Final Energy Crisis

This was originally published on 15 January 2009

World energy consumption grew by 11 per cent between 1989 and 1999. Most forecasts project energy demand will grow a further 60 per cent between 2002 and 2030, due to rising global population and economic growth in countries like China and India. (source: chief executive BP oil). Yet, almost all petroleum geologists agree that oil production will peak within 20 years, by which time half of the Ultimate Recoverable Resource will have been consumed. Natural gas will peak shortly after oil. After this, consumption has to fall, eventually to zero. Were consumption to stay constant, proven reserves of oil would be largely depleted within 40 years and natural gas not long after.

Coal consumption

Coal consumption is now growing at twice the average of all fuels, with China accounting for 80 per cent of the growth. If consumption continues at the present rate, proven recoverable reserves will last between 100 and 155 years. With coal, a substantial part of the problem is how much energy it takes to extract it. (source: AF Optimum Population Trust (OPT).

All fossil-fuels peak estimation

However, Professor David Rutledge of the California Institute of Technology recently made a compelling case for the peak of all fossil fuel energy production occurring in 2021 and for 90% of all the fossil fuels that we will ever extract being consumed by 2076. (October 2007: Hubbert’s Peak, the Coal Question and Climate Change).

While the 1990s saw the largest discovery of oil in 20 years in the Gulf of Mexico, this estimated new reserve of 700 million barrels would meet America’s then daily consumption of 17m barrels for just 42 days! (source: Albert Bartlett, Univ. of Colorado). By 2005, US oil consumption had increased by over a quarter, to 21million barrels a day, according to the US Energy Information Agency.

Efficiency

Average efficiency of coal fired power stations is about 35 per cent, but efficiencies could possibly be increased to nearer 46 per cent. However, limiting their carbon pollution by pumping effluent gasses into old oil or coal fields is energy intensive and expensive and there is no efficiency saving by adding carbon capture technology to power plants. As a result no commercial system has been built (source: the Economist magazine, 2 December 2006).

Renewables

Renewables like wind, wave, tidal and photovoltaics are all uncontrollable power sources that together, are limited to supplying at most about 20 per cent of total electricity supply due to the uncontrollable nature of wind, solar and wave supply. Their variable power output causes efficiency problems for traditional power plants that will still be needed to provide on-line back up power. However, Photovoltaic and Solar Thermal Energy has produced negligible results so far - about 1/700th of all commercial energy.

While world renewable energy supply grew by an average 2.3 per cent a year from 1971 to 2004, according to the International Energy Agency in Feb 2006, world population growth continued to increase the number of energy consumers, by 1.6 per cent a year. (source: OPT energy web pages)

Ethanol

Ethanol, produced either from corn or sugarcane, has a low output power density, containing 33 per cent less energy than the same amount of petrol. Eighteen per cent of U.S. corn goes to producing ethanol, but it provides only 1 per cent of the liquid fuel used in the U.S. (Pimentel et al). Similarly, biodiesel contains 12 per cent less chemical energy than diesel oil.

Expanding ethanol fuel production uses vital land needed for food production for ever-increasing populations and risks further widespread forest clearance to grow crops for fuel. Creating ethanol from cellulose waste is seen as a hopeful way forward, but no one has yet demonstrated a method by which more energy could be extracted than the energy required as inputs. The ‘Energy hopefuls’ talk about scientists finding better enzymes, but so far, this is just speculation.

'Net energy capture'

The ‘net energy capture’ would be a revealing figure if its value could be agreed, says OPT’s Andrew Ferguson, but we need to know how much of the by-product can be counted as an output and how much of the total crop can be utilised without causing soil degradation. In the case of corn, total yield is about 15,000 kg/ha (dry), with about half of this being grain and the rest being leftover stubble. (Pimentel and Pimentel,1996). Growing corn is prone to cause soil erosion and sugarcane causes even greater erosion. All the remaining stubble should be returned to the ground to return nutrients. The ‘energy balance’ of producing ethanol from corn can therefore be assessed as positive or negative, depending on judgement. A zero energy balance means that producing ethanol from biomass is not an energy transformation that produces useful energy; but merely a way of using other forms of available energy to produce energy in a liquid form.

Hydrogen a carrier, not a fuel

Hydrogen fuel cells are promoted as a clean fuel and only emit heat and water as waste. However, hydrogen is an energy-carrier, like electricity, not an energy source and needs electric power to extract hydrogen from water through electrolysis. It is only as clean as the fuel source used to produce it and provides only a quarter the energy as the same volume of petrol, diesel or kerosene (source: Prof. R Mann, Manchester University) – a significant problem for aircraft.

Biodiesel

Biodiesel contains 12 per cent less chemical energy than diesel oil and is five per cent less fuel efficient when burnt in an engine. A litre of ethanol contains 33 per cent less energy than a litre of petrol. In addition, ethanol blended fuels cannot easily be transported by pipeline as the ethanol attracts water, making it ineffective as a fuel. It must be transported by road, causing further fuel inputs. (Ecologist Magazine March 2007).

Electricity

In 2004, 50% of the electricity produced in the United States came from coal, 20% from nuclear, 18% from natural gas, 7% from hydro-electricity, 3% from petroleum and the remaining 3% from geothermal, biomass and solar.

A typical sized power station generates around 1000 megawatts (MW), where one MW equals a million watts. In 2002 average power demand in the UK was around 45 gigawatts (GW) or 45 billion watts. With average demand about 66% of peak demand, peak UK demand was then about 68 GW.

Geothermal

Geothermal energy[1] can be extracted without burning fossil fuel and produces only a sixth of the carbon dioxide of a natural gas-fuelled power plant, but heat pumps are expensive to install in houses. While it is very successful in a country like Iceland, where the capital is heated by geothermal energy, it is not as successful in the many places where there is no abundant heat sink in the soil.

Nuclear

Some say nuclear power is the only realistic answer to growing energy needs, despite the huge problems of storing deadly waste and potential terrorist threats. A 1,000-megawatt nuclear power station produces around 30 metric tonnes of high-level waste a year, which remains hazardous to life for thousands of years.

Nuclear fission generates just 2.5 per cent of the world’s electricity[2] and in most industrial countries nuclear supplies about 20 per cent of energy needs. In an extensive investigation, the June 2006 Ecologist magazine noted that Australia has 40 per cent of the world’s estimated 3.5 million tonnes supply of uranium. The industry estimates this would only fuel current nuclear capacity for another 45-50 years, but the potential doubling in number of fission reactors across the world could see commercially extractable uranium fuel ore run out in 20 years. As shortages loom, it is unlikely that nuclear nations with uranium ore, such as Russia, Canada and the USA, will be likely to sell it. The spot market price has risen 600 per cent between 2002 and 2006. The UK and other nuclear power generating countries will be increasingly reliant on remaining supplies from Kazakhstan, South Africa and Brazil and if major expansion takes place, will be investing billions to produce long-term deadly waste for only a short-term energy gain.

Nuclear reactors need 30 million gallons of water daily as coolant to prevent potential meltdown. With sea levels predicted to rise by half a metre by the end of this century, according to the International Panel on Climate Change, all the UK’s nuclear reactor sites are at potential risk of flooding and erosion. Major new reactor construction programmes will add millions of tonnes to CO2 emissions, though nuclear generated power will help to reduce carbon emissions. If the UK opts to keep nuclear power supplying around 20 per cent of energy needs it is likely 10 new reactors will need to be built. Worldwide, around 80 new reactors are envisaged. However, many countries are considering increasing their nuclear capacity further.

A 1998 study for the Canadian nuclear industry found that for every unit of useable high-grade (one per cent) uranium ore recovered, 20 times that amount of CO2 is released into the atmosphere. Most uranium deposits are only found in concentrations of 0.02 or less, making the true picture more problematic. Attempts to extract uranium from seawater would take three times as much energy as would eventually be produced in power output and involves highly polluting chemicals.

One hope is that reactors that breed their own fuel will come on stream. There are only three fast-breeder reactors in the world, in Russia, Japan and France, but only the Russian reactor is still operating and none has successfully managed to breed fuel. According to environmental consultancy Ceedata, if the technology could be made to work, the plutonium fuel to start up two reactors could theoretically double in size every 40 years - enough fuel to power up two more reactors. Optimistic forecasts say the technology might be ready in 20 years.

Energy fantasies?

Contrary energy messages include claims by Solar Century, a company promoting solar power, that if every south facing roof in Britain carried a solar panel, this would generate 85% of UK electricity needs. The same Guardian article of March 7, 2000 also quotes Shell Oil claims that if alternative ‘green’ energy sources were developed these technologies could provide up to 50% of the world’s energy needs by 2050.

Friends of the Earth

Friends of the Earth in its “Tomorrow’s World in Ten Minutes” overview of environmental challenges claims we have the technology to cut home energy use by 95 per cent, increase waste recycling by 80 per cent and vehicle fuel efficiency by 10 times. It says we could produce the food we need with a “tiny fraction” of the chemicals and fossil energy now used. It assumes a stable world population in 2050 without saying how all this can be achieved.

However, most of these claims are totally unrealistic, says OPT’s Andrew Ferguson, because they ignore the problem of intermittency of renewable energy sources, like wind turbines and low power density in biomass and hydro, So there are no grounds for confidence in the belief of a transition to a renewable energy world.

[1] Traditional geothermal, not deep geothermal or hot rocks.
[2] This figure, from The Ecologist is much smaller than the figure given by the International Energy Association, which was 6.8 in 2008. (See: www.iea.org/textbase/nppdf/free/2004/keyworld2004.pdf) The IEA predicts that nuclear generation in 2010 will be 6.2% of the total energy mix and that in 2030 it will be 4.3%, with - surprisingly - greater use of petroleum. I welcome readers' comments on these figures.

Why is critical scientific or political examination of reports from the ITER Project so rare? Perhaps the problem is the mystification of physics. Dr Dittmar's article demystifies fusion experimentation - theory and methods. This fascinating article is therefore not only very useful for students of physics, energy, economics and other social sciences; it is vitally important for politicians who must make decisions about funding future energy technology.

"Published results from experiments to date consistently fail to show that a window for a self-sufficient tritium breeding currently exists. This suggests that extant proposals for future tritium breeding have no demonstrable scientific basis.

In the absence of any supplementary evidence, this paper concludes that they rely on commercial hope, technological faith and public misunderstanding." [...]

"In light of everything that has been said in this article, it seems urgent that ITER should publish its research with the appropriate conclusions to the effect that:

1. Today's achievements in all relevant areas are still many of orders of magnitude away from the basic requirements of a fusion prototype reactor;
2. no material or structure is known which can withstand the extremely high neutron flux expected under realistic deuterium-tritium fusion conditions; and
3. self-sufficient tritium breeding appears to be impossible to achieve under the conditions required to operate a commercial fusion reactor.

