Showing posts with label research. Show all posts
Showing posts with label research. Show all posts

Friday, October 22, 2010

The Next Oil Shock? - Report

The Economics and Industry Team of New Zealand Parliamentary Library has published a new research paper: The Next Oil Shock?

The Conclusion of the report

The global economy is heavily dependent on affordable oil.

It may seem counter-intuitive that, when oil reserves and production capacityare higher than ever, the future of the oil market appears bleak. The problem is that production capacity is not expected to keep up with demand. That fact leads to severe economic consequences.

To replace the declining production from existing oil wells and increase production, oil companies are forced to extract oil in more difficult and expensive conditions (deep-water, oil sands, lignite to liquids) from smaller, less favourable reserves. The marginal (price-setting) barrel of oil costs around US$75-$85 a barrel to produce. This will continue to rise with higher demand and exhaustion of reserves.

Although there remain large reserves of oil which can be extracted, the world’s daily capacity to extract oil cannot keep increasing indefinitely. A point will be reached where it is not economically and physically feasible to replace the declining production from existing wells and add new production fast enough for total production capacity to increase. Projections from the IEA and other groups have this occurring, at least temporarily, as soon as 2012.

The difference between the global capacity to produce oil and global demand is the supply buffer. When the supply buffer is large, oil prices will be low. When the supply buffer shrinks - due to demand rising faster than production capacity or production capacity falling - prices will rise as markets add in the risk that supply will not be available to meet demand at any given point in time.

When a supply crunch forces oil prices beyond a certain point, the cost of oil forces consumers and businesses to cut other spending, inducing a recession. The recession destroys demand for oil, allowing prices to drop. Major international organisations are warning of another supply crunch as soon as 2012.

The world may be entering an era defined by relatively short periods of economic growth terminating in oil price spikes and recession.

New Zealand is not immune to the consequences of this situation. In fact, its dependency on bulk exports and tourism makes New Zealand very vulnerable to oil shocks.

Tuesday, August 24, 2010

US Minerals Databrowser

The United States Geological Survey (USGS) is the administrative branch in charge of managing information regarding mineral resources within the United States. Its minerals information function that collects, analyzes, and disseminates data that describe current production and consumption of about 100 mineral commodities, both domestically and internationally for approximately 180 countries.The goal of the US Minerals Databrowser is to make it easier to extract meaningful information from this valuable dataset. The US Minerals Databrowser provides several different visualization styles, each tailored to answer a specific set of question regarding the USGS Minerals dataset.

US Production / Exports

This visualization uses the production, apparent consumption, imports and exports fields from the dataset. Net exports are calculated as exports - imports. This plot highlights how sustainable US use of a particular mineral is.

World Production / Price

This visualization plots both US and world annual production of each mineral. The nominal price per ton as well as the inflation adjusted price (in 1998 dollars) are overlain. This plot highlights the interplay between price and production as anticipated by basic economics -- high prices should bring about increased production for globally fungible commodities.

Price Evolution

Plotting inflation adjusted prices against global production create interesting plots that give insight into how well the price signal works for a particular mineral.

Usage History

Usage patterns for any mineral will change as new uses are found and older applications are discontinued. The Usage History plots historical timelines of consumption in all the major usage categories.

Usage Pie

Pie charts provide a quick, intuitive view of relative consumption in each category for a single year to answer the question: "What is this mineral used for?"

Wednesday, July 21, 2010

Fossil Fuel Production with Supply and Demand Interactions

Steve Mohr has published his Thesis at the University of Newcastle, Australia:
Projection of world fossil fuel production with supply and demand interactions

Abstract

Historically, fossil fuels have been vital for our global energy needs. However climate change is prompting renewed interest in the role of fossil fuel production for our energy needs. In order to appropriately plan for our future energy needs, a new detailed model of fossil fuel supply is required. It is critical to know if fossil fuels will still be able to supply most of our energy requirements and meet the ever increasing energy demand in the future. Answering these questions is critical in order to identify potential periods of energy shortages; so that alternative energy resources can be utilised in a timely way. The aim of this study was to develop a model to predict fossil fuel production for the long term based on historical production data, projected demand, and assumed ultimately recoverable reserves for coal, gas and oil. Climate change is an important issue confronting society, and it is hoped that the work contained in this thesis will aid climate change modeling by focusing attention to realistic fossil fuel production projections. Fossil fuels are currently an essential component in the global economy and the growth of the human population. The fossil fuel production projections from this study suggest that many of the IPCC fossil fuel projections appear overly optimistic. Based on the assumed URR values, it is predicted that global fossil fuel production will peak before 2030. For this reason, it is imperative that appropriate action be taken as early as possible to mitigate the effects of fossil fuel decline, to avoid energy shortages in the near future.

