Our Energy Predicament in Charts

A friend asked me to put together a presentation on our energy predicament. I am not certain all of the charts in this post will go into it, but I thought others might be interested in a not-so-difficult version of the story of the energy predicament we are reaching.

My friend also asked what characteristics a new fuel would need to have to solve our energy predicament. Because of this, I have included a section at the end on this subject, rather than the traditional, “How do we respond?” section. Given the timing involved, and the combination of limits we are reaching, it is not clear that a fuel suitable for mitigation is really feasible, however.

ENERGY BASICS

Energy makes the world go around

Figure 1.  Source: Jewish World Review

Figure 1. Source: Jewish World Review

Energy literally makes the world turn on its axis and rotate around the sun.

Energy is what allows us to transform a set of raw materials into a finished product.

Figure 2. Energy is what allows us to transform raw materials into finished products. (Figure by author.)

Figure 2. Energy is what allows us to transform raw materials into finished products. (Figure by author.)

Energy is also what allows an us to transport goods (or ourselves) from one location to another. Services of any type require energy–for example, energy to light an office building, energy to create a computer, and human energy to make the computer operate. Without energy of many types, we wouldn’t have an economy.

Increased energy use is associated with increasing prosperity.

Figure 3. World growth in energy use, oil use, and GDP (three year averages). Oil and energy use based on BP's 2012 Statistical Review of World Energy. GDP growth based on USDA Economic Research data.

Figure 3. World growth in energy use, oil use, and GDP (three-year averages). Oil and energy use based on BP’s 2012 Statistical Review of World Energy. GDP growth based on USDA Economic Research data.

Energy use and oil use have risen more or less in tandem with GDP increases. Oil is expensive and in short supply, so its increases have tended to be somewhat smaller than total energy increases. This happens because businesses are constantly seeking ways to substitute away from oil use.

Figure 4. China's energy consumption by source, based on BP's Statistical Review of World Energy data.

Figure 4. China’s energy consumption by source, based on BP’s Statistical Review of World Energy data.

China is an example of a country with very high growth in energy use. China’s energy use started growing rapidly immediately after it joined the World Trade Organization in December 2001. China’s energy use is mostly coal.

Figure 5. Per capita oil consumption in countries with recent bank bailouts, based on data of the US Energy Information Administration.

Figure 5. Per capita oil consumption in countries with recent bank bailouts, based on data of the US Energy Information Administration.

European countries with bank bailouts show declining oil consumption.

Increased fuel use is also associated with rising population growth. 

Figure 6. World population from US Census Bureau, overlaid with fossil fuel use (red) by Vaclav Smil from Energy Transitions: History, Requirements, Prospects.

Figure 6. World population from US Census Bureau, overlaid with fossil fuel use (red) by Vaclav Smil from Energy Transitions: History, Requirements, Prospects.

On Figure 6 above, the fuel use and population growth rise very rapidly, after fossil fuels were added about 1800. In fact, the lines overlay each other, so it is not possible to see both. Adding fossil fuels allowed much better food supply, sanitation, and medical care, all leading to huge population growth.

Figure 7. World Population 1980 to 2011, based on EIA data.

Figure 7. World Population 1980 to 2011, based on EIA data.

World population is still growing rapidly, especially outside of the developed countries. The countries with the most population growth (blue) are only now beginning to obtain goods and services that the developed world takes for granted, like better medical services, cars, and electricity for every home. Their fuel use is growing rapidly.

There are many sources of usable energy. 

Figure 8. Examples of usable energy sources. Images from Wikipedia and Power Point clip art.

Figure 8. Examples of usable energy sources. Images from Wikipedia and Power Point clip art.

Figure 8 illustrates a few sources of usable energy. Clearly, there are great differences among them, both in terms of how the energy they provide is created, and in terms of the types of energy services they can most easily provide. Businesses will substitute a cheaper source of energy whenever they can. Businesses especially seek ways to substitute away from human energy, since it is the most expensive type. One approach is automation. This substitutes machines (running on electricity or oil) for human labor. Another approach is outsourcing the manufacturing of goods to countries that have lower-cost labor.

One factor that limits fuel switching from oil to electricity is the amount of machinery currently using oil.  Robert Hirsch says 

Worldwide machinery operating on oil is valued at $50 to $100 trillion (Automobiles, airplanes, tractors, trucks, ships, buses, etc.)

There is also a huge investment in roads, bridges, refineries, and pipelines. Past transitions have taken more than 30 years, because it usually makes economic sense to wait for current machinery to reach the end of its economic life before replacing it.

LIMITS WE ARE REACHING

Unfortunately, we live in a finite world. At some point we start reaching limits.

Figure 9. Humans at this point are winning the competition with other species for resources.

Figure 9. Humans at this point are winning the competition with other species for resources.

One limit we are reaching is how many people the world will support, without unduly affecting other species. There are now over 7 billion humans on earth, compared to fewer than 200,000 gorillas and chimpanzees, which are also primates.

The natural order is set up so that each species–including humans–reproduces in far greater numbers than is needed to replace itself. Natural selection chooses which of the many organisms will survive. With the benefit of fossil fuel energy, humans (as well as their cows, pigs, goats, chickens, dogs and cats) have been able to survive in far greater numbers than other species. In fact, paleobiologists tell us that the Sixth Mass Extinction has begun, thanks to humans. At some point, interdependencies are disturbed, and we can expect more population collapses.

Figure 10. Air pollution in Taiwan, from Wikipedia.

Figure 10. Air pollution in Taiwan, from Wikipedia.

