 225 wells are planned to be
drilled, bringing total available steam power to about 2,965 MW.6 
     The first geothermal reserve tapped for power generation was
in the town of Larderello, Italy in 1904. Steam engines were
altered to capture the natural steam that was emanating from the
ground. Problems with chemical emissions stalled the early
operation's success. "By 1913 the Larderello fields supported a 250
kilowatt power station, which supplied the electrified Italian
railway system."7 Since being rebuilt after World War II,
Larderello now has an "installed capacity exceeding 400 MW."8 
     The Larderello geothermal fields emit dry steam, which is
"superheated steam with no associated fluids."9 This kind of steam
is preferred because it contains less corroding elements and less
waste to deal with. The Geysers in California is the only other
significant geothermal field that produces dry steam. 
     The more common kind of steam found in geothermal fields is
wet steam. The steam to water ratio varies from site to site. Some
of the most famous fields produce wet steam, such as Cerro Prieto
(Mexico), Wairakei (New Zealand), Reykjavik (Iceland), and Otake
(Japan).  Elements occurring in wet steam calcify and crystallize
on machinery, causing it to corrode.  Arrangements for the storage
and disposal of the water that accompanies the steam also can be
problematic. 
     "Iceland is one of the most thermally active countries in the
world (and whence the word 'geyser' derived from an Icelandic word
beysir).10  Since the 1920s hot waters have been used to heat
greenhouses used to grow food that could not be cultivated in
Iceland's inhospitable climate. "By 1980 almost 10,000 MW were
under cultivation in Iceland in geothermally heated greenhouses. ''
1 l Steam and hot water has been used for heating homes since 1943
in Iceland, where only homes over 50 years of age have chimneys for
fire places. Electrical power generation from geothermal reserves
began in Hveragerdi in the 1960s. 
     In an effort to better understand wet steam geothermal mining
and power generation, the Upper Mahiao and Mahanagdong geothermal
development projects in the Philippines.  These plants are part of
the Philippine National Power Corporation (NAPOCOR), but where
built by ORMAT, and US based geothermal construction firm, and are
operated by California Energy Company (CEC). CEC and NAPOCOR have
a 10 year "cooperation period", which is called the
build-own-operate transfer (BOT) program. 
3.   Related Cases 
4.   Author: Carin Houck-Wylie 
II.  LEGAL Filters
5.   Discourse and Status
     The development of the second generation of geothermal power
plants in the Philippines has been facilitated by the national
government, seeking to appeal to businesses and lenders. There have
been no formal treaties signed bilaterally with other nations nor
have there been any legal proceedings resulting from this
geothermal production. 
6.   Forum and Scope:  PHILippines and UNILATeral
     The U. S. Government, through the State Department, has signed
treaties with Egypt in 1979 and to Italy in 1985 establishing
grants to develop geothermal facilities producing electricity.
However, the assistance going to the Philippines for the
development of the Upper Mahiao and Mahanagdong has come from the
U. S. government funded Export-lmport Bank, Overseas Private
Investment Corporation and other multilateral development banks,
like the World Bank, which is partly financed by the U. S.
government.
7.   Decision Breadth
     At the United Nations Conference on Environment and
Development in 1992 an agreement to limit C02 emissions was signed
by 175 nations.  All the nations with active or potential
geothermal energy production are part of this agreement. If a UN
Global (if Climate Convention is established, the role that
geothermal C02 emissions play in the problem of global warming,
will have to be included in the accounting to produce effective
abatement of emissions.
     In relation to the specific Philippine geothermal development
projects, the primary actors have been private business and
development banks, therefore the decision breadth has been limited.
However, the impact of these agreements will affect many by
increasing the availability of electric power for the Philippines.
8.   Legal Standing: LAW
     There is widespread acknowledgment of global warming and the
role which C02 emissions play in such phenomena.  Yet no
international accord which formally limits C02 emissions exists.
There seems to be little international will to completely address
global dependence on fossil fuel use, the primary contributor of
C02 in the air. 
III. GEOGRAPHIC Filters
9. Geography
     Geographic Domain: Asia 
     The Philippines archipelago is an active volcanic site, and
therefore is a fertile source of geothermal steam. 
     Geographic Conflict Site: East Asia 
     Geographic Impact: Philippines 
11.  Sub-national Factors: NO
12.  Type of Habitat: Tropical
IV.  TRADE filters
13. Type of Measure: SUBSIDY
     The US government through its aid packages and contributions
to development banks has facilitated development of the geothermal
reserves in the Philippines. 
14.  Direct vs. Indirect Impacts: Indirect
15.  Relation of Trade Measure to Resource Impact
     a. Directly Related to Product: Yes TECHnology. 
     The U.S. geothermal construction firm ORMAT has been
contracted to build the Philippine geothermal plants.
     b. Indirectly Related to Product: Yes. ENERGY
     c. Not Related to Product: No
     d. Related to Process: Yes. HABITat
     In many countries, like the Philippines, they adopt
regulations similar to US standards in geothermal production,
especially in projects which have international private
or public backing.