Conclusions (excerpt)

The combined supply and demand model includes the capability that demand and production could be influenced by each other, i.e. if production could not meet demand then future demand for that energy source was reduced. In this study, three options were considered. Firstly, the STATIC option resulted in demand and production acting independently of each other at all times. Secondly, the DYNAMIC option allowed both total demand and total production to change from the STATIC situation when there was a difference between the two. Finally, the INDEPENDENTLY DYNAMIC option was an extension to the DYNAMIC situation, but treated each fuel source individually when applying the supply and demand interaction, with both demand and production being able to vary.

The model requires estimates of Ultimately Recoverable Resources (URR) for coal, gas and oil. Following a critical review of the literature, included in this study, three cases were adopted. CASE 1 and CASE 3 being lowest and highest recent estimates, respectively, and CASE 2 being author’s best guess based on the information available. The URR values for CASE 2 were, total (60,800 EJ), coal (19,350 EJ), gas (17,680 EJ) and oil (23,780 EJ).

Oil: For CASE 2, peak production year remained almost constant at 2011-12 for STATIC, DYNAMIC and INDEPENDENTLY DYNAMIC options, with peak production varying only marginally between 179–188 EJ/y. Similarly, for CASE 1, peak production year was the same at 2005 for all three supply and demand interaction options. For CASE 3, peak production year varied only slightly at 2019, 2011 and 2016 for STATIC, DYNAMIC and INDEPENDENTLY DYNAMIC options, respectively. The important outcome was that for all scenarios the maximum peak year was 2019.

Combined fossil fuels: For CASE 2, peak production year remained almost constant at 2016–18 for STATIC, DYNAMIC and INDEPENDENTLY DYNAMIC options, with peak production varying only marginally between 509–525 EJ/y. Similarly, for CASE 1, peak production year was essentially same at 2012–13 for all three supply and demand interaction options. For CASE 3, peak production year varied from 2021 to 2029 across the three supply and demand options. In all scenarios it was found that natural gas offers the biggest future potential, and not coal.

[via Energy Bulletin]

Monday, June 28, 2010

World3 in Modelica: System Dynamics Models

World3 in Modelica: Creating System Dynamics Models in the Modelica Framework

This paper and presentation by F. E. Cellier introduces a new release of the System-Dynamics library of Modelica and shows how it is being used by discussing a fairly large application code: Meadows’ World3 model.

Meadows’ only talked in Limits to Growth about the results obtained with the model. The model itself, originally coded in Dynamo, was described in a separate book.

Meadows’ World3 model has seen two major upgrades since its original inception, one in 1992, i.e. after 20 years, and the second in 2002, i.e., after 30 years. The World3 application code contained in SystemDynamics 2.0 implements the 2002 version of the World3 model. In the code, we offer not only the basic model, but also all 10 scenarios that Meadows and co-workers are talking about in Limits to Growth: The 30-Year Update.

Future Research

What future additions are in the works? In today’s world of dwindling fossil fuel reserves, it becomes important to track how much energy we are actually using. Whereas classical System Dynamics is designed to track material flows, it does not track energy flows. This is a major drawback of the methodology.

For this reason, a second version of the System Dynamics library has also been released as a sublibrary of BondLib, our bond graph library. In that version, all material flows are represented internally by bond graphs. A bond graph naturally tracks energy flows. Each energy flow, in that version of the library, is represented as the product of a specific enthalpy and a mass flow. Hence we can track material flows and energy flows simultaneously.

When I drive my car from home to work, I am not only spending energy in the form of the gas that my car consumes. Some energy was also spent in producing the car, and more energy will be spent in discarding it at the end of its lifecycle and in recovering those materials from it that can be recycled.

The accumulated energy that accounts for all of those indirect uses of energy is called emergy. The specific enthalpy can be used to encode in the model the specific emergy, i.e., the emergy per unit of mass.

I plan on porting examples of emergy modeling, as described in the publications by Howard Odum, over to the bond graph implementation of the System Dynamics library, but this work has not yet been completed.


Check out the full paper and presentation by Prof. Dr. François E. Cellier here.