Another limit is pollution of many types. This image is of air pollution, but there is also water pollution and CO2 pollution. Even what we think of as renewable energy often poses pollution challenges. For example, battery recycling/disposal can pose pollution challenges. Mining of rare earth minerals, used in electric cars, wind turbines, and many high tech devices is often cited as being very polluting in China.

Another limit is declining soil quality. In the natural order, soil is not disturbed by plowing, and the nutrients animals use are recycled back into the soil, after they use them.

As we disturb this natural order, we find erosion reduces top-soil depth. The amount of organic matter in the soil is reduced, making crops less drought-resistant. Nutrients such as phosphorous and potassium are often depleted, and need to be added as soil amendments, requiring fossil fuel transport. Soils often suffer from salinity related to irrigation. Nitrogen levels also become depleted.

It is possible to mitigate these problems using fossil fuels. However, we discover that our ability to feed 7 billion people becomes increasingly dependent on continued fossil fuel use. If we increase biofuel production, this tends to make the situation worse. Techniques such as regrading of hills to improve rainwater absorption can help the situation, but this too requires energy.

Another limit is imposed by the Second Law of Thermodynamics.  Entropy happens. Things fall apart. All of the “stuff” humans have produced (including roads, bridges, pipelines, electricity transmission equipment, cars, synthetic diamonds, and computers) keeps degrading, and eventually needs to be replaced. If we intend to continue to have roads, we need to keep repairing them and building new ones. Using current technology, this requires an increasing amount of fossil fuel energy.

Figure 11. Declining resource quality image by author.

Figure 11. Declining resource quality image by author.

Another limit arises because we extract the cheapest, easiest to extract resources first. (Figure 11) As a result, at some point, the cost of extraction rises, because the cheap resources have already been depleted. Outside observers don’t necessarily notice a difference as the quality of resources drops over time; it always looks as if there is an increasing quantity of reserves available as we move down the resource triangle.

Unfortunately, the apparently increased resources are not really comparable to what was already extracted. The resources lower down in the resource triangle, such as oil and gas that requires “fracking” to extract, require the use of increased energy resources. The speed of extraction is often remarkably slower–light oil flows like milk, while heavy oil can be the consistency of peanut butter. Extracting oil using fracking has been compared to getting oil from the pores of a concrete driveway.

Another example is fresh water. Initially we take it from a local stream, or from a shallow well, where little energy (and cost) is required to obtain it. As this resource depletes, we  seek other sources–deeper wells, or water piped from afar, or desalination. All of these approaches use much more energy. If the world’s total energy supply is not growing rapidly, using more energy for water supply is likely to mean less energy is available for other uses. I discuss this issue in Our Investment Sinkhole Problem.

OIL LIMITS

Figure 12. US crude oil production, based on EIA data. 2012 data estimated based on partial year data. Tight oil split is author's estimate based on state distribution of oil supply increases.

Figure 12. US crude oil production, based on EIA data. 2012 data estimated based on partial year data. Tight oil split is author’s estimate based on state distribution of oil supply increases.

An example of how resource depletion can work is illustrated with US oil supply. US oil production (blue) suddenly began to decline in 1970, despite the oil industry’s best efforts to extract more. By scrambling around quickly, it was possible to add more oil production from Alaska (red), but this soon declined as well.

It wasn’t until oil prices rose in the late 2000s that it made economic sense to use technology which had been developed much earlier to extract tight oil. Tight oil is expensive oil to extract. How much production will rise from current levels depends to a significant extent on how much oil prices are able to increase in the future. The higher that oil prices rise, the greater the recessionary impact that can be expected, but the more oil that can be produced.

Figure 13. World crude oil production based on EIA data. *2012 estimated based on data through October.

Figure 13. World crude oil production based on EIA data. *2012 estimated based on data through October.

World oil supply is now about level, except for the small increase added by US and Canadian oil supply. (Figure 13) One concern with world oil supply as flat as it is, is that at some point, world oil supply will suddenly take a nosedive, just as US oil production did.

Figure 13. Oil consumption by area, based on BP's 2012 Statistical Report. FSU is Former Soviet Union.

Figure 13. Oil consumption by area, based on BP’s 2012 Statistical Report. FSU is Former Soviet Union.

Another concern is that the developing world will get the majority of the world oil supply, leaving little for historically large users (Figure 13). US, Europe, and Japan experienced severe recession in the 2007-2009 period, and still are seeing economic headwinds, at the same time that countries that were able to obtain the oil continued to experience economic growth.

I think of our current situation as being like that of a host who gives a party for 10 people. There is enough food to go around, but just barely. The host decides to invite another 50 people to the party. Surprise! Suddenly there is a shortfall. Globalization has its downside!

Figure 15. World oil supply and price, both based on BP's 2012 Statistical Review of World Energy data. Updates to 2012$ added based on EIA price and supply data and BLS CPI urban.

Figure 15. World oil supply and price, both based on BP’s 2012 Statistical Review of World Energy data. Updates to 2012$ added based on EIA price and supply data and BLS CPI urban.

A third concern is that oil prices will disrupt economies of oil importing nations. Oil prices rose sharply after US oil production dropped in the 1970s. They began rising rapidly again about 2003, as the world became more globalized. In addition, oil resources became increasingly expensive to extract. There is little possibility now that oil prices can decline for long without a drop in oil production.

Oil price spikes lead to recession. Economist James Hamilton has shown that ten out of the most recent 11 US recession were associated with oil price spikes. When oil prices rise, food prices tend to rise at the same time. Consumers cut back on discretionary spending, because fuel for commuting and the price of food are necessities. This cutback in spending leads to layoffs in the discretionary sector and recession.

