"The Pickens Plan" for Wind Energy: Why Use Natural Gas for Cars?

Oilman T. Boone Pickens made a splash last week by announcing plans to build a wind farm with 4,000 megawatts worth of generating capacity.  The Pickens Plan calls the U.S. the Saudi Arabia of oil wind, and he notes that, "At current oil prices, we will send $700 billion dollars out of the country this year alone — that's four times the annual cost of the Iraq war."  His logic in making this investment is pretty straightforward:

Building wind facilities in the corridor that stretches from the Texas panhandle to North Dakota could produce 20% of the electricity for the United States at a cost of $1 trillion. It would take another $200 billion to build the capacity to transmit that energy to cities and towns.

That's a lot of money, but it's a one-time cost. And compared to the $700 billion we spend on foreign oil every year, it's a bargain.

Great -- the more energy we generate at home, the more we can invest in rebuilding the U.S. economy and infrastructure.  Somewhat less obvious is the logic of his suggestion that this electricity be used to free up natural gas now burned to provide ~20% of US electricity, and instead use that gas to power cars.

There are very few natural gas powered cars in this country, and it would take an enormous investment to either retrofit existing vehicles or replace a large fraction of the existing fleet in less time than the present ~13 year life cycle.  Moreover, burning natural gas in large turbines is way more efficient than burning it in small car engines, so it is actually better used to produce electricity for the grid.  It would seem to make more sense to just use the added electricity generation capacity from wind to directly offset petroleum use.

Why not just replace or retrofit the fleet with plug-in hybrids that substantially increase the efficiency of cars regardless of their fuel type?  Then you could be agnostic about the specific engine technology and fuel, but still know you could potentially double the mileage of any given vehicle by recharging from the electricity grid?  Here, for example, is a story at Wired News by Chuck Squatriglia in which Andy Grove, the CEO of Intel, calls for converting 10 million cars and trucks in the U.S. to plug in hybrids over the next four years.  The story quotes John Dabels, CEO of conversion start-up EV Power Systems, as saying his company can provide an $11,000 conversion kit that bolts onto the transmission of existing cars and trucks and delivers a 30-40% increase in liquid fuel efficiency.  Google has evidently been running a fleet of plug-in Priuses and Escapes with a 50% improvement over the standard hybrid.  These are early numbers.  Efficiencies are bound to increase as better batteries and electric motors enter the market.

Pair plug-in hybrids with microbial biofuel synthesis -- oh, alright, and even cellulosic ethanol -- and suddenly you get way more out of your feedstock and thereby reduce pressure on food prices.  Not that I am biased or anything.

The Future of China's Economy

It's hot and damp in southeastern China this time of year.  So reports a relative of mine working in the area who called to chat a few days ago.  He was suffering through another day without air conditioning, in the middle of yet another regional power outage due to a shortage of coal.  This occurrence is evidently not uncommon.  We hear a great deal in the U.S. about the unstoppable juggernaut of the Chinese economy, but sometimes I wonder if the Chinese aren't setting themselves up for a stumble or two.

(Update: For more on resource demands, see my subsequent post "More on China's Economy, Food Production, and Food Demand".)

Many of the signs point to inevitable economic superiority.  The Carnegie Endowment for International Peace released a report last week that projects China's economy will overtake that of the U.S. by 2035 (Yahoo News). "China's Economic Rise--Fact and Fiction", by Albert Keidel, concludes that China's economy is now dominated by internal growth rather than exports, and that China's economy will be twice that of the U.S. by 2050.  Keidel gives the nod to financial and bureaucratic tangles as the primary threats to growth, but does not appear particularly concerned about environmental damage and pollution. He argues that:

The record for several other East Asian economies argues that pollution is unlikely to undermine China's growth in the coming decades. In particular, Japan, South Korea, and Taiwan all passed through similar periods of serious pollution associated with rapid industrialization. In these cases, policy responses were also delayed but eventually reduced pollution levels that in some dimensions were worse than China's today.

Maybe so, but, depending on how you look at the numbers, the cost of pollution may be wiping out all of China's GDP growth.

(Update 25 July, 2008: Here is a video feed from Fora.tv of a panel discussion at the Carnegie Endowment for International Peace discussing the "Fact and Fiction" report.  I haven't watched the whole thing yet...)