Monday, June 14, 2010

Lloyds Report - Sustainable Energy Security: Strategic Risks and Opportunities for Business

Chatham House-Lloyd's 360 Risk Insight White Paper
by Antony Froggatt and Glada Lahn, June 2010

As the disaster in the Gulf of Mexico has amply demonstrated, growing global energy demand and the anticipated restricted availability of some conventional fossil fuels pose an escalating threat to the security of energy supply for global businesses. Sustainable Energy Security: Strategic Risks and Opportunities for Business, produced jointly by Chatham House and Lloyd's, reveals multiple vulnerabilities in our current energy system and urges both business strategists and government policy-makers to take into account a range of encroaching risks and be bold in making plans for a more resilient and low carbon energy future.



This report, jointly produced by Lloyd’s 360 Risk Insight programme and Chatham House, should cause all risk managers to pause. What it outlines, in stark detail, is that we have entered a period of deep uncertainty in how we will source energy for power, heat and mobility, and how much we will have to pay for it.

Is this any different from the normal volatility of the oil or gas markets? Yes, it is. Today, a number of pressures are combining: constraints on ‘easy to access’ oil; the environmental and political urgency of reducing carbon dioxide emissions; and a sharp rise in energy demand from the Asian economies, particularly China.

Executive Summary
  • Businesses which prepare for and take advantage of the new energy reality will prosper - failure to do so could be catastrophic
  • Market dynamics and environmental factors mean business can no longer rely on low cost traditional energy sources
  • China and growing Asian economies will play an increasingly important role in global energy security
  • We are heading towards a global oil supply crunch and price spike
  • Energy infrastructure will become increasingly vulnerable as a result of climate change and operations in harsher environments
  • Lack of global regulation on climate change is creating an environment of uncertainty for business, which is damaging investment plans
  • To manage increasing energy costs and carbon exposure businesses must reduce fossil fuel consumption
  • Business must address energy-related risks to supply chains and the increasing vulnerability of 'just-in-time' models
  • Investment in renewable energy and 'intelligent' infrastructure is booming. This revolution presents huge opportunities for new business partnerships
[via Transition Culture]

Thursday, June 10, 2010

BP Statistical Review of World Energy 2010


For 59 years, the BP Statistical Review of World Energy has provided high-quality, objective and globally consistent data on world energy markets. The Review is one of the most widely respected and authoritative publications in the fi eld of energy economics, used for reference by the media, academia, world governments and energy companies. A new edition is published every June.

BP Statistical Review of World Energy June 2010 is available online at bp.com/statisticalreview. The website contains all the tables and charts found in the latest printed edition, plus a number of extras, including:
  • Historical data from 1965 for many sections.
  • Additional data for natural gas, coal, hydroelectricity, nuclear energy, electricity and renewables.
  • An energy charting tool, where you can view predetermined reports or chart specifi c data according to energy type, region and year.
  • An oil, natural gas and LNG conversion calculator.
  • PDF versions and PowerPoint slide packs of the charts, maps and graphs, plus an Excel workbook of the historical data.

Tuesday, May 25, 2010

Exergy Evolution of the Mineral Capital on Earth

Dr. Alicia Valero is a lecturer in the Department of Mechanical Engineering at the University of Zaragoza and works in the Centre of Research for Energy Resources and Consumption (CIRCE).

Her main scientific research areas are exergoecology and energy efficiency. In particular, she has had extensive involvement in the application of the exergy analysis in the global assessment of mineral resources on earth.

Download her PhD thesis (English): Exergy Evolution of the mineral capital on Earth

Abstract

The 20th century has been characterized by the economic growth of many industrialized countries. This growth was mainly sustained by the massive extraction and use of the earth’s mineral resources. The tendency observed worldwide in the present, is that consumption will continue increasing, especially due to the rapid development of Asia, the desire for a higher living standard of the developing world and the technological progress. But the physical limitations of our planet might seriously restrain world economies. In fact, many mineral commodities such as oil or copper are already showing signs of scarcity problems, and consequently their prices are increasing sharply.

Our society is based on an inefficient use of energy and materials, since there is a lack of awareness of the limit. If resources are limited, their management must be carefully planned. But it is impossible to manage efficiently the resources on earth, if we do not know what is available and at which rate it is being depleted.