Figure 15. High oil prices are associated with depressed wages. Oil price through 2011 from BP’s 2012 Statistical Review of World Energy, updated to 2012 using EIA data and CPI-Urban from BLS. Average wages calculated by dividing Private Industry wages from US BEA Table 2.1 by US population, and bringing to 2012 cost level using CPI-Urban.

Figure 15. High oil prices are associated with depressed wages. Oil price through 2011 from BP’s 2012 Statistical Review of World Energy, updated to 2012 using EIA data and CPI-Urban from BLS. Average wages calculated by dividing Private Industry wages from US BEA Table 2.1 by US population, and bringing to 2012 cost level using CPI-Urban.

High oil prices also seem to lead to depressed wages.  (Figure 15. Here, I am dividing total wages for all non-government employees or by the total US population, and then taking this average wage, and adjusting if for inflation.) This is the effect we would expect, if the major substitution caused by high oil prices is a loss of human employment. This shift tends to occur because human energy is very expensive, and because wages tend to be a big share of a company’s costs.

Figure 16. Illustration by author of ways oil price rise could squeeze wages. Amounts illustrative, not based on averages.

Figure 16. Illustration by author of ways oil price rise could squeeze wages. Amounts illustrative, not based on averages.

Figure 16 shows an illustration of the effect that happens. If oil prices rise, the cost of making goods and transporting them to their destination rises. If the sales prices of goods doesn’t rise, a business’ profits will shrink. (Before and after the oil price rise shown in black box). The company will consider low profits unacceptable.

The company has several ways of fixing its lower profit. Wages tend to be one of the company’s largest costs, so these are a likely target. One approach is automation. This may slightly raise electricity costs, but it will lower wage costs, and raise profits. Another approach is outsourcing production to a low-cost country like China. This will lower wage costs and probably other costs, leading to higher profit for the company.

A third approach is what I call “making a smaller batch.” It involves closing unprofitable offices, or flying fewer jets, so that the quantity produced matches the new lower demand for the product, given the higher required sales’ price, now that the oil price is higher. Any of these approaches reduces the amount of wages paid to US employees.

HOW DOES THIS CONCLUDE?

A person could argue that any of the limits could eventually bring the system down. The pressure on wages is particularly a problem, since a further rise in oil prices would seem likely to lead to more job loss, and further pressure on wages of those who keep their jobs. The large amount of debt outstanding is another issue of concern.

Figure 17. Author's view of how various limits might work together to produce different symptoms.

Figure 17. Author’s view of how various limits might work together to produce different symptoms.

My personal view is that the most likely scenario is that the various limits will work together to produce secondary effects, and it is the secondary effects that are likely to bring society down. These secondary effects are Financial (wealth disparity, debt defaults, inability to collect enough taxes), Political (not enough taxes, uprising by the lower classes, government collapse) and Disease Susceptibility (inadequate food, medicine, and sanitation due to inadequate wages and government cutbacks).

These effects are similar to ones experienced in the past when economies started reaching resource limits, based on the research of Peter Turchin and Sergey Nefedov reported in the book Secular Cycles. In the past, societies seemed to go through about 300 year cycles. The first was Growth, lasting over 100 years. The second was Stagflation, lasting perhaps 50 or 60 years. This third was Crisis, with population decline, lasting up to 50 years (but perhaps a much shorter time). The fourth was Depression/ Intercycle.

If we estimate that today’s complete cycle started in 1800 with the use of coal, and the Stagflation period started about 1970 with the decline in US oil production, then we now seem to be nearing the Crisis stage. Of course, each situation is different. This is the first time we are reaching resource limits on a world-wide basis.

Figure 18. Government receipts divided by private industry wages, and government expenditures divided by private industry wage, based on BEA data.

Figure 18. Government receipts divided by private industry wages, and government expenditures divided by private industry wage, based on BEA data.

There is considerable evidence that we are already reaching the situation where governments are encountering financial distress of the type shown in Figure 17. With wages being depressing in recent years (Figure 15), it is difficult to collect as much taxes as required. At the same time, expenses are elevated to handle the many issues that arise (such as payments to the unemployed, subsidies for alternative energy, and the higher costs of road repairs due to higher asphalt costs). The big gap between revenue and expense makes it hard to fix our current financial predicament, and increases the likelihood of political problems.

REQUIREMENTS FOR A FUEL TO FIX OUR CURRENT PREDICAMENT

Is it possible to fix our current situation? To really fix the situation, we would need to reproduce the situation we had in the post-World War II period–when energy was cheap, and growing very rapidly. Economists have observed that historically, the cost of energy was very low. Given the importance of energy, its low price was an important feature, not a bug.  It is what allowed society to have plenty of energy for growth, at minimal cost.

In order for a new alternative fuel to truly fix our current predicament, it would need the following characteristics:

  1. Abundant – Available in huge quantities, to meet society’s ever-growing needs.
  2. Direct match for current oil or electricity – Needed to avoid the huge cost of building new infrastructure. Electricity needs to be non-intermittent, to avoid the cost of mitigating intermittency. We also need an oil substitute. This oil substitute theoretically might be generated using electricity to combine carbon dioxide and water to create a liquid fuel. Such substitution would require time and investment, however.
  3. Non-polluting – No carbon dioxide or air and water pollution.
  4. Inexpensive – Ideally no more than $20 or $30 barrel for oil equivalent; 4 cents/kWh electricity. Figure 15 shows wage growth has historically occurred primarily below when oil was below $30 barrel.
  5. Big energy gain in the process, since it is additional energy that society really needs – This generally goes with low price.
  6. Uses resources very sparingly, since these are depleting.
  7. Available now or very soon
  8. Self-financing – Ideally through boot-strapping–that is, generating its own cash flow for future investment because of very favorable economics.