The tax payers, the policy makers and to the media need to be told that after 50 years of very costly research conducted at various locations around the world, enough knowledge exists to state that commercial energy production from nuclear fusion is never going to be a reality."

From Michael Dittmar, Fusion Illusions in Sheila Newman (Ed.) The Final Energy Crisis, 2nd Edition, Pluto Press, UK, 2008. Also available from Michigan University Press in the US, from Palgrave MacMillan in Australia or order from Amazon.com Get your local bookstore to order it in from these and several other sources.

Summary: The report's two crucial conclusions are that the greenhouse problem can be solved by adoption of alternative technologies, and that this can be done at negligible cost to GDP.

The glaring fault in the Report is its failure to discuss the energy assumptions underlying these conclusions, which I argue are invalid.
The core assumption is that alternative energy technologies can be scaled up by the huge magnitudes required to replace fossil fuels.

There has been almost no study of this issue, i.e., the limits to renewable energy sources. The paper looks at the quantities of wind, solar, geo-sequestration etc. that would have to be provided if Garnaut's conclusions were to be achievable, and indicates why these quantities are impossibly large.

If these arguments are valid then it will not be possible to provide the amount of energy consumer capitalist society demands while achieving acceptable greenhouse targets. lt is argued that the greenhouse and energy problems must be seen as elements within the general limits to growth predicament, and that these and other alarming global problems cannot be solved without transition to some kind of Simpler Way.

The 12 page paper is dated 13-11-08 and can also be found at ssis.arts.unsw.edu.au/tsw/GarnautFinal.html Critical feedback on the paper would be welcome.

The Final Garnaut Report; A Radical Critique of its Energy Assumptions.

13.11.2008

The publication of the Final Garnaut report (2008) has made a significant contribution to increasing awareness of the magnitude and urgency of the greenhouse problem and it has moved Australia towards the implementation of carbon trading. However the lengthy and detailed report is based on crucial energy assumptions that are not discussed let alone established. The argument below is that these assumptions are invalid and therefore Garnaut’s conclusions are unsound and his policy recommendations are seriously misleading.

Like the Stern (2007) and IPCC Fourth Report Working Group 3 (2007) analyses of carbon mitigation Garnaut’s core conclusion is that the greenhouse problem can be solved by the adoption of alternative technologies at negligible cost to GDP. In other words, these three highly influential reports reaffirm the common belief that conservation effort, geo-sequestration, nuclear energy and renewable energy sources can cut greenhouse emissions to safe levels while GDP continues to grow at more or less historical rates. Remarkably, none of these reports considers the reasons for concluding that the alternatives cannot replace fossil fuels, at any economic cost. This case is detailed in my Renewale Energy Cannot Sustain Consumer Society, (Trainer, 2007a), and a more recent summary of the case is given in Trainer 2008. (Critiques of the Stern and IPCC Reports are given in Trainer 2007b, and Trainer 2007c.)

Garnaut’s treatment of the crucial assumption

Garnaut concludes that the desirable target for atmospheric CO2 concentration is 450 ppm (although he recommends a 550 ppm target on the grounds that the lower one is not likely to be accepted.) The IPCC estimates that the 450 ppm target would result in a 2 – 2.4 degree rise in temperature. Many would now say that this runs an unacceptable risk of global ecological damage. Hansen (2008) argues that the appropriate target is in the region of 380 ppm, which the world has already passed.

Garnaut aligns with the IPCC in saying that the target would require all carbon emissions to be eliminated by 2100. He anticipates that by 2100 Australian electricity consumption is likely to be 7 times as great as it is now, i.e., around 5.25 EJ/y. (Fig. 20.10.) His Fig. 20.18 anticipates that globally electricity will be generated at a rate that is 10.3 times the present rate, i.e., 103 TWh/y or 620 EJ/y. These figures represent huge increases on present electricity consumption rates, and Garnaut is saying they will be achieved without carbon emissions (p. 482) or significant economic cost. Apart from a few superficial remarks, no explanation, derivation or defence of these assumptions or conclusions is given in the 700 page Report. Almost no reference is made to the possible magnitudes of the contributions that might be made by renewable energy sources, geosequestration and nuclear energy. He simply assumes or states that alternative technologies will be able to cut emissions sufficiently. Almost all of the relevant statements in the 700 page report are given in the brief Appendix 1 to this paper.

The energy targets.

First, note again the magnitude of the problem. By Garnaut’s own account the 2100 global target is a 10 fold multiple of present electricity supply, and a 7.5 multiple for Australia, with 95% of it coming from non-carbon emitting energy sources.

It is not clear how Garnaut accounts Australia’s probable transport energy and the figures do not seem to add up. Fig. 21.4 shows transport emissions rising from 80 million t/y to 350 million t/y under business as usual, but falling to about 20 million t/y by 2100 under the Standard run. (p. 512.) It is assumed that by the end of the century zero-emissions fuels account for 90 per cent of fuel use in these transport modes. (p.. 513.) This would mean that transport energy demand would multiply by 4.375, to 4.725 EJ.

However Fig. 20.10 shows total electricity demand is expected to be 5.25 EJ by 2100, which would mean only .875 EJ would be left to meet direct electricity demand, which is already .7 EJ and increasing at around 3% p.a. If direct electricity demand increases only at the rate ABARE expects Australian energy demand to settle to to (1.9% p. by 2030), then by 2100 it will be 6 times as great as it is now, around 4.2 EJ/y. If we add to this the electricity Garnaut assumes for transport the total is 9.45 EJ, 13.5 times the present amount, not the 5.25 EJ Garnaut’s Fig. 20.10 indicates.

The faulty methodology; "Top down" modeling.

Like Stern and the IPCC Working Group 3 and virtually all analyses of carbon mitigation, Garnaut has relied solely on either "bottom up" modeling (costing each unit of replacement technology and multiplying by the amount that would be needed) or top down modeling (estimating the effect that overall measures such as a carbon tax would have on a choice of energy sources). Garnaut’s approach is in general "top down" although he says some of the studies referred to were "bottom up".

The logic of the former approach asks what amount of tax on carbon would raise the cost of carbon based energy to the point where users would turn to other sources. To answer this question satisfactorily we would need to know firstly what the other sources cost, and more importantly whether they can be implemented on the scale required. This second question is not asked by Stern, the IPCC, or Garnaut. The following section sketches some of the many reasons for concluding that the alternatives cannot be scaled up sufficiently.

The reasons why alternatives cannot replace carbon fuels.

Let us take the global electricity target Garnaut assumes, 620 EJ/y, and also assume one-third of this comes from geosequestration, wind and solar sources respectively.

Geosequestration.

If one-third of 620 EJ, i.e., 206 EJ was to come from coal via geosequestration which captured 90% of emissions (and it might be only 80%), this would be about 6 times the present amount of world electricity produced from coal. If 90% of emissions were captured, emissions from electricity generation alone would be about 1/2 of the present global total CO2 emission level, when the target must be zero. In addition at that rate of coal use the commonly estimated probably recoverable coal resource of 1 trillion tones would last less than 40 years. (However the Energy Watch Group, 2007 (see also Hienberg, 2007), believe resources are much more limited than has been generally assumed, and that coal supply could peak within about 2 decades.

Note that all this is only for the provision of electricity and other forms of energy would also need to be explained. At present 40% of Australian energy is not accounted for by electricity plus transport.

Wind

If 206 EJ of electricity was to come from wind, where would this amount of capacity be located? Garnaut notes that there could be a problem of "site availability" (p. 481.) Trieb (undated), a strong advocate of renewables, estimates that total on and off shsore European potential is only 4 EJ. Europe would have to draw from a far wider area such as Czisch (2004) advocates extending from Morocco to Khazakhstan. This would set problems to do with transmission loss and equity; i.e., the right of other people in those areas to a share of the wind energy they produce.

If Australia is to use 7 times its present .7 EJ/y of electricity, and one-third of this is to come from wind, then wind supply would be 1.7 EJ/y. This is 50 times the amount of wind energy that the Sustainable Energy Development Authority estimated in 2005 might be provided by wind farms in NSW. Australia would need about 156,000 windmills of 1.5 MW capacity (at global average capacity of .23; IPCC, although Australia is likely to exceed this.) Average annual mill production for replacement purposes would have to be about 6,000, costing perhaps $9 billion p.a., not including transmission line replacement.

If we assume that Australia has 5000 km of coast with ideal wind conditions, then at normal spacing (5 x 10 diametres) the mills would form a band 156 km wide. (This is a significant underestimate, given the fact that areas are excluded by prior use, and that wider spacing would be required in a continuous band.)

Photovoltaic energy.

To derive one-third of a world 620 EJ electricity supply from PV sources, at average Sydney insolation, yielding about .85 GJ/m/y, would require 242 billion square metres of panels, which would probably be 27 metres per person (for 2050 population). For most of the world insolation would be much lower than in Sydney.

If Australia was to derive 1.7 EJ p.a. from solar panels we would need 2 billion square metres of panels, possibly 66 square metres per person. At the present cost, including balance of system cost, this would come to $475,000 for a household of four for one-third of national electricity supply. These PV panels could only supply electricity for about 7 hours a day on average.

Nuclear energy.

Nuclear energy is almost irrelevant to a discussion of the long term global energy future in view of the limited Uranium plus Thorium resources, unless breeder or fusion technologies are assumed. (Trainer 2007, Chapter 9.) The commonly estimated 3.7 – 4 million tones of Uranium would generate a total of only about 600 EJ of electricity, i.e., the equivalent of one year’s demand at the 2100 global rate Garnaut anticipates. Taking the high resource estimates and adding Thorium might multiple the quantity by 6. (Zittel, 2006.)

Integration problems.

Even if these formidable quantities of wind and solar energy could be collected and afforded, the main problems surrounding renewables have not yet been raised. These are to do with the integration and storage problems they set. No matter how much wind and PV capacity we build they can provide no energy at all – on a calm night. Output from wind and solar sources rises and falls markedly, and can do so quickly. All PV capacity would come on stream within a couple of hours, but it can take many hours to ramp up a coal-fired plant to full output. (Gas plant can ramp up quicker than coal, but gas use will not be a significant component in a renewable world, because it emits CO2, and gas resources will be largely exhausted later in this century.)

These are not difficult problems when wind and sun contribute a small proportion of demand, say up to 15% each, because adjusting the surplus coal/nuclear generating capacity can accommodate their varying output.

Very large quantities of electricity cannot be stored. Pumped hydro systems are the best option, but can cope with only a small fraction of the demand. Hydroelectricity makes up only about 6% of Australian electricity supply. To store as hydrogen means that possibly 75% of the electrical energy generated would be lost, not including the embodied energy cost of building the elaborate hydrogen generating, processing, storing and electricity regenerating plant. (Bossell, 2004.) That is why a number of people believe we will never have a large scale "hydrogen economy." (See Trainer, 2007a, Chapter 6.) Garnaut devotes one sentence to this enormous storage problem, simply asserting that we can expect it to be solved. (p. 481.)