Therefore, the aim of this PhD has been the assessment of the physical stock on earth and the degradation velocity of our mineral resources due to human action. This has been accomplished through the exergy analysis under the exergoecological approach. This way, the resources are physically assessed as the energy required to replace them from a complete degraded state to the conditions in which they are currently presented in nature. The main advantage of its use with respect to other physical indicators is that in a single property, all the physical features of a resource are accounted for. Furthermore, exergy has the capability of aggregating heterogeneous energy and material assets. Unlike standard economic valuations, the exergy analysis gives objective information since it is not subject to monetary policy, or currency speculation.

Examples of scientific contributions

With the relative abundance of the substances in each of the earth’s outer spheres obtained in this PhD, and the thermochemical information, we were able to calculate for the first time, the average Gibbs free energy, enthalpy of formation and chemical exergy of the atmosphere, hydrosphere and upper continental crust. Furthermore, since the mass of each layer of the earth is well known, we have obtained the first estimation of the earth’s specific chemical exergy: 1,22E9 Gtoe.

This study has obtained an inventory of the most important renewable and non-renewable resources on earth measured in exergy terms. The main novelty introduced in the inventory is the combined assessment of energy resources with non-fuel minerals. Since exergy is an additive property, we have been able to obtain the total exergy of the non renewable energy resources, including nuclear, fossil fuels and non-fuel mineral reserves. Furthermore we could estimate for all renewable resources, the rate of current consumption with respect to the available potential use.

Similarly, for non-renewables, we estimated the resource to production ratio. We came to the important conclusion that vast amounts of energy resources are available on earth, especially of renewable nature. However, we are currently using less than 2% of its potential. On the other hand, we have estimated that the reserves of concentrated fuel and non fuel minerals, which can be practically used by man, represent only 0,01% of the chemical exergy of the earth. Furthermore, their global R/P ratio excluding nuclear materials, is less than 100 years. Hence, humankind is not facing an energy crisis, as many claim, but rather a material’s scarcity.

This PhD has applied for the first time the Hubbert model to non-fuel minerals, with the aim of estimating the year were the peak of production is reached. It has been stated that the bell-shape curve is better suited to non-fuel minerals if it is fitted with exergy over time, instead of mass over time. This way, we take into account the concentration factor, which is very important for the case of solid minerals. Consequently, we have developed the required equations for estimating the Hubbert’s peak for all kinds of minerals in exergy terms.

With the available information about world mineral historic statistics and available reserves, we have carried out the first diagnosis of the state of non-renewable minerals on earth. This PhD has estimated through the exergy analysis, the degradation degree of the mineral commodities, detecting the ones being degraded at the highest rates, and the ones facing important scarcity problems.

We have stated that iron and aluminium are the most extracted commodities but not the most depleted ones, due to their crustal abundance. On the contrary, copper, which is also being extracted at very high rates, is already suffering scarcity problems, with more than 50% of its world reserves depleted. Other commodities such as mercury, silver, gold, tin, arsenic, antimony or lead are even more degraded, with more than 70% of their reserves depleted.

Thursday, May 20, 2010

Agriculture as Provider of Both Food and Fuel

The new research paper "Agriculture as Provider of Both Food and Fuel" has been published in AMBIO: A Journal of the Human Environment by Kesti Johansson, Karin Liljequist, Lars Ohlander and Kjell Aleklett

Abstract

A database of global agricultural primary production has been constructed and used to estimate its energy content. The portion of crops available for food and biofuel after postharvest losses was evaluated. The basic conditions for agriculture and plant growth were studied, to ensure sustainable scenarios.

The net energy contents for the world and EU27 was found to be 7200-9300 and 430 TWh respectively, to be compared with food requirements of 7100 and 530 TWh. Clearly, very little, or nothing, remains for biofuel from agricultural primary crops. However, by using residues and bioorganic waste, it was found that biofuel production could theoretically replace one fourth of the global consumption of fossil fuels for transport.

The expansion potential for global agriculture is limited by availability of land, water and energy. A future decrease in supply of fossil energy and ongoing land degradation will thus cause difficulties for increased biofuel production from agriculture.

A related blog entry has been published by Aleklett which has also appeared on EnergyBulletin.net.

Wednesday, April 7, 2010

Online World Simulation

This online Simgua World simulation predicts the macro-level development and change of the entire world. There are six main sectors in it: a food system, a population system, a pollution system, a nonrenewable resource system, and an industrial system.

You may experiment with several variables of the model including the initial level of nonrenewable resources, the start year for the implementation of a high-tech improvement policy, and the delay between technology development and its implementation.