It is interesting that when M. King Hubbert originally made his forecast of the decline of fossil fuels, he made his forecast as if an alternative fuel would become available in huge quantity, by the time of the decline. His original idea (in 1956) was that the new fuel would be nuclear. By 1976, his view was that the new fuel needed to be some version of solar energy.

What kind of solar energy might this be? Solar panels PV located on the ground are heavy users of resources, because they have a low capacity factor (percentage of the time they are actually collecting sunlight), and because they need to be fairly sturdy, to withstand wind, rain, and hail. Space solar theoretically would be much better, because it is much more sparing in its use of resources–it would have over a 99% capacity factor, and the PV film could be much thinner. Timing for space solar would be a big issue, however, assuming financial issues can be worked out.

Also, even if space solar or some other fuel should provide the fuel characteristics we need, we still need to address the population issue. As long as world population keeps rising,  humans are an increasing strain on earth’s resources.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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183 Responses to Our Energy Predicament in Charts

  1. Michael Lloyd says:

    I think Tom Murphy did a good job explaining the absurdity of continued energy growth.

    See http://physics.ucsd.edu/do-the-math/2011/07/galactic-scale-energy/

    To paraphrase Feynman : “Nature cannot be fooled.”

  2. John Van N. Dorr III says:

    An editorial suggestion that is also substantive.

    Illustration 8, “Different Kinds of Energy” should be re-captioned to “Different sources of useable energy” [The horse and person are, obviously, consumers of energy a form different from the other three examples, and it is the product of their effort [from energy extracted through metabolism] that introduces energy into the consumable product that they produce.

    This conceptual distinction is important: Public discussion that is focused on only the broad category of “energy”, rather than on the “form of energy” that provides the input for the production function, obfuscates the continuum from input to final output. I’d suggest that material that is presented to the consuming public, and particularly to the public channels of communication relied upon by the media, should be clear on this.

    The American Geological Institute [AGI] published MINERALS: FOUNDATION OF SOCIETY, written by my mother, Ann Dorr. It was first written to assist her in presenting to congressional staff and others in policy positions the relationship of our material existence to the availability of and access to natural resources. [Available on Amazon at http://www.amazon.com/Minerals-Foundations-Ann-P-Dorr/dp/0922152608%5D Those presenting information on energy issues might find it a useful additional resource to assist those who want to understand the field of play more broadly.

    Thanks for your excellent efforts in helping us try to get beyond the pressures of short-term interests.

    John Dorr

    • Thanks! I think the caption “Different sources of usable energy” is clearer. It seems like most people consider sources of usable energy too narrowly.

      The link you gave wasn’t quite right. I think you mean, “Minerals: Foundations of Society [Paperback]” by Ann P. Dorr (Author), Alma Hale Paty (Author). I see used books are available for $0.01.

      • John Van N. Dorr III says:

        Yes, correction appreciated. Not a bedside read unless you grew up with geologists. But what a deal!

  3. Solar PV mono- crystalline 16% efficient panels are available today from Sun Electronics of Miami, FL for $0.32/we. Given their mounting on the suitable roofs of US buildings, the USDOE estimates 900Gwe could be accomodated. From our work for Moraine Power Corporation, we devised a mounting system costing $0.68/we. Balance of plant, including collection system, grid connected inverters, and batteries amounts to $1.25/we. This totals $2.25/we. LEC for the produced power is $0.09/kwh. This assumes 3 hours storage at rated power.

    Solar PV systems last 20-30 years. They emit no pollutants. They are primarily
    made of Silicon, including the glass cover. They are quiet.

    Were such systems augmented by solar passively heated/cooled housing. Holdover
    plate refrigeration. Solar nano tube hot water heaters, it is practical for each dwelling to become a net energy exporter.

    Of course, it will be necessary to shift our transport system to electrified rail, and water. And it will be necessary to shift our agricultural system to one without diesel fueled tractors, perhaps using plant oils grown on the farm, otherwise forks, shovels, and hoes, or draft animals.

    But we could still maintain a civilization.. . .

    INDY

    • davekimble2 says:

      Do you have an energy budget for the full life cycle of one plant? Since almost 100% of the Energy Invested has to be expended before the Energy Returned can be enjoyed, there has to be an energy subsidy (mostly from fossil fuels) to make it happen. The transition would have to be done over a number of years, have you modeled the amount of fossil energy.years that would be required to make the transition ? How long before the project as a whole is making a net energy profit?

      • Of course I have such a thing. And I’m not the only one who did an energy
        budget for PV. I organized utility scale renewable power companies in Africa, and in the Midwest.

        Your problem is one of being behind the 8 ball. Pricing of PV crossed the magic $1/watt number last year. It has been dropping steadily since
        to the current level of $0.32/watt.

        I myself, installed 600 watts of PV on my ship 2 years ago at $2/watt. My system eliminated 450 gallons of diesel consumed annually to produce the power necessary to operate it. That is; $1,200 spent on PV eliminated $2,250 spent annually on diesel. The payoff was 6 months. Do the math.

        PV works, it’s now cheaper than alternatives, it doesn’t put mercury and sulfur into the atmosphere, it’s silent, needs minimal maintenance, and uses one of the most abundant elements in the earth’s crust.

        INDY

        • davekimble2 says:

          I asked about an energy budget, not a financial budget. The two differ when the price of energy changes, as it does for a variety of reasons. The recent drop in the $/W of PV has been due to Chinese companies having access to easy finance to increase production, leading to massive over-capacity and over-supply. Many manufacturers in US, Germany and Japan have gone bust under this pressure. But this appears to be coming to an end with the Chinese Government now refusing further easy money to Suntech, which has defaulted on its loans and is expected to go into bankruptcy. When the over-supply has been corrected, prices will rise again, including in the US. This will make a non-sense of a financial budget, but won’t affect the energy budget – which is why it is of particular interest.