Attempting to Account for the Costs of Pollution

For most of the last decade, China's government has downplayed the cost of environmental damage to the country's GDP.  However, according The Economist, in March of 2008, Pan Yue, a deputy minster at the State Environmental Protection Agency (SEPA), publicly estimated that environmental damage reduces GDP by as much as 13%.  As recently as May, 2006, the official estimate was only 3% of GDP for 2004, a tally contained in the first and only "green audit" of the economy.

The direct costs to human life are substantial, but official estimates are also variable.  A study by SEPA and The World Bank, published last year, "The Cost of Pollution in China", estimates that pollution is directly responsible for at least 750,000 deaths a year, while in a 2006 speech Mr. Pan stated that approximately 70% of China's two million annual cancer deaths were caused by pollution.

The disparity in these figures is evidently caused by political tension between different parts of the Chinese government.  Both the health findings and the future of the "green GDP audit" were evidently compromised by political infighting between state scientists, regional leaders, and officials in other ministriesThe New York Times reported that:

The official explanation was that the science behind the green index was immature. Wang Jinnan, the leading academic researcher on the Green G.D.P. team, said provincial leaders killed the project. "Officials do not like to be lined up and told how they are not meeting the leadership's goals," he said. "They found it difficult to accept this."

Here is the point: Even a 10% reduction in Chinese GDP would, in effect, zero out the overall growth of the economy.  Viewed this way, despite its role in the global economy, any "wealth creation" and growth in China may be accounted for entirely by the cost of degrading the local environment and increasing human disease and death.  You can understand how government officials might be uneasy about publicizing this figure.

According to officials at The World Bank, its "Cost of Pollution" report was similarly abridged for political reasons; "China's environmental agency insisted that the health statistics be removed from the published version of the report, citing the possible impact on 'social stability'."  As a result, one-third of the document was reportedly withheld from publication.  The tension between open communication and central control, and between development and damage, is evident in a press release from Gov.cn, the Government's official web site:

Even though the economic growth characterized by "high consumption, high pollution and high risk" is of its own historical significance in China, China's economy has been in the bottleneck period of resources and energy today and it cannot bear any risks of resources exhaustion.

Meanwhile, Chinese society has also entered the period with various conflicts protruding in which per capita GDP is about 1,000-3,000 US dollars, which cannot bear up any social problems caused by environmental pollution.

The government is clearly aware of the social and economic threats of environmental damage.  As reported by the Shanghai Daily, the most recent five year plan; "Requires energy consumption per unit of GDP to decline by 20 percent from the previous planning period.  The total amount of major pollutants discharged will be reduced by 10 percent, and forest coverage will be raised from 18.2 percent to 20 percent."

In an effort better address environmental concerns, in March of 2008 the State Council upgraded SEPA to a full Cabinet-level ministry.  To gather, "Accurate and high-quality data [of] pollution sources," the government launched in the first pollution census in February 2008.  And yet even while the central government attempts to close illegal and polluting coal mines and coal burning plants, journalists regularly report that local and regional authorities either ignore or explicitly condone the reopening of those facilities (1, 2, 3).

It does not appear that China's reliance on coal is going to decrease any time soon.  China has recently been building coal-fired plants at the rate of one every 7 to 10 days, with plans to build 500 more over the next decade.  The fraction of newly built power plants that burn coal has increased from 70% to 90% since 2000.  Thus, without either a more unified approach to reducing pollution or a substantially stronger response to that end by the central government, environmental damage will continue to directly plague both the economy and human health.

The Future Cost of the Building Boom

Here is something I don't see discussed in the press: where are the Chinese going to get all the coal to fire all the new power plants, especially when they are already facing supply shortfalls?  (Update: To clarify, I am less concerned here with the amount of coal in the ground than supply chain issues.  If they are already having trouble moving coal quickly enough to existing plants, how will they manage the increased demand?)  And while they may have the coal in the ground, how much will it cost to mine it with labor costs rising all across the country? And what about the costs of additional transportation infrastructure?

This brings us back to my father-in-law, sweltering away in Xiamen, and one of stumbling blocks the Chinese may be literally building for themselves.  As reported by The New York Times:

Each year for the past few years, China has built about 7.5 billion square feet of commercial and residential space, more than the combined floor space of all the malls and strip malls in the United States, according to data collected by the United States Energy Information Administration.

Chinese buildings rarely have thermal insulation. They require, on average, twice as much energy to heat and cool as those in similar climates in the United States and Europe, according to the World Bank. A vast majority of new buildings -- 95 percent, the bank says -- do not meet China's own codes for energy efficiency.

All these new buildings require China to build power plants, which it has been doing prodigiously. In 2005 alone, China added 66 gigawatts of electricity to its power grid, about as much power as Britain generates in a year. Last year, it added an additional 102 gigawatts, as much as France.