Note also that if the wind sector is large, for every 1000 MW of wind capacity added up to 1000 MW of coal or nuclear power might also have to be built, to use when the winds are down. This would add greatly to the capital cost of the new system, and clash with greenhouse goals.

If the PV contribution fell from 1.7 EJ to zero in a few hours a load equivalent to about 70 coal or nuclear power stations of 1000 MW capacity, twice our present total generating capacity, would have to be picked up by some other source.

Could solar thermal systems solve the problem?

Because solar thermal systems have the capacity to store heat that can be used to generate later they will probably be the most valuable contributors to a renewable energy world. However it seems that even in Central Australia, possibly the best solar thermal site in the world, these systems will not be ale to provide significant quantities of electricity over the three winter months at an acceptable cost. (For a more detailed discussion, see Trainer, 2008.)

In winter output from trough systems in use in the best US sites goes down to 20% of summer output. The analysis of relevant factors such as direct normal insolation levels, the probable performance of east west troughs in winter, operating and embodied energy costs, and transmission losses from distant sites, seems to leave little doubt that trough systems in winter would not be viable. Average 24 hour flows might be in the region of 10 W/m.

Dishes would be more effective than troughs, but output from the US Mod dish systems corresponds to a continual flow of 18-25 W/metre over a winter month. Performance data on other systems (Davenport, 2008) indicates c. 25 W/m flows. However such figures apply to use of efficient Stirling engines generating electricity at the focus of each dish and these are not applicable to our purpose, which requires heat storage.

The ANU group is exploring the use of ammonia dissociation (splitting into hydrogen and nitrogen) as a way of storing heat from dishes. (Lovegrove and Luzzi, 1996.) They believe the energy efficiency of the chemical process could be .7, and that half the energy entering the dish should be available for generating electricity after storage. This approach is very promising but its net energy efficiency seems to be problematic. For instance if the above Mod etc. winter output figure is reduced to .7 to take into account the ammonia storage process efficiency, and reduced again to take into account the lower efficiency of steam generation compared with Stirling engines, then the winter output would probably be significantly lower than the above 18-25 W/m reported for dish–Stirling systems. Note that at 25 W/m a large power station would need a 40 million square metre collection area, probably costing in the region of $(A)35 billion.

From this gross flow must be subtracted the embodied energy cost of building the collection plant and the heat storage plant involving large and heavy pressurised tanks for the ammonia process. The attempt to assess the embodied energy cost of this system in Trainer 2008 indicates high figures for very large scale systems. Fortunately the Whyalla project being built by Wizard Power will clarify some of these issues. Its developers say they are not yet clear about probable performance and in any case understandably will not make their technical information public.

Also to be deducted are the embodied energy costs of the very long distance transmission lines from central Australia to Eastern coasts. For European supply from Eastern Sahara these could be 15% of energy generated.

Perhaps the most difficult problem for solar thermal systems is set by the need for several days storage of energy in view of winter cloud occurrence. The climate data in Trainer 2008 shows that in central Australia in each winter month there might be two runs of 4 days with little sunlight. Heat storage capacity capable of coping with such runs would be extremely costly in terms of dollars and embodied energy. However if it is assumed that solar thermal is going to solve the intermittency problem set by other renewable source a far greater storage problem is set. This would require solar thermal plant to be equipped with the capacity to generate, accumulate, and store energy output from perhaps three times as much wind plus PV etc. plant as there is solar thermal plant, for several days.

For these reasons it seems that although solar thermal systems will probably be the most valuable contributors to a renewable energy world, they will not be able to guarantee electricity supply in winter even in Australia.

The conversion problem.

Discussions of the potential of renewable energy sources usually fail to take into account the need to convert energy from forms that are available to forms that are needed. Conversion is typically quite energy-inefficient, meaning that much more energy needs to be generated than might appear to be the case.

Electricity accounts for only about 20% of Australian final energy consumption. Garnaut does not explain where the perhaps 40% of energy other than direct electricity and transport energy is to come from, and he therefore does not deal with the losses of energy in conversion from one form to another Nor does Garnaut deal with the fact that sea and air transport cannot be fuelled by electricity.

It should be made clear that little of the global energy budget is likely to come from biomass. (Garnaut does not assume a large contribution.) In Chapter 5 of Trainer 2007a it is explained that if 9 billion people were to have the present Australian amount of transport energy per person from cellulosic ethanol, we would have to harvest a 23 billion ha plantation on a planet with only 13 billion ha of land. (Australia’s biomass potential is likely to be far greater than most countries.)

Energy conclusions.

At the very least the above discussion shows that there are several major difficulties and important issues which need to be resolved satisfactorily before confident conclusions can be arrived at, yet Garnaut does not deal with any of these. He anticipates an Australian electricity consumption that is 7.5 times the present amount, with 7 times the present amount coming from non-carbon based sources, and he anticipates global electricity consumption 10.3 times as great as at present but in a report of 700 pages gives no attention to showing that such huge multiples can be provided. This paper has pointed out that there are a number of impressive lines of argument supporting the conclusion that they cannot be provided.

All the issues raised above were presented to Garnaut as a mid-2008 response to the Interim Report, in the paper Trainer 2008. Receipt of this paper was acknowledged but it is not included in the list of submissions received in the Final Report.

It should be stressed that the points made above are not arguments against renewable energy. We must move to total dependence on renewables as quickly as possible and we can all live well on them, but not in an affluent-consumer-capitalist society.

The Limits to Growth position.

For some 50 years a "limits to growth" analysis of our situation has been accumulating, taking into account many more than energy issues. Its core point is that consumer society is grossly unsustainable because its levels of production and consumption are far higher than can be kept up for long or than all could ever rise to. The quest for affluence and growth is the direct cause of the many alarming global problems now accelerating. Just to note one of these impressive lines of argument, the Australian per capita footprint, around 8 ha of productive land, is about 10 times the amount of productive land that will be available on the planet by 2050 (even ignoring land losses.)

Considerations of this kind support the claim that consumer-capitalist society is not just grossly unsustainable, it cannot be made sustainable. A way of life which is rapidly destroying ecosystems and depleting resources, that is shared by only one-fifth of the world’s people but that all the rest are striving for, that insists on doubling consumption every 23 years, that is possible for a few only because they are taking far more than their fair share and condemning some 4 billion people to poverty – can’t be made sustainable or just.

Even though Garnaut actually briefly discusses the problem of resource limits (p. 69 and Table 3.3), he defers to the dominant ideology regarding the limits theme. He says there is no point considering any option to the greenhouse problem which threatens significant slowing of growth, let alone which involves a transition to much lower levels of production and consumption. He says, "It is neither desirable, nor remotely feasible, to seek to lower the climate change risk by substantially slowing the rise in living standards anywhere, least of all in developing countries. If such an approach were thought to be desirable in some expression of distant and idiosyncratic values, neither Australians, nor people in the developing countries, would accept it.(p. xxl.) Global and national mitigation is only going to be successful if reductions in emissions can be made and demonstrated to be consistent with continued economic growth and rising living standards." (p..)

For several decades some of us have been arguing that the only way out of the global predicament is by huge and radical transition to some form of Simpler Way, in which the core elements are non-affluent lifestyles, mostly small local economies under participatory social control and not driven by market forces or profit, and without any growth at all. (See The Simpler Way website, Trainer 2006.) Such a society would not be possible without equally radical change away from the competitive, acquisitive value syndrome that has driven Western culture for several hundred years.

There is now a small but rapidly growing global movement attempting to build an alternative of this general kind, most evident in the Global Ecovillage Movement and the Transition Towns initiative. Yet, given the overwhelming dominance of the commitment to material affluence and economic growth, the prospects for global transition to some kind of Simpler Way must be judged to be remote. This conclusion is powerfully reinforced by the failure/refusal of governments, media, bureaucracies, people in general, and the intelligentsia to recognise any need to question the commitment to pursuing limitless affluence and growth. Garnaut’s final Report powerfully reinforces the faith that there is no need to think about limits or transition to simpler ways, because alternative technologies will be able to eliminate the greenhouse problem while delivering with vastly greater quantities of energy, and at negligible cost.

Appendix 1. Statements relevant to the adequacy
of renewable energy sources.

- There is a path to Australia being a low-emissions economy by the middle of the
21st century, consistently with continuing strong growth in material living standards.(p. xvii.)
- The solutions to the climate change challenge must be found in removing the

- The interaction of the emissions trading scheme with support for research,
development and commercialisation and for network infrastructure will lead to
successful transition to a near-zero emissions energy sector by mid-century. (p. xliii.)
- Substantial de-carbonisation by 2050 to meet either the 450 or 550 obligation is

- The development of storage technologies and ongoing technical innovation is expected to combine with geothermal energy to begin to replace fossil fuels as the long term solution to our energy needs. Near zero emissions coal technology will have carried out its primary role and remain a significant energy source for some time. (p. 482.)

In Chapter 11 Garnaut makes it clear that he has not examined the potential of particular renewable energy technologies (p. 251) but he regards the most likely of these to be carbon capture and storage. The key numbers, such as those represented in Figure 11.1 stating costs associated with the 450 and 550 ppm targets, cannot sensibly be given without a detailed and convincing explanation of precisely what mix of alternatives might make their contributions and at what cost for each of them. No derivations of these conclusions are given.

- Technological development of any type is difficult to predict. When powerful incentives to innovation are introduced to a market environment, however, human ingenuity usually surprises on the upside. How will this ingenuity manifest itself in the face of high emissions prices and increased public support on a global scale for research, development and commercialisation of low-emissions technologies? We do not know, but there are good reasons to believe that, if we get the policy settings right over the next few years, the technological realities later in the century will be greatly superior to those which, for good reason, are embodied in the standard technology variants of the models used by the Review. (p. 273.)

The footnote says “2 The standard technology assumptions represent a best estimate of the cost, availability and performance of technologies based on historical experience, current knowledge and expected future trends. The standard scenario includes some technological cost reductions through learning by doing and improvements in existing technologies and the emergence and wide-scale deployment of some currently unproven technologies such as carbon capture and storage, hot rocks (geothermal) and hydrogen cars. It does not, however, include a backstop technology in any sector.” (p. 273.) No references are given.

- As one alternative to the standard technology assumptions, the Review
modeled an enhanced technology future, embodying various assumptions of more rapid technological progress, none of which seems unlikely. (p. 252.)