          • How many times do I have to say, that yes, I and others have done energy budgets
            for PV, GeoThermal, and Wind? How many times do I have to say that the
            result of those analyses give an EROEI > 20 for PV?

            Hmmm… …. …

            Are we still in denial? Hmmmm???

            INDY

            • Charlie Hall is saying that for installed Solar PV in Spain, the EROEI of the system is 2.4. It is not clear to me whether intermittency is considered at all in this. This is reported in his new book, Spain’s PV Revolution, by Pedro Prieto and Charles Hall.

            • Yes the analysis of solar in Spain came up with 2.4. To achieve this they threw
              in everything including the kitchen sink. By this I mean they included the Grid,
              Transmission lines, allowed for a very low capacity factor.

              The household PV system doesn’t need a grid. Doesn’t need long distance Xmission
              lines, actually doesn’t need an inverter, because it is easy to run a house on 36 VDC and given utility PV produces 40 VDC, conversion losses are eliminated, wiring sizes are minimized.

              Given a holdover plate refrigeration system which operates during the day, LED house lighting, a computer system like mine with an AMD Athlon II X4 620e 45watt
              TDP CPU, running with a DC-DC power supply, solar nano tube hot water heating,
              passive solar heating/cooling, only 1000 watts of PV can run the house, in NYC no less.

              How do I know this? Because I am doing it in NYC now. Given a sunnier clime
              like the West Indies or Florida, things work even better.

              If you want electric cooking, best go for 6Kwe of PV. Choose convection ovens, immersion heating of hotwater, ie: electric kettle, crock pot.

              Before you discount PV, I suggest you begin with the EROEI of tight oil ~ 4-5 just to get it out of the ground, subtract the energy embodied in the pipeline gathering and distribution system, subtract the energy embodied in the conversion system, automobile, power plant, divide by the efficiency, subtract the energy embodied in the road network or transmission system, and see where you are.

              Less than (1) ???

              The nay sayers like comparing apples to oranges.

              Like nuclear? How about subtracting the energy cost of sequestering the waste for 10^6 years? The energy involved in cleanup. The energy involved in concentrating the U235 to > 4%, the energy involved in mining the ore, crushing it, extracting the U at generally 0.5% from the waste rock, conversion energy into yellow cake, the energy embodied in the concrete and steel and exotic alloys of the plant, the energy embodied in the grid, ( oh, I forgot you threw that onto the PV and wind sources ) adjust for transmission and conversion losses, capacity factor, subtract the petroleum energy used, too.

              By the time you are done, I’m certain you can convince yourself that what you need to do, is live in a cave, eat raw roots and berries, wear sheep skins, rise with the sun, and go to sleep with the sun. Of course, there had best be only a few of you.

              BTW: did you subtract the energy embodied in the useless multi levels of government, which is doing it’s level best to make a FUBAR of everything? It takes energy to make hot air, you know….

              INDY

            • I don’t really have a problem with off-grid solar; it is on-grid solar that is the problem.

              With off-grid solar, it is pretty clear the person is buying it as a reasonable investment. They are matching up the system with their needs. Subsidies generally are not the reason for the investment.

              With on-grid solar, we get a whole host of other problems–a transmission system that must accommodate this variable electricity, fossil fuel generation that must be adapted for the new system, feed-in tariffs that shelter the owner of the solar panels from the true cost of the new electricity (and thus tend to keep the owner from making reasonable changes to reduce his own usage), plus a subsidy system that tends to lead to subsidies of the rich by the poorer members of the community.

            • davekimble2 says:

              I have seen the energy budget for this, and the system boundaries are set much wider than is usual. It includes the actual energy costs for all the things like office computers needed to build and run this extensive solar farm in the real world.

            • Christopher Johnson says:

              Dr. Oprisko: How do you respond to naysayers who cite recent studies about erosion of solar panels by sand and other detritus. They claimed an average efficiency decline of more than 40% after three years of operation in hot/dry/desert climates.

            • davekimble2 says:

              ERoEI is an important single figure, but it is not as useful as the energy budget from which it is derived. Can I see your energy budget ?

              You haven’t tried to address the point I was trying to make, so it could be that it is you who is in denial. I used to be an avid supporter of PV, and then I realised that I had made a ghastly mistake in dismissing the timing of ER and EI. This is something that is counter-intuitive, but can be calculated mathematically, so there should be no dispute about it, given the energy budget.

          • Regarding PV erosion and production decline in deserts, due to sand storms.
            I didn’t know that a significant number of folks live in places with no vegetation. When I was stationed in Namibia, between the Kalahari and the Namib deserts, our local population consisted of the Ovambo, San, Herrero, and Himba. The Himba live in the Namib, the San in the Kalahari. Only the Namib is a desert with virtually no vegetation, the Kalahari and the region in between has plant cover. Generally thorn trees, but plant cover nonetheless.

            We designed Solar Gradient Pond Electricity Generating Plants for Namibia. Omusati Region and other parts have lots of salt pans, and salt aquifers, so sourcing salt was no problem. The ponds did suffer from evaporation, so we had to incorporate RO systems to produce makeup water. We ran these on waste heat. The latitude was between 21 and 16 degrees south, so we had good solar insolation, and the lack of rainfall meant we had high capacity factors, nearly 90%.

            We developed bimodal organic fluids for the power conversion system, used radial inflow turbines, and were operating with 95 degree celsius high temps, vs 30 degree celsius cold temps, for a delta t of 65 degrees celsius. Thermodynamic efficiency was ~ 15 %.