You may download the model to control many more variables. This world simulation is based on the World3 model developed by the Club of Rome. This model was used in the original Limits to Growth publication in 1972.

Simgua is a next-generation, no-nonsense modeling application that helps you develop powerful models and simulations.

Thursday, March 11, 2010

Forecasting World Crude Oil Production Using Multicyclic Hubbert Model

A new oil forecast research from Kuwait

The year 2008 has witnessed unprecedented fluctuations in the oil prices. During the first three-quarters, the oil price abruptly increased to $140/bbl, a level that has never been reached before; then because of the global economic crisis, the price dramatically plunged to less than $50/bbl by the end of the year losing more than 64% of the maximum price in less than three months period. The supply of crude oil to the international market oscillated to follow suite according to the law of supply and demand. This behavior affected oil production in all exporting countries. Nonetheless, the demand for crude oil in some developing countries, such as China and India, has increased in the past few years because of the rapid growth in the transportation sector in addition to the absence of viable economic alternatives for fossil fuel. The rapid growth in fuel demand has forced the policy makers worldwide to include uninterrupted crude oil supply as a vital priority in their economic and strategic planning.

Even though forecasting should be handled with extreme caution, it is always desirable to look ahead as far as possible to make an intellectual judgment on the future supplies of crude oil. Over the years, accurate prediction of oil production was confronted by fluctuating ecological, economical, and political factors, which imposed many restrictions on its exploration, transportation, and supply and demand. The objective of this study is to develop a forecasting model to predict world crude oil supply with better accuracy than the existing models. Even though our approach originates from Hubbert model, it overcomes the limitations and restrictions associated with the original Hubbert model. As opposed to Hubbert single-cycle model, our model has more than one cycle depending on the historical oil production trend and known oil reserves. The presented method is a viable tool to predict the peak oil production rate and time. The model is simple, accurate, and totally data driven, which allows a continuous updating once new data are available. The analysis of 47 major oil producing countries estimates the world’s ultimate crude oil reserve by 2140 BSTB and the remaining recoverable oil by 1161 BSTB. The world production is estimated to peak in 2014 at a rate of 79 MMSTB/D. OPEC has remaining reserve of 909 BSTB, which is about 78% of the world reserves. OPEC production is expected to peak in 2026 at a rate of 53 MMSTB/D. On the basis of 2005 world crude oil production and current recovery techniques, the world oil reserves are being depleted at an annual rate of 2.1%.

Wednesday, February 24, 2010

Economic Growth And Climate Change — No Way Out?

Dave Cohen has posted a new entry on his Peak Watch blog on Economic Growth And Climate Change — No Way Out? I recommend you to check out the full article. Here is a short excerpt:

Humankind has reached a fork in the road. The business-as-usual path implies robust economic growth with a rise in the carbon dioxide emissions that contribute to anthropogenic climate change. The other path, whatever its actual form turns out to be, shuns business-as-usual in an attempt stabilize greenhouse gas levels (mainly carbon dioxide CO2) in the Earth's atmosphere (e.g. at 450 ppmv, parts-per-million-by-volume) to avoid catastrophic warming (e.g. > 2°C). Considered alternatives invariably lay out a vision of the future in which emissions steadily decline while economies continue to grow. Is such a vision realistic? This essay questions standard assumptions underlying this "have your cake and eat it too" view.

Conclusions

The main conclusions of this essay subvert standard views of how the future looks if humankind chooses to make a serious effort to mitigate anthropogenic climate change.

For now, and in the "foreseeable" future, putting the breaks on economic growth appears to be the only practical way out of the climate dilemma. Unfortunately, this solution is politically impossible, a circumstance which is reinforced by economists' incontestable, unshakable belief that economic growth will continue in all future emissions (energy) scenarios. This conclusion rests upon the equally incontestable, unshakable Assumption of Technological Progress.

The inescapable conclusion in 2010 is that continued economic growth at near 20th century rates in the 21st century is incompatible with taking positive, effective steps to mitigate anthropogenic climate change. Moreover, such assumptions are not compatible with a near-term peak in the conventional oil supply.

Our species faces unprecedented challenges in this new century. Our response to those challenges will define Homo sapiens in ways we never had to come to grips with during the Holocene (roughly the last 10,000 years) or before that in the Pleistocene. The problems we face in this century are unique, even on geological time-scales extending far into the past beyond the 200,000-year-old Human experience on Earth.