The essentials in the footnote are

- Faster energy efficiency improvements of an extra 1 per cent annually from 2013 to 2030, an extra 0.5 per cent from 2031 to 2040
- More effective carbon capture and storage in response to higher carbon prices
- The share of combustion CO 2 captured increases from 90 per cent to 99 per cent as the permit price rises from zero to $140/t CO2-e
- Faster learning by doing for electricity and transport technologies by increasing the parameter for the learning functions by 50 per cent relative to the standard assumptions over the whole simulation period, and
- Non-combustion agricultural emissions are eliminated when the carbon price exceeds $250/t CO-e. (p. 273.)

Each of the statements in this footnote lacks support, raises major problems and is open to radical criticism. Firstly, the future rate of energy efficiency improvement is highly uncertain and there are poor grounds for assuming particular rates regardless of whether or not the past yields clear figures. We are in an era of great uncertainty, risk and difficulties. Certainly in the short run the now greatly increased incentive is likely to generate considerable gains, but after the low hanging fruit have been picked there will probably be severely diminishing returns. Yet Garnaut assumes likely rates of improvement out to 2040, without supporting argument.

One of the most challengeable aspects of Garnaut’s optimism concerns geosequestration. In this passage he proceeds as if 99% capture and storage will be achieved. (E.g. pp. 273, 482.) It is generally assumed, including by the IPCC, that the limit is 80 -90%. In any case geosequestration can only be applied to that perhaps 50 - 60% of carbon emitting energy generating plant that is stationary. What’s more, Garnaut assumes without explanation that this rate will be possible at the relatively benign cost of $140/t – CO2e.

The third claim is not clear but seems to be, again without explanation, that the figures in the first (energy efficiency) paragraph can be increased by 50%.

In the fourth statement he baldly asserts an outcome which, to say the least, calls for serious examination. How are agricultural emissions to be eliminated, and how is this brought about by the carbon price of $250/t?

In Economic Modeling Technical Paper 1 it is said that there was a detailed treatment of renewable generation in the MMRF modeling, (p. 10), but no information is given.

The most appropriate statement Garnaut makes regarding the core problems is, “Many of the individual technologies are technically proven. Issues of scale, integration and economics are likely to be the greatest challenges. The challenge posed by the scale of the task is the most significant of these.” (p. 495). The reference to the scale of the problem is appropriate but no discussion is offered or referred to.

Again these statements are in effect all the Report includes which refer to, let alone defend the crucial assumption that alternative technologies can solve the problem. In other words almost no case is given and it has been simply assumed that sufficient alternatives can be found to provide more than ten times present electricity supply, while almost completely eliminating emissions.

by Professor Ted Trainer of UNSW.

Bossel, U., (2004), 'The hydrogen illusion; why electrons are a better energy carrier', Cogeneration and On-Site Power Production, March – April, pp. 55 – 59.

Czisch, G., (2004), Least-cost European/Transeuropean electricity supply entirely with renewable energies, www.iset.uni-kassel.de/abt/w3-w/project/Eur-Transeur-El-Sup.pdf

Davenport,

Energy Watch Group, (2007), Coal Resources and Future Production, April. http://www.energybulletin.net/28287.html

Garnaut, R., (2008), The Garnaut Climate Change Review; Final Report.
http://www.garnautreview.org.au/index.html

Hansen , J., (2008), http://www.worldchanging.com/archives/007829.html

Heinberg, R., (2007), “Peak coal; Sooner than you think”, On Line Opinion, 21, May,
http://www.onlineopinion.com.cua/view.asp?article=5869

Intergovernmental Panel on Climate Change, (2007), Intergovernmental Panel on Climate Change Fourth Assessment Report, Climate Change 2007: (Working Group 3), Mitigation of Climate Change, Summary for Policy Makers.

Lovegrove, K., Luzzi, A., (1996), "Endothermic Reactors for an Ammonia Based Thermochemical Solar Energy Storage and Transport System", Solar Energy, vol. 56, pp. 361-371.

Stern, N., 2006, Review on the Economics of Climate Change, H.M.Treasury, UK, Oct., . http://www.sternreview.org.uk

Trainer, T., (2006), The Simpler Way website, http//ssis.arts.unsw.edu.au/tsw/

Trainer, T., (2007a), Renewable Energy Cannot Sustain A Consumer Society, Dordrect, Springer.

Trainer, T., (2007b), The Stern Review; A critical analysis of its mitigation optimism, http://ssis.arts.unsw.edu.au/tsw/Stern.html

Trainer, T., (2007c), A critical discussion of the IPCC analyses of carbon emission mitigation possibilities and costs, http//ssis.arts.unsw.edu.au/tsw/IPCCcrit.html

Trainer, T., (2008), Assessing the limits of solar thermal power generation. http://ssis.arts.unsw.edu.au/tsw/solartherm.html

Trieb, F., (undated), Trans-Mediterranean Interconnection for Concentrating Solar Power; Final Report, German Aerospace Center (DLR), Institute of Technical Thermodynamics, Section Systems Analysis and Technology Assessment.

Zittel, W, et al., (2006), Uranium resources and nuclear energy, Energy Watch Group, Dec.

The Business Council of Australia says that the current design of the Government's Carbon Pollution Reduction Scheme will force closure of at least three major business, cause four to "fundamentally review their operations", and force others to find ways to cut expenses. It claims to have surveyed 14 businesses over sectors including minerals processing, manufacturing, oil refining, coal mining and sugar milling.

Whilst the problem is real, there is really no avoiding it.

Whilst the problem is real, there is really no avoiding it. The fact is that the kinds of industries and clients that the BCA and similar groups represent cannot expect to survive in their current form. Neither can the tertiary industries that rely on them, such as expensive law firms, frenzied global stock-exchanges, advertising corporations, high-flying consultants and millionaire-salary CEOs.

"Propaganda about a ‘dematerialised economy’ makes it hard to establish the reality that material industrial productivity is not actually less reliant on burning fossil fuels than it was in the 1970s, and that drawdown on fossil fuels has in fact been multiplied by the needs of much greater populations. Similarly the obvious still needs to be pointed out that increasing productivity means burning more fuel and outputting more pollution, accelerating petroleum depletion and adding more greenhouse gases."[1]

We have to face reality. Business and economic structure and expectations have to change.

The Business Council of Australia writes in its recent news release of "The ‘truly dreadful
problem’ of the emissions-intensive, trade-exposed industries." It says, "Professor Ross Garnaut, in his review of emissions trading, accurately describes what he calls the ‘truly dreadful problem’ of EITE industries: so-called ‘carbon leakage’. If we price emissions fully in Australia, emissions-intensive activity might simply relocate overseas. Rather than eliminating emissions, Australia’s regime would move the source of the emissions offshore, most likely to jurisdictions with less stringent environmental standards. Thus a well-intentioned Australian regime could produce the truly perverse effect of actually increasing the level of global emissions."

It is all very well threatening to go overseas, but this will be a very temporary measure; as these industries try to continue to process and sell massive amounts of industrial product, they are going to run into the long-anticipated problem of not having any customers left in the industrialised 'richworld' to sell to, since the people in those 'first world countries', unburdened of corporate accelerated profit-making, will simply slow down and relocalise their activities. Big business will finish up mired in the poverty which it has sought to exploit in its offshore victims.

It adds that, "This problem affects a substantial slice of Australian economic life. The EITE industries contribute 16 per cent of Australian business investment, 51 per cent of exports, 15 per cent of gross value add and employ nearly one in 10 working Australians."

What to do about mass unemployment with the decline of mass production?

Val Yule often says, that it isn't that there isn't any work. It is that the work that needs to be done isn't done because of all the work we do that doesn't need to be done in paid employment which uses up our time and energy.

If we stop working to feed the profit machines, which only expend most of the profits we make for them on more growth, creating more needs for more growth, and less time for everyone, we could, instead, work according to our needs and desires, rather than the hypertrophied needs and desires of a small sector of global power-freaks.

Political commentator and climate activist, Clive Hamilton, writes in Growth Fetish,[1]

Reduction in working hours is the core demand for the transition to post-growth society. Overwork not only propels overconsumption but is the cause of severe social dysfunction, with ramifications for physical and psychological health as well as family and community life. The natural solution to this is the redistribution of work, a process that could benefit both the unemployed and the overworked.

He remarks that

“Moves to limit overwork … directly confront the obsession with growth at all costs,” and talks about the liberation of workers “from the compulsion to earn more than they need.”

Because growth is sustained by a constant ‘barrage of marketing and advertising’ Hamilton wants advertising taxed and removed from the public domain, and television broadcast hours limited so as to

“allow people to cultivate their relationships, especially with children.”

The era of big profits, big business and big government is in terminal decline

The problem is that, with rising fuel costs, the margins for profit are declining. Add this to costs for carbon emissions, and you are looking at a profound challenge for the growthist economy of profit.

We industrialised humans have to change the way we do business and the pace of business.
We are facing global climate change; futures of very unpredictable wind-speeds, temperatures, crop productivity and water availability. We are facing continuous declines in agribusiness productivity because of the decline in availability of fossil fuels. Permaculture will be better able to provide than agribusiness as fossil fuels decline and it will provide better socially as well. See Antony Boy's delightful "Photo essay of a rural Japanese city," for an excellent and entertaining discussion of the problems and solutions.

It is normal for the Business Council and for the Government to be worried, because the necessary changes threaten their systemic hegemony and the whole notion of profit.

If we attempt to go on as we are, Australia faces monolithic power production and government systems, in the effort of the current elite to retain a profit-oriented society, from which the elite themselves are the overwhelming social and financial beneficiaries, at the cost of the greater population. There will be continuous attempts to find finance for huge nuclear power plants to keep up ever less viable industries and giant cities.

The Nuclear route (...) implies total electrification, synthesising, using complex technology, the pattern of settlement and transport which arose from exploitation of the natural endowment of petroleum. It requires massive investment, and in Australia’s case, the investment sought is likely to be private. This implies ongoing loss by citizens of control over the country’s energy systems and all that flows from that – the future of work, the state of the environment, natural amenity. It implies the reshaping of Australian society by corporations with profit alone in mind, for the benefit of a small dominant asset-rich class, with the electorate a mere captive market.[2]

This is a truly unsustainable battle; it will just bring us into feudalism and a much deeper economic depression than a relocalising of all our systems will.

Not only do we not need all the goods we produce for consumption at home or abroad, we do not need the income they bring, and their acquisition is a poor compensation for lives given to industry. Wonderful jobs are few and far between. No-one wants to give those up. Some people also derive much of their social life from work but they would derive similar benefits, and perhaps more status and satisfaction, from other community activities. And plenty of people reach a stage of maturity where childlike obedience to workplace regimes in the cause of producing more and more widgets in different colours, or processing more and more customers a day, with unflinching subservience, challenges every natural instinct.