16. Trade Product Identification: TECHnology
     Electric power is produced from geothermal steam that is
harnessed by turn mechanical turbines.
17. Economic Data
     Geothermal power is increasingly part of the Philippines
energy program. It is estimated by the World Bank that the
Philippines has geothermal reserves of 8,000 MW, but so far has
developed just 900 MVV.13  Geothermal exploitation will help reduce
dependence on imported energy from 75% in 1990 to 70% by 2000.14
The geothermal fields of Tiwi, Bulalo, Tongonan, and Palimpinon
account for 22 percent of the nation's power with generation close
to 4.9 million kilowatt-hours annually.  This displaces 8.3
million barrels of fuel oil and retains internally about $ 142
million, which would otherwise be spent yearly for oil
importations.15  However, all geothermal wells that are proposed or
drilled are not economically viable. "It is costs a minimum of $ 1
million to drill a geothermal well, and in order for the investment
to be economically viable it must provide geothermal emissions for
20 to 30 years after the initial testing.16
18.  Impact of Trade Restrictions: HIGH
     No trade restrictions currently exist on geothermal power
production.  However, grant, aid, and loan agreements have been
promoted because geothermal electrical power generation is
considered more "environmentally friendly", because it can be less
ecologically harmful than the mining and burning of fossil fuels. 
You could postulate that since development monies are being
allocated to geothermal power due to environmental motives, that
such activity may serve as a non-trade barrier (NTB) against fossil
fuels and nuclear power. However, those other two power industries
enjoy huge public and private sector support, much greater than
does geothermal power. Therefore, determining if there is a
significant NTB effect occurring would be very difficult. 
19.  Industry Sector: Mining and Utilities 
20.  Exporters and Importer: USA and PHILippines
V.   ENVIRONMENT filters
21.  Environmental Problem Type: HABITat Loss
     Despite its "environmentally friendly" image geothermal power
contributes to ecological degradation on site as well as globally. 
"When a large volume of fluid is removed from an underground
reservoir and is not replaced, the weight of the overburden may be
reflected in the subsidence of the land  surface above it.2~ 17
This is most common is wet geothermal fields; This caving in of the
land over a geothermal well can be reversed by rejecting waste
water back into the geothermal well. In some early cases of
geothermal mining, the subsidence caused fractures in the ground
and, in some extreme cases caused landslides (like at The Geysers
in California).  Seismic activity has also been associated with
geothermal mining. "Prolonged geothermal exploitation, subsidence,
and reinjection could trigger earthquakes in critically stressed
areas. " 18 Earthquakes at the Krafla geothermal field in Iceland
are attributed to geothermal mining activity 
     Carbon Dioxide (C02) and Hydrogen Sulfide (H2S) are the most
prevalent emissions from geothermal wells. "Of the non-condensable
gases C02 always forms by far the largest component - from 63% to
97% by weight - with H2S usually as the next largest ingredient -
from 1% to 21%."19 Other environmentally harmful elements, like
mercury, boron, ammonia, arsenic compounds, and radioactive
elements, comprise a small but significant part of the geothermal
emissions. The noise associated with geothermal mining and running
machinery can be, not only a nuisance, but also a danger to
workers. 
     Emissions of C02 vary, depending on the concentration in the
Geothermal well. Generally speaking, the C02 emissions from
geothermal power are less than what is produced by fuel combustion.
"In a 200 MW coal-fired plant, carbon dioxide emissions alone would
be 10-20 times greater that a geothermal operation. Over the life
span of a plant, 25 years, a geothermal plant will release 120m
fewer tonnes of carbon dioxide into the atmosphere than a coal
plant."20 
     "However, in certain exceptional fields, such as those in the
Monte Amiata region of Italy, the C02 discharged to the air may be
far greater than from fuel-fired plants of comparable size and
duty. ,,21 In order to sequester the C02 emitted into the
atmosphere a type of chemical fixation would be necessary, a
technology which currently does not exist As more geothermal
reserves are exploited for their electricity producing
capabilities, it will become increasingly important to control or
reduce the C02 emissions. It has been determined that C02 is a
major contributor to the greenhouse effect, the phenomena in which
the planet's median temperature rises because a blanket of gases
traps radiant heat close to the surface. 
     H2S has a rotten egg smell when the emissions are slight.
However, H2S is of increasing danger as its concentration
increases, gradually causing olfactory paralysis, and in extreme
cases of exposure, death.  "The US Environmental Protection Agency
suggests that H2S emissions from existing commercial facilities be
limited to an average of no more than 10% (about 10 ppm) of the
loading in the raw fluid.22  This is the standard that is used on
the geothermal sites in the Philippines. 
     Mercury, boron, ammonia, arsenic, radioactive compounds and
other harmful air emissions associated with geothermal power have
been relatively small. However their presence in the area require
the use of protective outfitting on workers. Many countries require
monitoring as a precaution, and inspect the concentrations of their
toxic emissions. 
     Most of the waste generated in geothermal mining takes the
form of water which has concentrations of silica, boron, ammonia,