Damn.  So not only is China building enormous power generation capacity, but their underlying infrastructure is inherently inefficient.  This kind of systemic inefficiency is often attributed to, excused, or even just written off as a characteristic of a particular "stage of economic development" (see Keidel for one example).  It is certainly true that the U.S., Japan, and Europe all went through periods when the focus was on generating jobs and building wealth, only later to be followed up by mining inefficiencies to squeeze more product out of each unit of water and energy.

But all of China's infrastructure, all that housing and commercial space, is brand new.  So here are more questions: Is the government's plan to replace inefficient buildings over the next couple of decades?  Will labor remain so inexpensive that Chinese infrastructure is, in effect, disposable?  What are the secondary costs of maintaining that construction boom (e.g., energy, pollution, materials)?

It would seem that without a truly radical change in energy production, China is setting itself up to rely on dirty coal for many decades to come.  And so I wonder: How it is that the country will escape continued environmental damage that is equivalent to China's GDP growth?  You can't put off dealing with those costs forever.

The U.S. is borrowing cash from China to buy petroleum, and we have to sort that out as soon as possible.  But the Chinese are using their health, and thus their future productivity, as collateral for present growth. Even if they don't stumble, they may have to pause to catch their breath.

Ineffective Export Controls for US Technology

In the context of my ongoing skepticism about the effectiveness of regulation for improving biosecurity, here is a quick note on the utility of export controls for restricting transfer of sensitive technology.

Over at Wired News, Noah Shachtman has a post pointing to an article in Mother Jones about all the US weapons that are winding up in the hands of Iran.  Re-sale by third parties seems to be the short answer, but read the article to get the full story.

"The Big Squeeze: New Fundmantals for Food and Fuel Markets"

Big_squeeze_coverBio-era recently released a new report describing our latest thinking about the future of food and fuel markets.  In the short term, we could be in for an even bumpier ride than we have seen so far.  Over the longer term, new technologies (biological and otherwise) will profoundly alter our ability to produce non-fossil fuels and will thus alter the structure of the economy.  But the sheer size of the petroleum and gasoline markets will continue dominate energy markets, and our economy, for many years to come.

Click on the image to  obtain the report -- as with previous releases you can purchase a copy from a print on demand service or download a PDF after registering.

Here is the Introduction:

In recent years, rising prices for agricultural and energy commodities have heightened interest in the economic fundamentals governing these markets. This report presents bio-era’s latest thinking on some of these fundamentals, and how they may be changing in unanticipated ways. Part of what we explore here concerns the interactions between the principal “long forces” affecting these markets, including the forces of climate change, the limits of conventional crude oil supply expansion, and the impacts of continued underlying growth in global populations and economies. Not surprisingly, we foresee these long forces acting in combination to place additional upward pressure on fuel and food prices, and we present a model for thinking about the dynamics at work in what we hope is a simple, but useful, way.

In addition, we also consider the growing linkages between agricultural and energy commodities, and how these linkages might affect current and future pricing dynamics within and between these markets. Under one, very specific set of conditions, we believe that price signaling between these markets could lead to a self-reinforcing feedback loop — which if left unchecked — could result in steadily escalating clearing prices.  The theoretical effect we describe is akin to an “evolutionary arms race” or a “red queen effect.” Should market circumstances ever give rise to the price dynamic described here, the implications could be far-reaching. Energy and food prices could rise steadily as a result, at great cost to the global economy. Continuing globalization might even be placed at risk. For these reasons, and because these theoretical possibilities have gone largely unnoticed to date, we felt it worth calling special attention to them here.

Here are the "Key Findings":

  • Despite seven years of rising real prices for crude oil and a doubling of prices over the past year, global crude oil production has been nearly flat since 2005.
  • The production of biofuels--in the form of ethanol fermented from sugars and starches, and biodiesel derived from vegetable oils and animal fats - has increased significantly and is now an important source of supply satisfying year over year increases in global liquid transportation fuel consumption.
  • There are two principal connections between the crude oil and petroleum product markets and many of the so-called "soft" agricultural commodities such as grains, sugar, and vegetable oils:
  1. an input-cost effect on agricultural commodity prices because oil and energy-intensive fertilizers account for a significant share of total production costs for most major crops;
  2. an output-price effect prices of petroleum products such as gasoline or diesel oil set a floor price for agricultural commodities that can be converted into fuel substitutes.
  • The first of these connections--the input-cost effect--is "one-way." The cost of petroleum will influence agricultural commodity prices over time, but the reverse is not true--the cost of agricultural commodities will have little or no effect on the costs of producing, transporting, and refining petroleum.
  •  The second of these connections--the output-price effect--is increasingly "two-way." As volumes of agriculturally-derived fuels grow, expanding or withholding these volumes from the petroleum product markets directly influences both the price of petroleum products and the price of agricultural commodities.
  • The result is competition between food and fuel end-use markets to price at a level sufficient to attract (and/or preserve access to) marginal supplies. Attempting to hold down food prices by restricting or redirecting feedstocks used to produce fuel, may cause fuel prices to rise. Similarly, attempting to hold down or lower fuel prices by increasing conventional biofuels production may increase food prices.