Both our limitations and our abilities, such as they are, will be displayed in the bright, harsh light of the energy & climate outcomes in the 21st century. Regardless of who we pretend to be, our response to these challenges will tell us who we really are.

Wednesday, February 3, 2010

Publications by the new economics foundation


nef (the new economics foundation) is an independent think-and-do tank that inspires and demonstrates real economic well-being.

Growth isn't Possible

Four years on from nef's Growth isn’t Working, this new report goes one step further and tests that thesis in detail in the context of climate change and energy. It argues that indefinite global economic growth is unsustainable. Just as the laws of thermodynamics constrain the maximum efficiency of a heat engine, economic growth is constrained by the finite nature of our planet’s natural resources (biocapacity).

The Cuts Won't Work

Why spending on a Green New Deal will reduce the public debt, cut carbon emissions, increase energy security and reduce fuel poverty.

The Great Transition

Creating a new kind of economy is crucial if we want to tackle climate change and avoid the mounting social problems associated with the rise of economic inequality. The Great Transition provides the first comprehensive blueprint for building an economy based on stability, sustainability and equality.

The Consumption Explosion

Overconsumption, not overpopulation, is the real threat to the environment. Even the recession has had little impact on our burgeoning ecological debt.

Ecological Debt

This book explores a great paradox of our age: how the global wealth gap was built on ecological debts, which the world's poorest are having to pay for.

A Green New Deal

The global economy is facing a ‘triple crunch’: a combination of a credit-fuelled financial crisis, accelerating climate change and soaring energy prices underpinned by encroaching peak oil. It is increasingly clear that these three overlapping events threaten to develop into a perfect storm, the like of which has not been seen since the Great Depression, with potentially devastating consequences.

Hooked on Oil

How fossil fuel profits could be taxed to fund a clean energy economy.

Saturday, December 19, 2009

Economic Dynamics - And the Real Danger

George Mobus has published a new summary paper on his blog Question Everything that he have written to explain the findings from his computer model of an abstract economy's dynamics when it is run mostly on fixed, finite fuel sources such as fossil fuels.

His model describes an abstract economy in which work processes use energy and raw materials to produce assets, some of which are consumed by processes that constitute the major body of the system, some of which will be reinvested in the work processes.

The dynamics of asset production and decay are governed by the laws of thermodynamics. The general conservation law applies to both matter and energy. But the second law, in particular, has ultimate influence over the efficiency and effectiveness of work processes as well as the entropic decay of all forms of assets.

A key question that needs to be addressed is: given our current heavy reliance on fossil fuels for more than 80% of our energy inputs, what happens in an economy that is growing when the resources are depleting?


Many people have realized, either intuitively or logically, that what matters insofar as economic activity is concerned is the net energy — the energy available after extraction of the gross energy (in this case crude oil) and refinement or conversion to a form useful in doing work. Energy must be reinvested in energy extraction, transportation, and refinement in order to gain net energy that can be available for asset production (other than assets needed for energy extraction). Thus there is an energy return on energy invested (EROI or EROEI) that must be taken into account in determining if an economy is viable, stable, or growing.

Check out the very interesting full post on the Question Everything blog.

Monday, November 30, 2009

Is Global Warming Unstoppable?

Theory Also Says Energy Conservation Doesn't Help

Nov. 22, 2009 - In a provocative new study, a University of Utah scientist argues that rising carbon dioxide emissions - the major cause of global warming - cannot be stabilized unless the world's economy collapses or society builds the equivalent of one new nuclear power plant each day.

"It looks unlikely that there will be any substantial near-term departure from recently observed acceleration in carbon dioxide emission rates," says the new paper by Tim Garrett, an associate professor of atmospheric sciences.

Garrett's study Are there basic physical constraints on future anthropogenic emissions of carbon dioxide? was panned by some economists and rejected by several journals before acceptance by Climatic Change, a journal edited by renowned Stanford University climate scientist Stephen Schneider. The study will be published online this week.

The study - which is based on the concept that physics can be used to characterize the evolution of civilization - indicates:

  • Energy conservation or efficiency doesn't really save energy, but instead spurs economic growth and accelerated energy consumption.
  • Throughout history, a simple physical "constant" - an unchanging mathematical value - links global energy use to the world's accumulated economic productivity, adjusted for inflation. So it isn't necessary to consider population growth and standard of living in predicting society's future energy consumption and resulting carbon dioxide emissions.
  • "Stabilization of carbon dioxide emissions at current rates will require approximately 300 gigawatts of new non-carbon-dioxide-emitting power production capacity annually - approximately one new nuclear power plant (or equivalent) per day," Garrett says. "Physically, there are no other options without killing the economy."