arsenic and mercury. This brine is generally reinjected back into
the geothermal field to prevent subsidence, but it also is
collected in some locations to be dumped at sea. 
     The amount of waste water that can be produced by a geothermal
operation is great. "The Tiwi field produces about 4.5 million Ibs.
of brine per hour, of which eighty percent is currently
reinjected."23  Reinjecting waste water can be a precarious
process. Particular attention must be paid not to contaminate the
aquifers, which feed into potable water sources, when reinjecting. 
     As mentioned earlier, mining for geothermal energy releases
C02 into the atmosphere. These C02 emissions contribute to global
warming. It is commonly accepted that the burning of fossil fuels
is the largest contributor to this problem. However, because this
practice is pervasive in most nations, there appears to be little
international will to control C02 emissions. 
22.  Species
     Habitat disruption can be associated with the construction of
geothermal power facilities and the noise of running a power plant.
Also the dumping of waste water brine into seas and waterways can
be attributed with changing the ecology of aquatic life. 
     A geothermal power plant that is now run by the Philippine
National Oil Company (PNOC) on the island of Mindanao has seriously
disrupted the breeding program for the endangered Philippine
monkey-eating eagle. A geothermal power plant was constructed on
Mt. Apo in the late 1980s. Not only is this mountain a deeply
religious site for the indigenous people of the region, but also it
is the site of a breeding program to bring back the dwindling
numbers of these eagles. "Today perhaps three hundred of these
eagles are left in the wild."24 
     While there have not been causal links between the Upper
Mahiao and Mahanagdong plants and species loss, the noise
associated with drilling and operating a geothermal power plant is
not conducive to the promotion of any form of wildlife. The
environmental stresses, caused by this human activity and others,
are contributing to the overall losses in global biodiversity. 
23.  Resource Impact: MEDium
24.  Urgency of Problem: LOW 
25.  Substitutes: ALTERnative 
     Geothermal energy has been hailed as an environmentally benign
source of energy. It is not. However, it is comparatively better
than burning fossil fuels or nuclear fission. Solar power may
provide an even yet more environmentally innocuous source for
energy. Unfortunately, the current solar technology causes
pollution in manufacturing and cannot yet financially compete with
the other methods of electricity production. Wind power is also an
option, even though site access for it is limited to wide open
spaces. Without a truly "clean" source for generating the
electricity which turns the wheels of the modern international
economy, conservation measures, accompanied by continued research
into a combination of alternative power sources, seems like the
most environmentally conscious way to proceed. 
VI. OTHER factors 
25. Culture 
     Without a doubt Western economic and material values require
the increasing use of electricity. As more and more developing
nations adopt similar values, it is apparent that energy demands
will increase. Astute environmental analysis of the Western liberal
model of development reveals the fundamental flaws of this
paradigm. The ecological impact of economic growth was never part
of Adam Smith or David Ricardo's equations. Our natural environment
is not a bottomless well of resources, nor is it a bottomless pit
to dump wastes. Therefore, as the world economy becomes more
imbedded in the liberal model for economic advancement, we
exacerbate the ecologically ruinous trends already.  The ecological
costs of mowing down a forest to make cattle ranches to sell cheap
beef to people thousands of miles away are not calculated. It may
make great short-term economic sense but it is completely ignorant
of the long-term environmental costs that have been paid in species
loss, deforestation and soil degradation. Similarly, to continue to
expand or increase our appetite for electricity usage, as our
population swells, without accounting for the environmental costs
is an equation for ecological ruin. 
26.  Human Rights: YES
     The Mount Apo geothermal site mentioned earlier also has an on
going political dispute between the PNOC and the local indigenous
peoples. Plundering Paradise: The Struggle for the Environment in
the Philippines by Robin Broad with John Cavanagh eloquently
conveys the situation from the perspective of the indigenous
people.
     "Mount Apo's forested slopes and foothills are home to
     the Bagobo, one of Mindanao's many indigenous groups who
     are collectively know as the Lumad ('born of the soil').
     Mount Apo is the Bagbo ancestral land, their place of
     worship; it where their supreme god and common ancestor,
     Apo Sandawa, lives. In brief, the mountain is sacred...in
     1985 the government-owned PNOC began exploratory drilling
     at the base of Mount Apo to test the potential for
     geothermal energy development. The government's own
     Department of Environment and Natural Resources raised
     concern, denying the project a permit for exploration in
     1988.  But PNOC decided to ignore such interference. By
     1989 two test wells (each more than 2,000 meters deep and
     20 centimeters in diameter) and a 8.5-kilometer road had
     been built; Mount Apo's Blue Lake, where Bagobo went to
     worship, had turned brown and muddy; trees in there area
     were said to be dieing; erosion near the road was
     reported, and the PNOC made clear its intention to build
     new roads and expand the number of geothermal wells to as
     many as thirty-five or forty.