In the absence of a supply response from conventional crude oil, looking ahead, this dynamic is expected to continue until either global economic growth slows substantially, or additional supplies of non-conventional fuel substitutes - such as gas-to-liquids, coal-to-liquids, or biomass-to-liquids -- become available at meaningful scale. The necessary lead time on the latter option is at least 3-5 years.

"The Big Squeeze: New Fundamentals for Food and Fuel Markets",  A Special Bio-era Report, June 2008, By Stephen C. Aldrich, James Newcomb, Dr. Robert Carlson

Oil on the way to a C-note per barrel

Over the last several months I have had the opportunity to talk to a good number of oil and gas executives.  Way back, say, just last summer,  when oil was only at $65 per barrel, it still seemed like a stretch for the oil guys (yes, all guys) to claim oil would hit $100 by the end of 2007.  Now, according to Reuters, oil has just hit $92 per barrel, up 30% since August alone.  It seems the C-note per barrel may arrive quite soon.

Part of this run up in price is due to the decline of the dollar, which may further encourage a shift to trading oil in euros.  The follow on effect of moving so much trade away from the dollar can't be seen as a good sign for the U.S. economy.  Yes, it is still true that foreign governments still hold large amounts of U.S. government debt, which will always be denominated in dollar and which gives many nations an interest in propping up U.S. currency.  But slippage in international use of the dollar for trade makes me even less interested in keeping any business I do here in the U.S.  I have just accepted my first project from Canada, and the contract stipulates pay in Canadian currency.  I might even ponder leaving it in that currency, as the Canadian dollar has been appreciating with respect to the U.S. dollar at a fairly decent rate.

Anyway -- back to oil -- a significant motivation in the increase in price is limitation of supply and increased demand.  Some of this will get fixed as new refining capacity comes on line.  Shell, for instance, is investing US$ 7 billion in doubling the capacity of a refinery in Texas, though this will take many years to come on line.

Bio-era's numbers suggest that by 2020, given current plans, biofuels will amount to 10% of global liquid fuel use.  That doesn't seem like much, but the increase from ~2% to 10% of use will account for 50% of the global increase in use, which is a big deal.  I am beginning to wonder if this is already an underestimate.  Many companies are making good progress in producing various liquid fuels using microbes (see previous posts here and here), and any shift away from the dollar in trading oil will cause further substitution within the U.S.

It will be interesting to see what effect this has on the economics of distributed fuel production.

China and Future Resource Demands

It isn't news that China has a huge and still growing population, nor that the economy is growing rapidly in the context of an enormous trade surplus.  But looking at what China is today importing, and extending a few trends out into the future a decade or two, gives an interesting slant to food and energy markets that everyone should be thinking about.

I've been digging into these issues as part of Bio-era's consulting practices on biofuels and emerging biotechnologies.  What follows are some notes on trends to watch.

Arable Land:  China is actively moving farmers off the land in an attempt to slow desertification:

The relocation program is part of a larger plan to rein in China's expanding deserts, which now cover one-third of the country and continue to grow because of overgrazing, deforestation, urban sprawl and droughts.

The shifting sands have swallowed thousands of Chinese villages along the fabled Silk Road and sparked a sharp increase in sandstorms; dust from China clouds the skies of South Korea and has been linked to respiratory problems in California.

Since 2001, China has spent nearly US$9 billion planting billions of trees, converting marginal farmland to forest and grasslands and enforcing logging and grazing bans.

The policy is driven in part by concerns over food, as farmland yields not only to the deserts but also to pollution and economic development. China has less than 7 percent of the world's arable land with which to feed 1.3 billion people -- more than 20 percent of the world's population. By comparison, the United States has 20 percent of the world's arable land to feed 5 percent of the population.