            On the cattle stations, PV was used extensively by the remote operators, and no one I met complained about sand erosion.

            So from my experience in those two deserts, you don’t have the problem mentioned there. I also crossed the Gobi Desert 3 times, found it covered in vegetation too, with no flying sand. So the described problem doesn’t exist there either. Sounds like a localized problem endemic to one place.

            I have an idea. There are no trees atop the Matterhorn. Just snow and rock.
            Since the Peak of the Matterhorn has no trees, we should only consider options suitable for treeless snow covered rocky areas, with steep slopes.

            Cooking on a campfire, in front of your forester tent, doesn’t work on the Matterhorn, so we should never build either campfires or forester tents don’t you think?

            While you ponder that, I’m going off to the Adirondaks with my canoe, forester tent, sleeping bag, axe, bowie knife, matches, a side of bacon, some salt, sugar, tea, flour, and pepper. I’ll build a spruce bed using spruce tips over a rectangle warmed by a wood fire, which I’ll move to one side, I’ll pitch my forester tent over the spruce tip mattress, and while you’re ruminating, I’ll cook the salmon I killed with a stick over my fire, and wash the whole thing down with some Earl Grey Tea.

            Let me know how it all turns out.

            INDY

    • Thanks! I think that there would likely need to be a grid upgrade and changes to remuneration of fossil fuel plants to make such a system work, as well.

      There get to be a lot of details–quantities that are really feasible, pollution, who will pay for all the systems, how to deal with the intermittency added to the system. etc. Nothing is a slam-dunk.

      • Gail,
        None of the prerequisites you mention will occur. I believe we will see a disorderly
        process, wherein individuals, fed up with continually increasing electricity costs, do the math. Once they do so, they will buy the panels, erect them on the south facing roofs of their buildings, connect up the inverters, and become net exporters of PV power to their local utility through feed in tariffs currently in force.

        The reduced demand, observed at the grid level, will drive utilities to finally shut
        down overage coal plants, now under the gun for their high level of sulfur, mercury, and other toxic metal emissions.

        Adding to this trend, we now see companies erecting panels on customer buildings, financing the installations themselves, and leasing the units to the building owner.

        This latter activity, will eliminate a previous barrier to implementation by many, and will result in increased rates of construction.

        INDY

        • davekimble2 says:

          The Australian experience is that the coal-fired generators will complain very, very loudly that FiTs for solar are unfair and putting them out of business. In this they will be backed by coal miners, the political opposition, the media, and a rag-tag army of climate change deniers and anti-Green thinkers. What they won’t do is close coal-fired power stations voluntarily. If forced into bankruptcy, the remaining generators will complain all the louder.

          • It works the same way in the US. Some folks complain about mountain
            removal, the rest complain about lack of work. We couldn’t get Moraine Power on line due to this sort of thing.

            The solution to this is found on Bill Mitchell’s blog. It’s called the job guarantee. The job guarantee eliminates a key participant in foot dragging, working people. Then you only have to deal with the coal companies and the utilities. You bankrupt the coal companies, so they disappear. You regulate the utilities to death, to the point they shut up.

            But frankly, none of this is necessary. Mom and Pop home owner, tired of
            paying Con Edison, met Joes Solar Company. Joe puts up PV systems on south facing roofs like that on Mom/Pop’s house. He leases the system to
            the building owner, with small monthly payments, which are half their current utility bill. The lease lasts 30 years, with no price increase. Mom/Pop did the math, and the PV system is a no brainer, it’s cheaper.

            Joe makes his money selling the appliances to match the PV system. He has a line of hold over plate 36 VDC refrigerators, 36VDC kettles, convection ovens, hot plates, lights, computers, and heat pumps. His nanotube hot water heaters, proven in Germany where it’s cloudy, work just fine in the US corn belt, where Mom/Pop live.

            It took Mom/Pop several years to fully make the conversion, but the appliances work great, the cost of power is fixed and cheaper, and Joe does all the maintenance, as part of the deal.

            Con Edison, proposed legislation that would prohibit roof installations of PV, but all the Moms/Pops got together and killed it. Then the Moms/Pops got net metering passed, and then got a feed-in tariff for small IPPs passed. To do this they had to twist the arms of the FERC, but a close presidential race between a black man and a white supremacist, gave them the leverage to do it.

            Deprived of nearly half their former customer base, ConEd had no choice but to close all their old and inefficient coal plants. Finally, the NERC got religion after a close call in California involving Mission San Ofre, and forced closure of all nuc plants over 40 years old (twice their design life). With free liability insurance killed by all the Moms/Pops trying to sell their power, no new nuc plants could be built. So finally, the only thing left was Hydro, Geothermal, some wind farms ConEd couldn’t kill because they were owned by T. Boone Pickens and the sage of Nebraska.

            INDY

            • davekimble2 says:

              So have you counted all the energy costs of making those 36 VDC appliances in your energy budget ? I think not, because you are still in the mindset of things simply appearing because you have money. Not only is your plan going to need the energy to make all those solar panel factories and the panels themselves, but it is going to need all the energy to make the 36 V devices, which nobody currently has.

              If we had started on this 30 years ago, when there was energy easily available, this gigantic transition would have been possible. But the future is not going to be like the past – energy is going to be limited and some people (the poorest, no doubt) are going to have to do without altogether.

        • Government cannot afford these feed-in tariffs on any reasonable scale. Neither can other consumers stand the higher cost that would be needed to support the full system, including more than just the feed in tariffs–the cost of grid upgrades, and if the price of natural gas rises, the price of natural gas subsidies, to maintain the balancing needed to support the system.