Instead of those complicated international agreements about percentile reductions in emissions over the years to come, which are hardly enforceable or even measurable, remaining mostly in the control of the corporate emitters, the solution lies much closer at hand, and could ultimately be controlled at grass-roots levels by the masses themselves. Relocalisation is obviously the best way to develop the solidarity and self-sufficiency to reorganize work.

It should be obvious that the slower we work, the more fuel will remain, the less greenhouse gas will be emitted. If the populations which have ballooned to unimaginable proportions since the 1950s were allowed to return (through natural attrition) to more natural sizes by 2050, and the economy permitted to slow, it would take the heat off the planet and us as well. With so much less effort we could make such a positive difference to the planet and to our personal effectiveness.

ENDNOTES

[1] Hamilton, Clive, Growth Fetish, Allen & Unwin, Australia, 2003 and Pluto Press UK, 2005, last chapter, especially, pp.218-220

This article contains extracts from :"101 Views from Hubbert's Peak" in Sheila Newman (Ed.) and from "France and Australia after oil," in Sheila Newman (Ed.) The Final Energy Crisis, Second Edition Pluto Press, UK, 2008 (Available in Australia in late August)

Oil Superspike and Forecasting Fatigue

If we take a flashback view on “official forecasts” from one year ago – in June 2007 – the unreality of those Cheap Oil Hopes jump from the page. While the OECD’s IEA is mutating quite fast into a Peak Oil friendly organization, able to admit that future oil supplies will not meet likely or probable demand, the US EIA and other diehards, ironically including the OPEC Secretariat and its far out underestimates of world oil demand growth, have not yet made that cultural revolution.

The chart below, from the US EIA’s June 2007 forecast, which for natural gas set a truly unreal forecast or wish-list 2008 average price, Henry Hub, of about 7.40 USD/mln BTU, is typical of how far out of line from reality some of the ‘official forecasting’ fraternity has got. For 2007-2008, the US EIA in June 2007 was hoping, very hard, the upward price spiral for oil was going to be trimmed back, to highly moderate, almost zero growth of average prices.

From Q3 2007 the graph of crude oil price change from previous year goes straight up – in the real world – not close to zero, as the US EIA hoped and wanted for 2008 and for 2009. For obvious reasons, the US EIA’s faith-based forecasters expected “nonOPEC supply” to ramp up, because OPEC was set to stay recalcitrant about unleashing its massive-mythic pent-up supply capacities. The US EIA placed its bet on new hopefuls like Angola and Azerbaijan + Kazakhstan, and tarsand grubbing Canada, and perhaps even hoped Russia, too, would ramp-up exports in a quest to grab petrodollars. Or maybe they would do this to please the outgoing G W Bush administration? Or because NOPEC producers have a special urge to exhaust their resource pile at record speed, drive down the oil price and national revenues, ending up as Price Takers peddling their cheap and tacky Sunset Commodity like they did for 15 years through 1985-2000. Dream on !

We all know that ‘supply side economics’ is the only economic policy music since at least 20 years, but supply siders also have one demand-side idea on oil. This is ‘price elastic’ demand shrinkage due to oil demanding consumers, habituated to cheap oil, waking up to unreal and exotic prices and suddenly using less. Certainly since 2005, as oil prices have racked their way up, the consumer-nation energy agencies led by the OECD’s IEA and the US EIA have manfully done what they could to talk down demand – on paper.

It might have been high last year but Boy ! Have we got news for you next year ! The slump in demand forecast for last year didn’t happen, as the world’s regular Teflon Herd consumer kept on gulping their gasoline, gasoil, cooking kerosene, aviation kerosene and other fuels, but this year everything is different. Rivaling each other in unreal forward demand estimates, and joined also by OPEC’s Secretariat for whatever dark or hidden motive, by the investment banks and by almost all analysts, the forecasting crowd today claims world oil demand in 2008 is “unlikely” to grow more than 1.1 mln b/d to 1.3 mln b/d.

Maybe these ‘experts’ don’t know the world automotive industry is in full-flood, with a likely 2008 output around 70 million cars, 27 million motorcycles and scooters, 8 million heavy vehicles including trucks, buses, tractors, harvesters and construction site vehicles, and 2 million other road and off-road vehicles. To be sure, 4WD monsters with 350 HP engines trundling round shopping mall car parks are no longer in vogue, in the US or Europe, but cars arent going out of fashion. The first thing buyers do with a new car is fill the tank, and the same for buyers of ‘Capemax’ cargo ships using up to 10 tons of oil per hour, or buyers of Airbus, Boeing and business jet planes and the bulldozers needed to build new airports for them to land on their oil-based tires.

Real world demand growth in 2008 is likely closer to 1.6 or maybe 1.7 mln b/d than 1.2 mln b/d, immediately swallowing June’s largesse from King Abdullah, to grace the world’s consumers with another 0.3 mln b/d (or was that 0.2 mln b/d ?). The headline number for world oil demand as a year average daily number, is likewise and constantly underestimated. One big reason for this is ignoring the rate of loss-to-production and losses through all downstream steps in the well-to-wheel chain. These add by my estimates to a year average near 1.4 mln b/d and are increasing at least 2 times faster than production growth (around 4% annual increase of losses for 2% production growth). By late this Summer, the peak annual bulge of demand can lift global demand beyond 90 mln b/d. Will production meet this ?

WORLD OIL DEMAND 2005 - 2008

NOTES:
1.Daily demand in Million barrels/day (Mbd) on “all liquids” base, including NGLs, refinery gains, other condensates, tarsand and syncrude oil, GTL (gas to oil), CTL (coal to oil) and the biofuels
2. Total demand includes all loss-in-production, loss in transport, storage and loss in break of bulk operations, estimated at 1.4 Mbd.
Net final demand for 2008, for example, is a day average of 89.5 – 1.4 = 88.1 Mbd.
3. First annual peak, 2007, was depressed due to exceptionally warm winter conditions in northern hemisphere.

200-dollar oil by Christmas ?

Since late April 2008, gathering numbers of analysts have come around to the simple logic I noted many times previously. From Jan 2007 to Jan 2008 oil prices swung from a month-low of 49.50 USD/bbl in 2007 to a month high above 100 USD/bbl in 2008. Doing that doubling operation one more time generates a Jan 2009 target of 200 USD/bbl. After Jeff Rubin of CITIC, we had GS analysts led by Arjun Murti, in a 5 May report titled “Has the Oil Super-Spike Endgame Begun ?” which concluded 200-dollar oil is not impossible. The few European analysts following Patrick Artuis of Natixis Bank, who more than 2 years ago forecast that 200-dollar or 300-dollar oil was far from science fiction by around mid-2009, come to the same ballpark estimates as Murti’s report.

Maybe we need to spike-up to 200 USD/bbl to achieve finance sector and global economic meltdown, but maybe also we don’t. Prices above 130 USD/bbl are going to do impressive things for US monthly oil trade deficits, on its 13 or 13.5 mln barrels/day of crude and products imports. India imports the same percent of its total consumption, about 65%, even if this only adds to a modest 2.2 mln b/d, but paying for cooking kerosene in a country where 300 million persons – exactly the same number as USA’s total population – live on about 1 dollar 50 cents-per-day means very big subsidies. If not, the rubber band breaks and India’s vanishing forests disappear even faster as firewood, and social tensions will burn in a country with a Muslim minority big enough to make it the third-biggest Muslim nation in the world, if it was a separate entity. Oil subsidies in India, loudly decried as market distortion by OECD finance ministers worried about gasoline prices for their consumer horde car fleets, and worrying fall-out in the airline industry, have spiraled to about 3% of India’s GNP. China’s impressive foreign exchange cashpile, like the US trade deficit but in exact reverse – China is a creditor nation – will surely start shrinking as 130 dollar-oil eats into it, but nowhere near so fast as shrinkage of Japan’s ‘traditional’ monthly trade surplus, already down 33% on one year previous. As economic growth slows, quite fast in India and also in China, quite fast in several European countries, very fast in some Latin American countries, inflation rises – usually described as ‘only due to oil’, but now surely helped by oil.

The club of big economies and countries with 20%+ annual inflation has now reached more than 20, and is growing. Inflation is not uniquely due to oil prices but helped by energy cost push, specially at over 100 USD/bbl, and when added to falling economic growth is the signal we have the rubber band of “seamless global growth” stretched near its limits. The detonator for a global economic explosion, triggering a crash landing for growth and inflation at 10% pa right across the OECD, and many times that outside the OECD, is easy to project. When sudden and repeated interest rate rises are brought to close proximity with existing high inflation the global economy can replicate 1979-1980. This was the last time oil prices in 2008 dollars were anything like today’s, probably around 95 to 110 USD/bbl when corrected for inflation. The real difference was that interest rates, at the time, were sky high, at over 10%pa in all OECD countries when the second Oil Shock hit.

Stress and Storm Signals

To be sure the situation is grave. June’s G-8 finance ministers meeting in Osaka, at which the Russian and Canadian ministers were perhaps not sincerely sure they wanted cheap oil, due to oil’s miracle effect on their budget balances, foreign exchange reserves and value of their national moneys, was held under special crisis conditions. The ministers posed for the family photo without neckties – a new Japanese custom for office-based salarymen who, without ties, can take temperatures at least 10°C higher than nekutai colleagues hooked on air conditioning. As everybody, or at least finance ministers believe, airconditioning is a big oil user in advanced economies burning 140 million-year-old fossil residues to change the world’s climate. We can ask: at 200-dollars for the barrel will the ministers pose naked ?

World finance and business leaders have to date in mid-June not come around to telling us what oil price is needed to make the band snap, which in fact is the real and interesting question. There are several parameters in the mix deciding when and how this happens, all of them daily-commented by finance and business players, analysts, and by consumers in the street, whether driving their car or buying food or anything else.

One way global economic explosion can happen is when or if the USD versus EUR, or Dollar/Euro struggle gets vicious. Today even Ben Bernanke wants a strong dollar, to curb both imported and domestic inflation, and is fast losing interest in bailing out subprime-addicted investment and other banks, asset reinsurers, and other Wall Street wailers for billion dollar Federal Reserve handouts. The Euro Central Bank’s Monsieur Trichet created the Euro in a pure atavistic dream of “saving Europe from inflation”, forever of course. This hasn’t worked. The outrageously overvalued Euro does not protect against inflation – it might even favor or generate it by its own heavy presence. No country feels the money is its own, and everybody feels they were cheated by the fiat exchange rate they had to accept, to get Euros.

As in Argentina, Venezuela, Russia or the GCC countries, real world inflation has really slipped out of Al-Din’s petro lamp in Europe, trashing ECB and official, as well as “consensus” CPI figures produced by consensus forecasters anxious to please the ECB. Europeans no longer believe inflation is low because, after all, flat screen TVs always cost less and “the Euro is strong”.