...The battle against deserts is playing out across much of western China. Desertification has caused as much as US$7 billion in annual economic losses, the China Daily reported.

Over the past decade, Chinese deserts expanded at a rate of 950 square miles (2,460 square kilometers) a year, according to Wang Tao of the Chinese Academy of Sciences in Lanzhou.

...Global warming also threatens to make a huge dent in grain production, which has already slipped from 432 million tons in 1998 to 422 million tons in 2006 because of desertification. At the same time, grain consumption has risen about 4.4 million tons a year to 418 million tons, in part because of rising demand for beef, chicken and pork.

The production declines have forced China to draw down its grain stocks, and eventually it will need to buy a massive 30-50 million tons a year on the world market, Brown said.

Fresh Water Supplies:  According to an article at Yellow River Conservancy Commission, evidently a Chinese government endeavor:

China has been a production marvel when it comes to labor costs, but not for water costs. To produce a unit of GDP, China uses approximately six times more water than the Republic of Korea and ten times more than Japan, according to Zhai Haohui, vice minister of water resources.

...The water shortage nationwide will reach 50 billion cubic meters by 2030 -- up from the current 6 billion cubic meters, according to the Ministry of Water Resources.

A recent article in the Independent claims that glaciers in the Tibetan plateau, which provide freshwater to much of the country, are now melting at 7% annually.  I've seen that number as high as 13% elsewhere.

Commodities Imports:  The USDA simply says, "China's Demand for Commodities Outpacing Supply".  Demand for corn has exceeded supply in recent years, and I've read that this is the first year they might wind up importing corn.  China already imports enormous amounts of soy; just before I went to Asia in June, the quarterly Chinese buying trip to the U.S. purchased four times as much soy as markets were expecting, $3 billion in one week. 

Meat Consumption: A recent report from the UN FAO, "Livestock's Long Shadow", points out the repercussions from increasing meat consumption around the world: inefficient use of grains, massive consumption of fresh water, increased pollution and greenhouse gas emissions.  Here is a summary from the FAO magazine, carrying the title "Livestock impacts on the environment", which has a link to the full report at the bottom of the page.

Among the most remarkable tidbits from the report, and a key part of the analysis Bio-era is giving to investors in Asia, the U.S., and Europe about the future of commodities usage in regards to biofuels, is related to future Chinese meat consumption.  If China maintains the historical relationship between per capita income and meat consumption (See figure 1.4, page 9 of the FAO report.), by the time it reaches average European income levels supplying all that meat will require 40% of world grain supplies.  40%. 

This is one of those numbers that makes you wonder where and when the current system will break down.  China today has ~15% of world population, and will probably max out at about 18%, with only ~7% of the globe's arable land.  And yet supplying them with mean could consume 40% of the world's production of grain.  Either very strong cultural practices related to meat consumption will have to change (a hard thing to do), or China will be importing a huge fraction of the world's commodities.  Is that the future use of China's massive foreign currency holdings?

Fuel Mix:  According to the USDA FIA "China Bio-Fuels Annual 2007" (PDF), diesel dominates the fuel market in China.  In 2006, 120,000,000 MT of diesel and 40,000,000 MT of gasoline were used across the country (see figure on pg. 8).  Gasoline consumption appears to have leveled off, while gasohol usage has jumped considerably over the last 4 years.

Biofuel Use: The government has put a moratorium on using corn to make ethanol, and may in fact ban that use of corn altogether, but the USDA predicts, "China Fuel Ethanol Production Projected to Increase 12% in 2007":

A report from the US Department of Agriculture Foreign Agricultural Services (USDA FAS) estimates that the production of fuel ethanol in China will reach 1.45 million tonnes (484 million gallons US) in 2007, up 12% from 1.3 million tonnes in 2006. Official production of fuel ethanol in China began in 2004.

...Now, according to the FAS report, plans are to increase ethanol feedstocks from non-arable lands making the use of tuber crops and sweet sorghum. Given the new constraints, a realistic 2010 target appears to be between 3 and 4 million tonnes (1 billion and 1.33 billion gallons US).

...Diesel is the primary fuel used in China. In 2006, China consumed 120 million tonnes of diesel and 40 million tonnes of unblended gasoline. A rise in the use of E10 has caused gasoline consumption to plateau over the last four years. During this time, automobile use in China has increased on average 11.8% annually.

A story at Green Car Congress speculates that, compared the US, cellulose to ethanol may move faster in China because of labor costs.  It's interesting as well that, "China Oil and Food Corporation (COFCO), the country’s largest oil and food importer and exporter, is partnering with Novozymes on the production of cellulosic ethanol."