  4. still the obsession with shifting energy around goes on, we can power tractors with biofuel. When will people ‘get it’ that biofuel produces an EROEI of little better than 1:1? You cultivate 100 acres and get an actual food return from 1 acre. Such is the genius of putting biofuel in tractors.
    yet the nonsense persists…but I suppose it should get an airing in here, where the collective flak can be concentrated!
    We grew our present 7 billion bodies with mechanised foodgrowing, when we used shovels and hoes we had 1 billion, because that’s all the food that could be produced with shovels and hoes.
    More fantasies persisting in the collective imagination of humankind that we can become gentle pastoralists. Just where our fields will be isn’t made clear. Tower farms probably–we can all pedal exercise bikes to provide lighting and pump water up 50 stories. Full employment for everybody.
    Ive seen nuttier economic ideas getting a Nobel prize.

    • The EROEI for current production mono-crystalline PV is > 20.
      I quoted an LEC. LEC stands for “Levelized Energy Cost”, that is a life cycle
      cost, which considers the cost of capital, O&M, that is Operations and Maintenance.

      I also mentioned that the shift in agriculture could take at least 3 courses:
      1. A return to manual tillage using hoes, shovels, and forks. ( this is what most small gardeners do)
      2. A return to tillage using draft animals. (it should be mentioned that 100million
      acres formerly used to grow feed for draft horses, were given over to human food
      production in the USA during the 50s. This was the root cause of the massive
      food surpluses of that period.
      3. A shift to farm grown oil crops like soybeans and canola, which are pressed on the
      farm for conversion to biodiesel, or are consumed in Elsbet Diesel Engines, with
      the resulting meal fed to livestock as a protein source.

      I am not advocating one over the other. However, if the course taken is option
      1, the percentage of the population necessarily given over to agriculture will be
      north of 50%, specifically because those tools will limit the acreage tillable by one
      family to less than 5 acres, I imagine.

      I quite reasonable case can be made for option 2, using technologies developed
      by the Amish in the US. However, this means 100 million acres now growing food
      for humans will be given over to fodder production for draft animals.

      It must also be mentioned that if the US does not electrify its rail network, and
      does not power that network with grid connected renewable power, there is a real
      possibility that the rail network as well as the road networks, will crater for lack
      of fuel, with the consequence that land transport will be animal driven.

      Should this occur, the corn belt of the US will be effectively cut off from the population centers of the country. Transport of perishables from Florida/California to the cities will end as well. This will have negative consequences that are far reaching.

      Should the shift to passively heated/cooled housing not occur, there is a real risk
      of massive deforestation by a population desperate for fuel to provide winter heating/ cooking.

      All this boils down to the leadership/lack of leadership provided.

      INDY

      • I think the amount of investment needed to make such a change, and the amount of resources devoted to such a change, would have to be extremely high as well. For example, the change to passively heated/ cooled homes would require a lot of investment. People would have to (at a minimum) make huge cutbacks in discretionary expenditures. It is not even clear it could be done, with great leadership.

        • The US has 25% unemployment. It invested $6 trillion in the wars in Afghanistan and Iraq for the express purpose of controlling the oil of South Asia. My research discovered that passive solar homes meeting LEED standards, and passive solar office buildings, are now being built for the same or less money than conventional buildings.

          Innovations in passive solar design, have turned conventional thinking upside down.

          Regardless, if the UK/US can justify the massive expenditures necessary to
          maintain hegemony over middle east petroleum, justification can be found for conversion of the housing stock.

          INDY

      • more black humour as we collectively starve to death
        probably not one person in 100 has the necessary skills to see himself through a year in an agricultural context
        we have lost the knowledge
        it takes great skill to plant harvest and store the necessary food supply through a year, and even those who used to do it as a lifestyle used to call the period between planting and harvest ‘the lean times’
        Most of us would starve before the first harvests, certainly the second
        and PLEASE…leave the Amish out of this. They are a self perpetuating fraud unto themselves, selecting the bits of the modern world they will use, and casting out bits they decree as ungodly. Using machinery so long as it’s not within their dwelling—or some such convoluted thinking that somehow circumvents the use of mechanised forces but allows the use of its benefits, or use ‘stuff’ that has been manufactured by ungodly means by other people. (wheels, spectacles healthcare and so on—it varies according to sect) You either stay out of modern living–or you use it. The Amish might be good farmers, but their system is as unsustainable as anybody else’s long term They live as they do because our industrialised system can tolerate their eccentricities
        The only way you can get millions into agricultural labour is by a system of ‘no work no food’. we have become too used to having our food delivered to us on a regular basis for any other system to work
        Sorry to be so brutal, but that’s human nature. It would be work direction, that would mean dictatorship, (forget persuasion), loss of civil liberties would mean violent revolt. Read up on Stalin, Mao Tse Tung and Pol Pot if you need a clearer picture about what happens when you mess with agriculture
        The root cause of surplus food production was the application of nitrate fertilisers, not taking grazing animals off the land btw
        we cannot go back to using that 100m acres for draft animals because people need the space. And in any event, once the food supply begins to falter, the draft animals will get eaten.