Getting Heat for Viewing Civilization as a "Heat Engine"

Garrett says colleagues generally support his theory, while some economists are critical. One economist, who reviewed the study, wrote: "I am afraid the author will need to study harder before he can contribute."

"I'm not an economist, and I am approaching the economy as a physics problem," Garrett says. "I end up with a global economic growth model different than they have."

Garrett treats civilization like a "heat engine" that "consumes energy and does 'work' in the form of economic production, which then spurs it to consume more energy," he says.

"If society consumed no energy, civilization would be worthless," he adds. "It is only by consuming energy that civilization is able to maintain the activities that give it economic value. This means that if we ever start to run out of energy, then the value of civilization is going to fall and even collapse absent discovery of new energy sources."

Garrett says his study's key finding "is that accumulated economic production over the course of history has been tied to the rate of energy consumption at a global level through a constant factor."

That "constant" is 9.7 (plus or minus 0.3) milliwatts per inflation-adjusted 1990 dollar. So if you look at economic and energy production at any specific time in history, "each inflation-adjusted 1990 dollar would be supported by 9.7 milliwatts of primary energy consumption," Garrett says.

Garrett tested his theory and found this constant relationship between energy use and economic production at any given time by using United Nations statistics for global GDP (gross domestic product), U.S. Department of Energy data on global energy consumption during1970-2005, and previous studies that estimated global economic production as long as 2,000 years ago. Then he investigated the implications for carbon dioxide emissions.

"Economists think you need population and standard of living to estimate productivity," he says. "In my model, all you need to know is how fast energy consumption is rising. The reason why is because there is this link between the economy and rates of energy consumption, and it's just a constant factor."

Garrett adds: "By finding this constant factor, the problem of [forecasting] global economic growth is dramatically simpler. There is no need to consider population growth and changes in standard of living because they are marching to the tune of the availability of energy supplies."

To Garrett, that means the acceleration of carbon dioxide emissions is unlikely to change soon because our energy use today is tied to society's past economic productivity.

"Viewed from this perspective, civilization evolves in a spontaneous feedback loop maintained only by energy consumption and incorporation of environmental matter," Garrett says. It is like a child that "grows by consuming food, and when the child grows, it is able to consume more food, which enables it to grow more."

Is Meaningful Energy Conservation Impossible?

Perhaps the most provocative implication of Garrett's theory is that conserving energy doesn't reduce energy use, but spurs economic growth and more energy use.

"Making civilization more energy efficient simply allows it to grow faster and consume more energy," says Garrett.

He says the idea that resource conservation accelerates resource consumption - known as Jevons paradox - was proposed in the 1865 book "The Coal Question" by William Stanley Jevons, who noted that coal prices fell and coal consumption soared after improvements in steam engine efficiency.

So is Garrett arguing that conserving energy doesn't matter?

"I'm just saying it's not really possible to conserve energy in a meaningful way because the current rate of energy consumption is determined by the unchangeable past of economic production. If it feels good to conserve energy, that is fine, but there shouldn't be any pretense that it will make a difference."

Yet, Garrett says his findings contradict his own previously held beliefs about conservation, and he continues to ride a bike or bus to work, line dry family clothing and use a push lawnmower.

An Inevitable Future for Carbon Dioxide Emissions?

Garrett says often-discussed strategies for slowing carbon dioxide emissions and global warming include mention increased energy efficiency, reduced population growth and a switch to power sources that don't emit carbon dioxide, including nuclear, wind and solar energy and underground storage of carbon dioxide from fossil fuel burning. Another strategy is rarely mentioned: a decreased standard of living, which would occur if energy supplies ran short and the economy collapsed, he adds.

"Fundamentally, I believe the system is deterministic," says Garrett. "Changes in population and standard of living are only a function of the current energy efficiency. That leaves only switching to a non-carbon-dioxide-emitting power source as an available option."

"The problem is that, in order to stabilize emissions, not even reduce them, we have to switch to non-carbonized energy sources at a rate about 2.1 percent per year. That comes out to almost one new nuclear power plant per day."

"If society invests sufficient resources into alternative and new, non-carbon energy supplies, then perhaps it can continue growing without increasing global warming," Garrett says.

Does Garrett fear global warming deniers will use his work to justify inaction?