     At that point, the resistance of the Bagobo and other
     Lumad - and the confrontation -- escalated. Two thousand
     Lumad from nine tribes met and signed a d'yandi, and
     intertribal blood compact to defend their area from the
     project. It was an historic occasion; only the third
     Lumad d'yandi since the thirteenth century, and the first
     time in history for all nine tribes to gather as one.
     Their solemn words made the event all the more momentous:
     'For us the land is our life; a loving gift of [The
     Creator] to our race. We will die to defend it, even to
     the last drop of blood'...

     For their concern for the fate of their forests, many
     Lumad leaders are being termed Communists, detained by
     paramilitary force, and harassed, and their ancestral
     domains are being bombed by the government military. The
     geothermal project continues, as does the Bagobo's
     life-and-death struggle to protect their ancestral
     domain."25

     While the Upper Mahiao and Mahanagdong geothermal plants are
no where near the Mt. Apo site, they are part of the overall
geothermal development program of the PNOC Respect for indigenous
peoples' rights is as important to the long-term success of a
development project as incorporating environmentally responsible
aspects into a venture. 
27.  Trans-boundary
28.  Relevant Literature 

Armstead, H. Christopher H. Geothermal Energy: Its Past, Present an
Future Contributions to the Energy Needs of Man. New York: E. &
F.N. Spon, 1983. 

Broad, Robin. Plundering Paradise: The Struggle for the Environment
in the Philippines. With the collaboration of John Cavanagh. Los
Angeles: University of California Press, 1993. 

Fernandez, Justito C., Mary Flor G. Hernando and Edgar P. Sevilla.
The Balance between Geothermal Development and Environmental
Protection. " Paper for Presentation at the Philippine Geothermal
and Coal Burning Technologies Conference, October 26-27, 1991. 