The USD/EUR pivot is exactly 1.50 USD for 1 Euro; when the Euro gets there it can fall and fast, with no floor, like it rose against the US dollar with no ceiling – which is par for a fiat money The Trichet gang will not take this lying down and will crank up interest rates. So will Bernanke. Pretty soon the US goes into real economy recession, like the Eurozone was already “but nobody knew” because 1.5%pa economic growth is normal for Europe’s obsolete, oil-intense and energy-intense “postindustrial” countries living like the USA with unreal dreams of economic power.

In the Europe of June 2008, retail gasoline and diesel prices around 9 to 10 US dollars per US gallon are already generating daily protests by the biggest energy-using and wasting industries and professions, from fishing and trucking through farming to taxis and ambulances. With a Euro buying only 1.18 USD, the famous “target rate” the ECB itself set, back in 1998 at the Euro’s launch, this shifts up to 11 dollars-a-gallon or more. How long do consumers take that ?

The Oil Price Trigger

The important point is this: current global oil supply/demand conditions can bring 2009 Super-Spike prices to the present anytime we get a geopolitical shock to layer on the shifting mix of factors making the rubber band very fragile. Even without this, completely spooking average analysts and business-as-usual deciders, pure physical shortage might tilt oil prices into Super-spike realms by mid-2009. Constantly underestimating demand, and overestimating new supply is a sure way to experience bad surprises.

We can say that if 130-dollar oil is a really bad dream for the real world economy, 200-dollar oil will be even more traumatic. With the USA’s oil trade deficit running at maybe 2 billion dollars-a-day, the Obama gang will need a lot more than friendly winks and gifts from Wall Street backers – and will have to radically cut US oil import demand. Exactly the same applies to European leaders painfully trying to fool European consumers they need a European passport and army, not affordable food, lodging and energy. In other words, the pussyfooting with bolt-on gadget “soft energy solutions” as our heartfelt contribution to fighting climate change will need to give way to simple and straight oil-saving and energy-saving. This will be the equivalent of what Jimmy Carter called a cultural revolution – and like his administration showed, these don’t happen without crisis.

Copyright Andrew McKillop, 2008
Andrew Mckillop

Also published at http://www.energypulse.net/centers/article/article_display.cfm?a_id=1798

See also: A McKillop, General editor with Sheila Newman co-editor, “The Final Energy Crisis - First edition”, Pluto Books, ISBN 0745320929

The Next Oil War is likely or increasingly possible because the old, mature, or ‘post-industrial’ urban consumer societies, and the burgeoning new and emergent industrial economies of the planet are totally dependent on oil gas and coal. One of these big chunks of Humanity will have to rival the other for a bigger share of a smaller fossil fuel supply pile. However, burning fossil fuels in vast quantities not only ensures fast depletion and possible armed conflict, but also and surely causes the climate change some citizens, and some politicians in most of these countries claim to regard as a serious problem. By a whim Jurassic geology, most remaining oil and gas reserves are located in the Middle East and central Asian region. Very logically, almost surely any subsequent and probably final Oil War following those that occurred, or continue in the region since 1991 will also occur in this region. This is a geological fatality.

Particularly in the ‘post-industrial’ societies of the OECD, awash in an ocean of cheap industrial goods made with, and operated using oil, gas and coal-based energy, many persons claim they aspire to "ecological lifestyles" and protection of the environment. This is not only a form of mass schizophrenia, but also an increasingly acute and politicized question, simply because the consumer society industrial-urban lifestyle, whether ‘post-industrial’ or ‘new industrial’ is extremely energy and resource intensive. This results in a stark real choice – political speeches, or posturing at G8 summits lauding “sustainable development and renewable energy” is finally no substitute for measurable and concrete action. This must target, and achieve reduction in average fossil energy consumption per capita. Action must start soon.

Kuwait’s liberation from Iraqi occupation in 1991 was hailed by the markets as a triumph for cheap oil and a signal for ‘exuberant’, almost daily increases in general stock values on major markets. Today, however, Kuwait and other GCC countries focus alternate energy investing as part of their After Oil strategy. Kuwait’s national oil corporation reportedly admits and accepts national oil reserves have been heavily over-estimated, and may only be about 43 Billion barrels remaining (reported by Petroleum Intelligence Weekly in 2007). World consumption in 2008 will be about 32 Billion barrels. Apart from any other factor, the actual size of remaining reserves, and the extreme high rate of extraction makes it possible to conclude that full and final depletion may intervene before any final Oil War could be started – thus preventing this war from occurring!

#UnsatisfiedDemand" id="UnsatisfiedDemand">Unsatisfied Demand

This no-war outcome due to “the prize’, abundant oil reserves, disappearing before the final oil war can be organized is however unlikely. To be sure, “ecologically correct” lifestyles are media friendly, and appeals to these lifestyles are larded into the political speeches of economic growth-chasing political leaders, who know exactly what their consumer and voter masses really want. That is a new car, flat screen TV, suburban swimming pools, cellphones with permanent Internet access, jet travel holidays in faraway but cheap tourist locations, and mountains of plastic, metal and cheap food produced using several barrels-equivalent of energy per hectare cultivated. By direct consequence, economic growth must continue!

This permanent quest for more of everything automatically assumes – in fact demands and imposes – that there will always be more oil to satisfy this expression of individual and collective greed, schizophrenia and ignorance of ever clearer limits on satisfying this primitive urge to overconsume. Kuwait may almost ashamedly avow that it lied about its oil reserves, perhaps to spur its Western oil consumer ‘friends’ to chase out Iraqi invaders 17 years ago, so Kuwait can continue producing at least as much, perhaps more than previously. The same ‘performance logic’ is applied to any other oil exporter country, except Russia and because of its thermonuclear weapons, ballistic missiles, and rather evident willingness to exert its newly regained Oil and Gas Power on the world stage. Bullying Russia into ‘performing’ better at more quickly exhausting its national oil and gas reserves and driving down world prices, and its revenues as a result, is not on the table, but for the others, it is.

As we know, this farce is operated “because there is no alternative” and despite the vast emissions of greenhouse gases it produces being officially, today, described as ‘regrettable’ or ‘critical’. At worst this mass schizophrenia is fantastic hypocrisy, and terrible confusion at best or least. In this antinomic and irrational political, social and cultural context, both rational and irrational decisions can be expected. One of these decisions, from a nexus of rational and irrational being interwoven and seamless can easily be the Next Oil War. This would be launched by consumer nations against some ‘underperforming’ oil exporter. Another strand of irrationality, and already a discredited kneejerk ‘response’ to oil crisis, well documented in the 2005-2007 period from boom to slump, was the attempt to massively develop the agrofuels or biofuels. These food crop-based and of course ‘low carbon’ fuels would, under almost any hypothesis, never have provided more than insignificant quantities of oil saving fuels for the Apocalypse Wagon, or family passenger car. Many billions of dollars were however poured from the pockets of investors into their development, to little avail. As oil prices rise, so does the cost – and alternate value as food and feeds – of their ‘basic feedstocks’, the grains and vegetable oils.

#NewKuwait" id="NewKuwait">New Kuwait or North Korea?

Since late 2005 and increasingly ever since, agrocommodity prices reflect, and agroindustrial investment analysts underline the new trend for "full barrel price indexation". In other words the main crops used, or potentially to be used for producing fuel ethanol and biodiesel oil, to save petroleum-source gasoline and diesel fuel, now reflect their real, or future potential alternate use for feeding cars and vice versa, letting the car starve. The biofuels boom-slump cycle was short, no more than about two years, but at least serves to educate the consumer masses that they really do have a choice: to drive or eat. This decision has already been made, by force majeure, in North Korea and Cuba, cut-off from cheap Soviet oil when the USSR collapsed.

North Korea, in particular, pursued copybook Soviet and Western ‘modern agriculture’ development or the massive substitution of oil for manpower, draught animals, crop rotation, composting and all other ‘primitive and traditional’, non-mechanized forms and methods of industrial food production. Far behind Japan but close to the USA in direct oil intensity of its food production, North Korea in the 1980s utilised about 1.75 barrels per hectare every year, specially as fertilisers, insecticides and pesticides, as well as for irrigation, agricultural machines and road transport. Today it uses about one-half that amount – and starves, although it does possess rudimentary atom bombs and exportable if rustic ballistic missiles, if not all-year and all-day electric power supplies from its mostly oil-based power stations, chronically short of fuel. Cuba, a little less drastically, has also been forced to make adjustment to reality, severely cutting both direct and indirect oil intensity of its agriculture. Its poverty but nice climate makes this an ideal location for low cost holiday flights from the “ecologically concerned” OECD postindustrial countries, of course not including the USA, for ideological reasons.

Not for ideological reasons but simply because oil prices have started to reflect reality – in particular there are no easy and cheap substitutes and reserves are declining – even the postindustrial countries are beginning to pay more for their food. Since they essentially ‘eat oil’ this is no surprise for anybody able to scan a list of energy inputs to ‘no alternative’ modern food production, distribution, its predatory soil mining, biodiversity destruction and complete unsustainability. A future more like that of present-day North Korea or Cuba will however be a very bad surprise to the average innocent consumer, and rather difficult to manage for their current-crop leaderships. Much more attractive to some, an exemplary and quick war aimed at ‘securing’ oil supplies ‘at reasonable prices’ will almost inevitably bubble to the surface in the mind of our decision making elites and be faithfully trumpeted by every government-friendly and patriotic media outlet.

See: www.energybulletin.net/node/45944.

#ComingFast" id="ComingFast">Coming Fast

World consumption of fossil or mineral petroleum and 'fossil hydrocarbon liquids' in 2007 was about 5150 Billion litres or around 4.8 barrels per head of world population. The world's two biggest biofuel programmes, or industries, in Brazil based on sugarcane ethanol and in USA based on maize ethanol, produced a combined total of about 38 Billion litres of anhydrous ethyl alcohol the same year. The European Union biofuels program targeted 5.75% by volume of all European motor fuels being substituted by 2010, mostly based on rapeseed biodiesel, but is now in the process of being ‘disowned’ by most political decision making elites, due to its sheer uneconomic performance. A more rational target could be 0.5% or 1% on a sustainable basis.

Any increase in petroleum demand, even tiny fractions of one percent, sets yet more impossible targets for biofuels expansion. This is at least in the real world of ‘current generation’ biofuels based on food crops, and not the fantasies of ‘next generation’ biofuels produced from using miracle plants not needing irrigation, pesticides, agricultural machinery and only the slightest processing energy – for example jatropha curcus. In addition, world consumption of motor fuels is locked on to the growth of the world car and vehicle fleet, increasing at about 55 million units per year. Excluding their production, which is in no way low energy the annual increase in oil demand, only for motor fuels, due to fleet expansion, can be estimated at about 85 Billion litres, equivalent to about the fuel value of 110 Bn litres of anhydrous fuel ethanol. From this, we get an idea of how far the biofuels – or the ‘next best hope’ of electric cars - have to go, and grow, to start representing a credible alternative to oil.