Offshore Land Deals:  Early this year, Chinese companies signed deals worth US$ 4.9 billion to secure growing rights on 1.2 million hectares (~3 million acres) (Here's the version from Bloomberg, via the IHT).  A similar deal was signed between China National Offshore Oil Corp (CNOOC) and Indonesia, to the tune of US$ 5.5 billion for land to grow crops for ethanol and biodiesel and for processing plants (U of Alberta China InstituteBiopact).

Finally, China recently announced an increase of planned biofuels use to 20 MMT by 2020.  This is absolutely enormous, as a story at Biopact notes:

The total production of biomass energy from non-grain crops will grow to 500 million tons of coal equivalent, worth some 3 trillion yuan [€290/$385 billion], which will account for 24 percent of the nation's total energy consumption.

In the end, given the shortage of water, the decrease in land suitable for crops, the increase in meat consumption, etc., it just isn't clear where all the biomass is going to come from.  Clearly a great deal of it will be imported, and we can now see where some of China's foreign currency reserves are going to go over the next couple of decades.  Commodities markets are going to get tighter worldwide as a result.

Here Comes China

The NatureJobs section in this week's Nature has a short news piece on science funding, education, and investment in China:

The US National Science Foundation's Science and Engineering Indicators 2006could perhaps be renamed 'Here Comes China'. The biennial report shows an increasingly international science and technology workforce, with China showing large gains in internal investment in R&D, investment by multinational corporations, and numbers of Chinese nationals earning science and engineering doctorates in the United States.

China has increased its R&D investment 24% per year over the past five years, compared with 4–5% for the United States. This growth, from US$12.4 billion in 1991 to $84.6 billion in 2003, puts the country behind only Japan and the United States. Meanwhile, investment by US-based multinationals into Asian markets outside Japan has more than doubled, from $1.5 billion in 1994 to $3.5 million in 2002, with more than $1 billion going into China alone. Finally, Chinese students earn more US science and engineering PhDs than those of any other foreign nation.

These statistics are impressive, but they tell only one side of the story. What do they mean in terms of jobs and who will get them? The United States, Europe and Japan still produce many PhDs and create a host of jobs. But China is coming on strong. One wild card is whether Chinese PhDs will stay in the United States or return home. While China's PhD production in the United States has increased, PhDs by US white males has dropped from its peak of about 8,900 in 1994 to just over 7,000 in 2003.

It would be premature to say this marks the end of US dominance in science and engineering employment, but it does show that the United States is producing less of its own scientists and may have more difficulty recruiting from abroad as other nations, particularly China, ramp up funding and infrastructure. As the report says, these trends point to a "potentially diminished US success in the increasing international competition for foreign scientists and engineers".

The Death of Innovation, or How the NIH is Undermining Its Future

Donald Kennedy's latest editorial in Science notes that the vast majority of NIH grants are going to older investigators.  Writes Kennedy;

In 1980, despite a tightened academic job market..."new" investigators held 50% of competing new grants, and 23% of all awards were going to scientists under 35. Now, alas, that percentage has shrunk to less than 4%, with a huge corresponding increase in the proportion going to older researchers.

This despite the fact that the NIH budget has at least doubled since 1980.  (The figure is from an interesting article on how to fund science and innovation by Kei Koizumi for the AAAS.)  A rough Google search suggests 80% of PhD's in the US are held by people under 40 (does anybody have good numbers for biology?), which means that the vast majority of NIH dollars are going to investigators who have been around awhile.

Now, of course, I don't mean to imply that "older researchers" aren't innovating.  Few brand-spanking new PhD's can keep up with Sydney Brenner.  A characteristic of biology that distinguishes it from theoretical physics is that doing good biology requires the grasp of a great many facts and stories.  Whereas a the guts of a PhD in physics can be derived over a weekend (or so I was told upon arriving at Princeton -- mine took rather longer) the combination of biological lore and experimental art accumulates over time.  But if we aren't funding young scientists with new ideas then we are missing out.  New methods and tools are the key to progress in biology.

Why should young scientists from abroad bother to come here?  Why should any young scientist bother to stay here?  Yes, yes -- the US still has the biggest budget and a tremendous diversity of research.  But even Sydney seems to be spending most of his time in Europe and Asia these days.  If we fail to ensure proper funding and opportunity for young biological scientists, then the innovation is simply going to happen elsewhere.