Harsh, Gupta K. Geothermal Resources: An Energy Alternative. New
York: Elsevier Scientific Publishing Co., 1980.

Mitchell, A.H.G. and T.M. Leach. Epithermal Goal in the
Philippines: Island of Arc Metallogenesis, Geothermal Systems and
Geology. Cambridge: University Press, 1991. 

National Research Council. Geothermal Resources and Technology in
the United States.  Washington, D.C.: National Academy of Sciences,
1979.

Rybach, L. and L. J. P. Muffler, ed. Geothermal Systems, Principles
and Case Histories. New York: John Wiley & Sons, 1981. 

U.S. Department of State, "Egypt Economic Assistance: Thermal Power
Plant," 8 November 1990. Treaties and other International Acts
Series no. 11065. 

U.S. Department of State, "Italy Energy: Geothermal," 27 October
1992. Treaties and other International Acts Series no.11329. 

Endnotes 

1.   Ryback and L.J.P. Muffler, ed., Geothermal Systems: Principles
and Case Histories (New York: John Wiley & Sons, 1981), 26. 
2.   Harsh K. Gupta, Geothermal Resources: An Energy Alternative
(Amsterdam: Elsevier Scientific Publishing, 1980), 186.
3    Ibid, l91.
4.   The Earth Explored: Geothermal Energy, 19857 videocassette.
5.   Department of State, Philippines - Oil & Gas Exploration
Equipment, by U.S. Embassy in Manila, Market Reports, 16 November,
1993. 
6    Ibid.
7.   Christopher H. Armstead, Geothermal Energy: Its Past, Present
and Future Contributions ot the Energy Needs of Man (New York: E.
& F.N Spon Ltd., 1983), 5.
8.   Ibid, 6.
9.   Harsh K. Gupta, Geothermal Resources: An Energy Alternative
(Amsterdam: Elsevier Scientific Publishing, 1980), 42.
1O.  Christopher I I. Arrnstead, Geothermal Energy: Its Past,
Present and Future Contributions ot the Energy Needs of Man (New
York: E. & F.N Spon Ltd., 1983), 7.
11.  Ibid, 9.
12.  California Energy Company Press Releases, 17 September 1993.
13.  Power Asia, 21 February 1994, "World Bank Approves $211
million for Geothermal Development. " 
l4   Ibid.
15.  Jusitito C. Fernandez, Mary Flor G. Hernando and Edgar P.
Sevilla, The Balance Between Geothermal Development and
Environmental Protection (Manila: Philippine Geothermal and Coal
Burning Technologies Conference, National Institute of Geological
Science, 1991): 2. 
16.  The Earth Explored: Geothermal Energy, 19857 videocassette.
17.  National Research Council, Geothermal Resources and Technology
in the United States: Supporting Paper 4, The Report of the
Geothermal Resource Group Supply and Delivery Panel of the
Committee on Nuclear and Alternative Energy Systems, (Washington,
D.C.: National Academy of Sciences, 1979), 40. 
18.  Harsh K. Gupta, Geothermal Resources: An Energy Alternative
(Amsterdam: Elsevier Scientific Publishing, 1980), 193. 
19.  Christopher H. Armstead, Geothermal Energy: Its Past, Present
and Future Contributions ot the Energy Needs of Man (New York: E.
& F.N Spon Ltd., 1983), 313. 
20.  Power Asia, 21 February 1994, "World Bank Approves $211
million for Geothermal Development." 
21.  H. Christopher H. Armstead, Geothermal Energy: Its Past,
Present and Future Contributions ot the Energy Needs of Man (New
York: E. & F.N Spon Ltd., 1983), 329. 
22.  Jusitito C. Fernandez, Mary Flor G. Hernando and Edgar P.
Sevilla, The Balance Between Geothermal Development and
Environmental Protection (Manila: Philippine Geothermal and Coal
Burning Technologies Conference, National Institute of Geological
Science, 1991): 7.
23.  Ibid, 9
24.  Robin Broad, Plundering Paradise: The Struggle fof the
Environrnent in the Philippines, with the collaboration of John
Cavanagh (Los Angeles: University of California Press, 1993), 35.
25.  Ibid, 33-34.