We can note that even to hold the not-so-impressive rank of 1% bioethanol/99% fossil petroleum in world car fuel terms, the world's two-biggest bioethanol production industries would have to increase output by stellar amounts. Supposing, for example, that Brazil and USA were to expand their annual bioethanol output at the rate of world motor fuel demand growth, then in 2007-2008 their mission impossible target increase would need to be about 400%. Taking a more rational target, and assuming the world's two biggest biofuel industries targeted firstly achieving 5% of world motor fuels supply in volume terms, and then maintenance of this 5% part of the total, their combined output will have to grow at a sustained rate of at least 25%-per-year for more than a decade. Long before this, Brazil would run out of sugar and Amazonian forest to clear for grazing cattle displaced by sugarcane growing expansion further south. And the US would run out of maize and the water to grow it. This is the simple reality behind the 'biofuel revolution' and reason for its very quick end.

World oil production is facing an exactly similar mission impossible. So long as there is any growth in the system, so long as more people eat more industrial food, drive more cars and fly more planes, consume more plastic and metal, and continue being good industrial-urban consumers, we will get closer to the point where supply is in permanent shortfall. Very surely, promoters and defenders of the ‘alternate and renewable energy revolution’ will point to encouraging signs of massive investment intentions and cashflow projections, and spiraling mergers and acquisitions in ‘New Energy’. But on the ground and in the fuel tanks of the world's approximately 975 Million car equivalent road and off-road vehicles, ocean shipping fleets and 25 000 Boeing 767 and Airbus A320-size planes it is fossil petroleum, either liquid or LPG, which makes around 98.5% to 100% of these vehicles operate.

For market traders and operators in the arena of formerly dual-use, but now again simple food commodities the time is ripe for testing new 'psychological price ceilings', due to oil’s recent and proven ability to grow about 33% in price over 6 months. Soft commodities still have some way to go in catching up the hard commodity boom, itself driven by and dependent on rising oil, gas and energy prices, and sometimes-rapid depletion of orebodies and exploitable reserves. Almost unknown to the minds of media commentators and business analysts, the entropy-linked requirement for oil and energy prices to keep moving higher in order to make intrinsically low-performing substitutes feasible or ‘economically attractive’ is the only way forward for alternate energy. By doing this, they could drag the biofuels and electric cars, solar electricity, geothermal heat or other alternate energy ‘solutions’ behind them, into the realms of long-term economic feasibility - as opposed to their present de facto role as vehicles for short-term financial and speculative trading interest. The bottom line cost, of course, is to spend more of personal and national income on anything containing or using energy, and less on the trinkets and gadgets so prized by economic growth fanatics.

#Overheads" id="Overheads">Beware of Overheads

Infrastructure and overhead energy costs, in the OECD countries, and increasingly in the Emerging Economies are either extreme high, or very high. The survival value of the whole production process is therefore low. Without cheap, or at least abundant oil and gas, the construction and operation and maintenance or current production systems and their infrastructures is compromised. The successive shells or layers of the urban industrial consumer economy, that is economic infrastructures, have high or very high embodied amounts of energy, and this dependence increases as we mount the successive infrastructure layers, due to previous shells or layers being energy intensive. The much touted image of cellphones as ‘jumping the infrastructure barrier’ of landlines made from copper and recycled tree trunks, is a classic claim of those profiting from placing extreme high frequency emitters close to the brains of children and adults.

In 2007, around 10% to 12% of US total electricity consumption was swallowed by Internet and cellphone, portable computer and pager systems. Some 55% of US electricity comes from coal-fired power stations, burning hundreds of millions of tons of rail shipped coal each year. Champions of the ‘mobile office’ and the ‘communication revolution’ sometimes call this the ‘dematerialized’ economy!

Embodying and incorporating abundant and previously cheap fossil energy in productive and support infrastructures of the economy, these structures and economic processes need energy to be maintained, operated and renewed. Without this energy supply, cheap or otherwise, the North Korean or Cuban ‘solution’ becomes the No Alternative. Unfortunately, replacing ‘current generation’ productive systems and their infrastructures with alternate energy will not be difficult, but totally impossible. Arbitrage, or choices will have to be operated, surely not by the blind and chaotic 'free play of market forces', and preferably not by Our Heroic Leader and his clique.

This reality is in fact known to many persons, even to traders, speculators, and business analysts who track big spending on alternate energy, 'to save oil', in their market surveillance. It is also known to the scientific community, but care is taken by politicians and the media to avoid clearly spelling out such fatal and total weakness and dependence to Average Joe Citizen. Even less spoken of are the concrete, real world results of failed energy transition. In particular, as we have discussed elsewhere, these include oil war, military invasion, and mass killing in the wider Middle East and central Asian (MECA) region, triggered by failed attempts to increase ‘pumping performance’ and supply of real world petroleum for the real world, fatally doomed economy.

#PartyingOn" id="PartyingOn">Partying on with Alternate Energy Investing

The continued growth of the 'alternate energy boom' is entirely linked to the oil price. What is required is an oil price near the pain threshold, but well below the panic level we can place at around 150 to 200 USD/barrel. After the panic level is attained, the world economy will enter into troubled but classic waters of deep economic recession, cutting oil demand, and shaving its price. This is the ‘slump dividend’ for surviving consumers!

Sufficiently intense world economic recession can however easily result in only the war option for improved oil pumping ‘performance’ from exporters being retained. But we could also argue the opposite may ensue through reduced needs for energy in the slowed world economy, plus the ‘prudence premium’ on ray-jeem changing underperforming oil pumping countries ‘for their own good’, but finding they produce less for some while after their military ‘liberation’ and democratization. We can conclude that if we stay inside the pain threshold price, below 150 USD/barrel, fast development of many alternate energy sources and systems will remain a healthy new business. It can continue to attract not only the pension funds, but the Bill Gates, Vinod Khosla and Peter Thiel or Richard Branson of this world. These extreme consumers of every imaginable fossil fuel can continue to scurry round the world, preaching 'environmentally correct energy' as well as classic ways to make more money

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The most important future effect of the 'biofuels revolution' is however on food prices. The production of biofuels on a large, or even massive scale is unlikely, but it comes at a bad time for world agriculture and food production. In large part due to climate change, but also because of rising fuel prices, erosion and loss of biodiversity due to industrial overkill being used against the biosphere, world agricultural output has stagnated. More strictly economic reasons for stagnating world food production can also be added, for example water supply limits and declining amounts of prospective new agricultural land for raising production. Prices for basic food commodities are rising, independently of real or potential biofuel ‘feedstocks’ demand on available grains, sugars and oilseed supply. This problem is already recognised, in the action taken to develop GM non-food "fuel crops", such as jatropha and grasses (in general leguminous species) which can or might be planted in non-irrigated lands, take less existing agricultural land, and potentially use less or no fertilisers, pesticides and machinery for production.

We find there is a firm and surprisingly low limit on how much alternate energy, such as the biofuels, can be produced before danger signals are set for the growth economy. As any economic textbook will explain, the amount of "discretionary non-food revenue" available to consumers has always has been the key determinant of economic growth, and growth potential in any economy. This 'iron law' of the economy, much discussed by Ricardo, Say, Malthus, Engels and Marx, among others, is easy to understand. As the consumer cypher or Economic Man spends more of their income on food and energy, and has less to spend on Microsoft products, iPods or flights in 100% kerosene-fuelled Virgin airliners this hits company revenues and corporate profits, employees are thrown out of their jobs, company spending decreases, and so on.

The moral question of do we need to feed cars and keep modern “ecologically minded” consumers high on the barrel, rather than feeding the approximately 900 Million underfed persons of the planet is usually avoided. Likewise, the urge to do something to limit climate change is certainly present in the media, but concrete action to cut oil, gas and coal burning is not. To what extent the growth economy survives, or more precisely how long it survives is of course low-key or absent from in media treatment of the Alternate Energy Investor Boom, that is yet another asset bubble.

More important for us at this moment, in late 2008, we can note how quickly real world energy-economic limits cut into the agrofuels boom, leaving a trail of unused or underused biofuels processing plants, in the case of G W Bush’s US Renewable Fuel Scheme – unable to operate through too costly corn or soybean oil on one hand, and insufficiently expensive imported oil from ‘underperforming’ oil exporter countries on the other. This tradeoff, between food and fuel, was and is arbitrated by rising food and energy prices and their impact on the economy, political ideas and public opinion.

#WhatNext" id="WhatNext">What Happens Next

Any asset boom is under imminent threat of implosion whenever stock markets wilt in the face of reality and investors scurry to salvage what they can of the bets they that more and following gamblers would come along to the same party, bringing fresh cash. Continued growth of the Alternate Energy asset bubble therefore depends on stock markets avoiding a crash. In turn this means there must be neither an oil price crash, nor a continued oil price explosion.. If we take the second and rational hypothesis, a classic economic crisis generated by oil prices moving to 150+ USD/barrel, the crisis will trigger a cut in world oil demand, reducing oil prices. Plenty of arguments support this outlook, particularly the extreme oil and gas intensity, or total oil dependence of the OECD 'postindustrial' societies. These ultimate consumer societies are under recession threat almost any time because of the debt-driven, resource intensive, unstable, cycle prone bases of economic growth in these societies. Not only the banks and finance houses, but most home- and even car-buyers are ‘highly leveraged’, that is debt dependent, exactly like OECD governments, most of which also run big trade deficits.

Another possible cause of a serious tilt to the Alternate Energy asset bubble’s Titanic deck is simply a boom-bust sequence in the 'stock growth and decline cycle'. Exactly the same happened in a quick period with the dotcom and hi-tech asset bubble, ending in the crash of 1999-2000. Since then, the Asian economy growth explosion, mergers and acquisitions mania, the real estate bubble and its subprime afterglow, all driven by stepwise increases in world liquidity, low interest rates and consumer debt, have taken over as economic cycle drivers. This extreme fragility is unlikely to resist the ‘external shock’ of oil prices climbing to their real equivalent price of the early 1980s, corrected for competing asset prices and the US dollar’s world value. This is probably around 175 USD/bbl, in any case more than 150 USD/bbl. Reaching this panic price level will be signalled by stock exchange falling any time oil prices rise, instead of the reverse, which was the pattern right through 2005-2007, but not now in 2008.

Also, and ironically any prolonged fall of oil and gas prices can help ‘crater’ the world economy by strangling the 'real resource boom' and depriving the world economy of liquidity transfusions generated by high metals, minerals, agrocommodity and energy prices. The Alternate Energy asset bubble is therefore caught between two stools the same way Kuwait, and other small GCC petro-countries are caught between Iran and US occupied Iraq plus Saudi Arabia.