  5. JamesJones says:

    I trust the soundness of the article, but I think that it puts too much trust on the value of the very tools it uses for analysis. It is a bit like trying to measure length with a rubber-band. The rubber band here is the price of finite commodity measured in infinite, free, fiat currency, which was seriously over-abused over the years. The price of oil in terms of gold is back to the values it had in 1985-2000 (1.5-2.0 grams per barrel; price of oil in gold is today lower than it was in 50s when there was a gold standard), which might lead us to believe that the value of US dollar has lost its value after a decade of financial terrorism, and then bail-outs, and then QEs, which of course would lead to higher oil prices even after a downturn. The currency with trillions in debt cannot have the same value as the one without any debt. Now that would not be a big issue for insurance, pension funds if they did not buy into US dollar bonds/stocks and chose to be part of the over-extended rigged system. Why are they not hedging against failing currencies now, as even some central banks are doing it (I am still studying to become an actuary, so I might write a thesis on this)? I have no illusion that the debt can be ratcheted up even with the fixed currency, and thus the need for good regulation, instead of bailouts.

    I think that we have a problem with the shrinking oil supply whatever argument you make, but let’s not forget all other issues which impair the very tools (value of US Dollar, supply-demand, price-discovery, price-rigging, speculation, monetary policy) which we then use to reach this very conclusion. It is like looking in wrapped-up mirror, we all look ugly when we look into it. Fixing our financial system, break up the financial, medical and any other monopolies before we go on and evaluate where we stand with regards to resources. You don’t know what you have until you discover what you waste and that goes for money, food, and in the end, energy. Japan lives with the population density that is unimaginable for the US, and it does not collapse even after the greatest of misfortunes. So people in the US need stop with the spoiled kid mentality, where it is easier to imagine post-apocalyptic future and world end fantasy, and not a little change of lifestyle or little dent in financial industry. When you have a kid that would rather die or hurt himself and do damage to everyone around, when it has to take a simple flu shot. I guess death and pessimism is better, safer, because you cannot ever get disappointed. Either that or over-exuberance.

    • The problems with extracting oil from the ground are very real–the easy sites are gone.It takes more man hours, and more fossil fuels, to get a barrel out now than 50 or 100 years ago. The population limits we are reaching are very real. Neither of these depend on the flawed financial system. I also find that when the price of oil goes up, the amount of energy we are able to consume goes down. This is a physical measurable quantity. I think the story is pretty clear, whether or not the financial system has its problems.

      Energy use per capita declines when fossil fuel costs rise.

    • Pricing energy in terms of precious metals, is a favorite of the gold bugs.
      But let’s get real here. The current tight oil boom in the US, causing the recent rise in production, is limited by extremely high depletion rates, to the point that production from tight oil will peak in 2016, after which it will rapidly plummet.

      The issue staring the US and the OECD in the face is what to do about this.

      Currently these countries are in denial. Indeed, we see nostalgia trips everywhere. Movies about the 30s are in vogue, for example. Why? Because that era was the era of “Giant”, Teapot Dome, and other discoveries, which made energy cheap.

      But living in the past, will not solve the issues of today. Sitting on one’s hands will not carry us forward. The only thing that will work is for us to accept some realities:
      1. We waste 90% of the energy we use. That means we could cut our consumption massively, and still get things done.

      2. The investment in wind, geothermal, and PV has paid off. We currently can produce power from wind at $0.02/kwh, from PV at $0.09/kwh, and from geothermal at $0.05/kwh. The only reason we don’t have greater penetration from these sources is due to a lack of a feedin tariff system in the US. This lack, permits utilities to shut out competing sources of power, so they can recoup investments in nuc and coal plants. This has progressed to the point that utilities have lobbied for extensions of operating licenses on nuc plants that are way beyond their design life. This has progressed to the point that the public has been bamboozled into subsidizing onsite storage of spent fuel, rather than insisting such fuel be reprocessed.

      Were we to shift our transport from diesel trucks, private cars, and diesel locomotives, to renewable light, medium, and heavy rail, we could save 70% of our fuel consumption, or 12.6 million barrels / day. This would eliminate our negative balance of payments.

      Were we to shift our homes to passive solar designs, including solar hotwater, we could save an additional 2 million barrels/day.

      This is no longer rocket science, folks. It’s a done deal.

      INDY

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  8. the problem lies in the ‘if’ part.
    It is human nature to regard what we have now as somehow ”sufficient unto the day”. That is how our brains have evolved. It is a waste o effort to plan and act for something which may or may not happen tomorrow, or next year.
    Our supermarkets are full today, it is exactly the same as having killed an animal in the hunt–we will eat this one, the worry about catching the next one when we’ve eaten it.
    it has been part of the evolutionary system that has worked fine up to now, but it also illustrates the dead end (literally) that we have reached

  9. Mel Tisdale says:

    Anyone concerned about what conditions could be like post collapse if we revert to more primitive societies, might be interested in BBC Radio 4’s current book of the week, week days at 9:45 U.K. time. It is entitled: ‘The World Until Yesterday’ by Jared Diamond. Each episode is available on BBC iPlayer for seven days after transmission.

    (If anyone knows of an actuary ;-), they might be interested in looking into some of the numbers that it comes up with, such as the number of deaths from tribal warfare compared to that from wars between nation states, ratios of elderly in the population and their needs to that of the rest of the tribe etc. etc. – Just a thought.)

    • yes I’ve been following it—a brilliant book

    • I guess I haven’t looked at Diamond’s current book. It would probably be easier to find the book, and look at it, than to listen to a UK show that comes on in the middle of the night here.

      • Mel Tisdale says:

        Middle of the night, no problem. Just use iPlayer. Go to the Radio 4 schedules on the BBC website and when you have found the programme ‘Book of the Week’, click on it and when the specific page appears, click on the speaker symbol. You can listen to it anytime within seven days of it being broadcast. I suggest that you listen to the first programme (only 15 minutes) and see if it appeals to you.

        • I am more of a “reader” than a “listener”. I tend not to listen to talks, if I can find a written version. In written form, it is easier to scan for what I am interested in, and go back to the numbers to make sure I got them right.

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