If we take the 1980-1982 shakeout or meltdown of the world economy as at least partly oil price-triggered, this recession cut world oil demand about 9.5% in 3 years. The same economic slowdown, today, would also cut oil prices until falling supply due to Peak Oil caught up. Thanks to market over-reaction or ‘exuberance’ this process would naturally be a firework show of extreme volatility, but could end up cutting oil prices to below 100 USD/bbl, wreaking havoc on biofuels feasibility and return on investment, as well as the financial performance of other alternate energy investor vehicles.

Later on, long-term shrinkage of oil and gas supplies, which will surely start from 2011-2014, intensifying after that, will finally cut world energy demand by unimaginable amounts. The economic spinoff, or economic impact of much higher oil and gas prices spilling through the economy will simply mask the underlying physical causes of economic recession. In the 'longer-term’ future of about 2015-2018, it is not certain the alternate energy sources, including biofuels will have any larger role to play than today, simply due to the world economy practicing – for force majeure – the kind of de-growth that is the only solution for fighting climate change and limiting outright destruction of the biosphere. To be sure, the percentage weight in world energy of Alternate Energy will be higher, that is rising from around 1.5% today, to perhaps 5% of a smaller world total energy demand by around 2015. Much higher food prices, simply reflecting energy prices and environment costs of current agriculture, will also play their part in economic de-growth, and mightily constrain ‘first generation’ biofuels production we can easily note. Kuwait can practice After Oil investing, with ever-increasing real need, but the Alternate Energy asset bubble may be off trader’s screens well before that!

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Copyright Andrew McKillop Jul 2008

Ross McCluney, Ph.D., Chattanooga, TN, 21 July 2008 rmccluney [ AT ] comcast net Periodically I’m asked why I oppose new nuclear power plants. I have B.A., M.S., and Ph.D. degrees in physics, so have had some exposure to nuclear physics in my training. I also studied the subject during the first wave of nuclear power plant applications. So I guess I’m not surprised that some people expect me to be in favor of nuclear power. I am surprised by the question, however, because the nuclear industry in the U.S. has been all but shut down for over 30 years. I thought everyone understood the multiple dangers and threats inherent in nuclear power. I guess I didn’t count on all the youngsters who have come along during the hiatus period and who haven’t learned much about the history of nuclear. Newcomers to the nuclear controversy seem to think of nuclear as clean, safe, and a great antidote to global warming. This is reinforced by that cute pro-nuclear animated commercial by Areva, with its catchy tune, that you might have seen on TV and by several pro-nuclear politicians. So let me state the primary reasons I’m against this resurgence of nuclear power. 1. Radioactive waste and other radioactive releases. The waste products from nuclear power, including the wastes from manufacturing the fuel, the wastes spewed into the air and water by every nuclear power plant (admittedly modest in quantity under normal operating conditions, but dangerous nevertheless), and the “spent” fuel left over from operating the reactor, has half-lives ranging from short to tens of thousands of years. The half-life is the time it takes for half of any quantity of a radioactive material to decay to another substance – in some cases this may be a stable element, in others it may be one or more other radioactive elements. The types of radioactive materials and emissions produced are also varied in type, including alpha, beta, gamma, and neutron radiation. For more on these see http://www.factmonster.com/ce6/sci/A0860620.html http://www.infoplease.com/ce6/sci/A0860620.html and http://en.wikipedia.org/wiki/Ionizing_radiation Radioactive waste, either routinely emitted or accidentally released in high quantities or concentration, is very damaging to living things. Ionizing radiation from radioactive substances receives this label because the radiation is so energetic on the microscopic scale that it can strip electrons from atoms, ionizing them, leaving them positively charged and therefore very chemically reactive, meaning that the charged atoms and the molecules to which they are attached, easily undergo chemical reactions with other atoms and molecules in their vicinity, producing new chemical species in the process. It doesn’t take a lot of this inside biological cells to cause a lot of disruption, leading to failure of the cells to operate properly, usually making the organism ill. High energy radioactive radiation can also produce genetic mutations, disrupting genes in the human body. We naturally have this happen within us regularly, due to the presence of cosmic rays and solar storms from outer space and a low level of background radiation from the soil, rocks, and other sources. Plus there is still some residual radiation from atmospheric weapons tests in times past and a little from nuclear accidents at power plants, weapons labs, and industrial plants. All of this is dangerous and is thought to cause at least some of the cancers from which humans increasingly suffer. The problem with nuclear power is that it causes an increase in the background radiation, increasing our risks of disease from the radiation directly and from the genetic mutations. Radiation also contributes problems with human reproduction (infertility and sterility) and is thought by some to be a contributor to some miscarriages. Though it is a controversial subject, I believe that there is no “safe” level of radioactivity on or in the human body. The National Academy of Science, in its 7th report from the panel on Biological Effects of Ionizing Radiation, 2005, seems to agree. Though many of us have very short-lived radioactive tracers for medical diagnostic tests, and these are generally considered safe, because they are very low level and leave the body quickly, every exposure is potentially risky, and is tolerated for the greater benefit such exposure hopefully provides. Unreported, involuntary routine exposure, day in and day out, however, is another issue entirely. The risk for cellular mutations resulting in cancers are increased in the vicinity of nuclear reactors. Children are more susceptible to radiation induced cancers than adults. References: http://www.bfs.de/en/kerntechnik/kinderkrebs/kikk.html http://www.nirs.org/factsheets/sepam.pdf http://www.nirs.org/factsheets/nosafedose.pdf 2. In the event of an accidental release or a terrorist intentional release, substantially higher levels of radioactivity can be experienced by the populace. Radioactivity is particularly dangerous because it cannot be seen, heard, smelled, or felt. You can be exposed to unsafe levels and not find out about it for years (unless the exposure is very high or acute), making it very difficult to identify the cause of the illness that results or even when or where you were exposed. A particularly unfortunate factor is that cancer can never be “proven” to be the result of a specific event months or years before; however, we know that every radiation exposure increases the risk that the affected individual will suffer from it. Some radiation impacts are heritable – can be passed on to the next generation – so the nuclear industry is gambling with the genetic treasury of life. Human-caused radioactive pollution impacts all species exposed, so all are vulnerable. 3. Nuclear power plants use a lot of water, as do fossil fuel-fired ones. They suck water from a lake, river, stream or wherever they can get it, heat it up in order to cool the steam coming out of the power plant’s generator turbines so that it will condense into water again. The water making the steam is clean and recycled over and over. The water from the environment, after being heated, needs to be cooled before it can be released back into nature again. This can be done with natural evaporation by putting the heated water back into a closed off pool where it evaporates and cools as it goes to the other side, where it can be released again back into the ocean, bay, lake, estuary, river, or stream from whence it came. The evaporated water is carried away by air currents, eventually being condensed into rain again, so the power plant operators may say that the water is not lost. However, the evaporated water can travel many miles or thousands of miles before it condenses into rain again, and this can cause the net removal of copious quantities of fresh water from the region. Many regions are suffering from prolonged droughts, so power plants that make matters worse by taking billions of gallons of this water away are not helpful. This applies equally to nuclear and fossil-fuel-fired plants. 4. There are much better, safer, much less expensive alternatives based on a combination of reducing the need for electricity through conservation and improved efficiency in energy-using-equipment and making the electricity we need from clean renewable sources such as direct solar conversion to electricity, wind power, and hydroelectric power. The large sums to be spent on new nuclear power plants around the world could be much better used to improve energy conservation, efficiency, and use of renewable energy. The jobs created by an expanded conservation, efficiency, and renewable energy industry will be more numerous and less dangerous than those which might be created by a dramatic expansion of nuclear power. 5. The costs of nuclear power are huge. In addition to the 18 billion U.S. dollars, and more, likely to be spent in building a typical nuclear power plant in my country, the U.S. government, using our taxpayer dollars, spends fortunes: a. Insuring power plant operators from excessive costs in the event of a disastrous nuclear accident (no private insurance company will insure a nuclear reactor for the full costs of a terrible accident) b. Providing security and protection against possible terrorist attacks c. Historically pouring more than 65% of all research funds on energy into the development and protection of nuclear reactors d. Researching and making nuclear fuel for power plants and guarding the processes e. Researching and otherwise trying to figure out what to do with radioactive wastes and spent fuel, which can remain radioactive for tens of thousands of years The U.S. Nuclear Regulatory Commission is supposed to evaluate and approve or disapprove nuclear power plants and monitor their operations. This is a very expensive operation. Though the nuclear industry pays for NRC operations – NRC sends a budget to Congress and then Congress invoices the industry – not all federal government (taxpayer) costs are covered by the industry. This might explain why the NRC works more for the industry than for the people of the United States. If this were not enough, there are the high costs to operate the plants, transport the fuel to many power plants around the country and abroad, transport the wastes and spent fuel to processing or storage sites, also sprinkled around the country. 6. There are high costs to secure all this radioactive material, in storage and in transport between sites, as well as to guard the power plants themselves, and the radioactive storage areas not usually inside the thick walls of the containment buildings built to keep the nuclear reactors themselves isolated from the outside environment. 7. Operations of the nuclear industry and all the nuclear power plants around the world use copious quantities of fossil fuel for a variety of purposes, and the combustion of fossil fuels releases global warming gases into the atmosphere, so nuclear power is not free of global warming contributions. Repetition by nuclear proponents of the false claim that nuclear energy could be a solution to the climate crisis and the assertion that nuclear is emissions-free are troubling indicators that propaganda is still driving nuclear waste policy in the US. Using nuclear power is even counterproductive at reducing carbon emissions. As Amory Lovins of the Rocky Mountain Institute points out, "every dollar invested in nuclear expansion will worsen climate change by buying less solution per dollar..." It makes little sense to support construction of new nuclear reactors as a means of addressing the climate crisis. Available renewable energy and energy efficiency technologies are faster, cheaper, safer and cleaner strategies for reducing greenhouse emissions. The list above is reinforced by the sampling of current news items as of June 2008 which you can find at http://www.futureofhumanity.org/Nuclear/. If you scan through this list and search for additional items on the web, you will discover the large number of accidents, accidental releases, and other problems nuclear reactors are facing all over the world. None of this gives me any comfort that nuclear energy is safe. There are several sources of relatively unbiased factual reporting on the problems of nuclear energy in the world today. See for example, The Nuclear Monitor, back issues at http://www.nirs.org/mononline/mononl.htm, published by the World Information Service on Energy (WISE) and NIRS. Read carefully, however, the web publications of the many nuclear industry proponents. You can also subscribe to a weekly service that sends out summaries of nuclear news articles and links to them at http://groups.diigo.com/groups/nukenews Thanks to Mary Olson for her assistance with this article. Mary is Southeast Regional Coordinator for the Nuclear Information and Resource Service and is based in Asheville, North Carolina, USA. She can be contacted at nirs [ AT ] main nc us.