"No," he says. "Ultimately, it's not clear that policy decisions have the capacity to change the future course of civilization."

References

The global economy and its carbon dioxide emissions as a simple heat engine

  • Garrett, T. J., 2009 Are there basic physical constraints on future anthropogenic emissions of carbon dioxide? Climatic Change doi:10.1007/s10584-009-9717-9 HTML PDF

Tuesday, November 10, 2009

World Running Out of Oil?

(via Guardian) Key oil figures were distorted by US pressure, says whistleblower

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies.

In particular they question the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels. External critics have frequently argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production.

Read the full report here.

The Peak of the Oil Age - The Uppsala Energy Outlook

A new study has been accepted for publication in the journal of Energy Policy. The article performs an analysis of the oil production forecast done by the International Energy Agency in 2008 and highlights several shortcomings as well as confirms other parts.

Abstract:
The assessment of future global oil production presented in the IEA's World Energy Outlook 2008 (WEO 2008) is divided into 6 fractions; four relate to crude oil, one to non-conventional oil and the final fraction is natural-gas-liquids (NGL). Using the production parameter, depletion-rate-of-recoverable-resources, we have analyzed the four crude oil fractions and found that the 75 Mb/d of crude oil production forecast for the year 2030 appears significantly overstated, and is more likely to be in the region of 55 Mb/d. Moreover, analysis of the other fractions strongly suggests lower than expected production levels. In total, our analysis points to a world oil supply in 2030 of 75 Mb/d, some 26 Mb/d lower than the IEA predicts.

The connection between economic growth and energy use is fundamental in the IEA's present modelling approach. Since our forecast sees little chance of a significant increase in global oil production, our findings suggest that the "policy makers, investors and end users" to whom WEO 2008 is addressed should rethink their future plans for economic growth. The fact that global oil production has very probably passed its maximum implies that we have reached the Peak of the Oil Age.

The study is available online as PDF here.

Monday, November 9, 2009

Economies Evolve by Energy Dispersal

(PhysOrg.com) -- Terms such as the "invisible hand," laissez-faire policy, and free-market principles suggest that economic growth and decline in capitalist societies seem to be somehow self-regulated. Now, scientists Arto Annila of the University of Helsinki and Stanley Salthe of Binghampton University in New York show that economic activity can be regarded as an evolutionary process governed by the second law of thermodynamics. Their perspective may provide insight into some fundamental economic questions, such as the causes of economic growth and diversification, as well as why it’s so difficult to predict economic growth and decline.

Abstract: Economic activity can be regarded as an evolutionary process governed by the 2nd law of thermodynamics. The universal law, when formulated locally as an equation of motion, reveals that a growing economy develops functional machinery and organizes hierarchically in such a way as to tend to equalize energy density differences within the economy and in respect to the surroundings it is open to. Diverse economic activities result in flows of energy that will preferentially channel along the most steeply descending paths, leveling a non-Euclidean free energy landscape. This principle of 'maximal energy dispersal‘, equivalent to the maximal rate of entropy production, gives rise to economic laws and regularities. The law of diminishing returns follows from the diminishing free energy while the relation between supply and demand displays a quest for a balance among interdependent energy densities. Economic evolution is dissipative motion where the driving forces and energy flows are inseparable from each other. When there are multiple degrees of freedom, economic growth and decline are inherently impossible to forecast in detail. Namely, trajectories of an evolving economy are non-integrable, i.e. unpredictable in detail because a decision by a player will affect also future decisions of other players. We propose that decision making is ultimately about choosing from various actions those that would reduce most effectively subjectively perceived energy gradients.

Read the full research here: Economies Evolve by Energy Dispersal by Arto Annila and Stanley Salthe.

Friday, October 30, 2009

Economic Scenarios for an Age of Declining EROIs

One of the most interesting presentations on the ASPO USA Peak Oil Conference 2009 was delivered by Charlie Hall (ESF) and Hannes Kunz (IIER). This is a short overview of their research.

They suggests that a fundamental change in economic dynamics requires a new approach to macroeconomics. Instead of the traditional "Growth" paradigm their research has lead to a much wider system definition which includes
  • Financial systems (money supply, credit, prices, etc.)
  • Resource systems (energy, human labor, other natural resources)
  • Global flows of goods, energy and funds (exports, imports, balances)
  • Population development
The New Paradigm: Decline is as much part of a human ecosystem as is growth

Energy and GDP

Economic Scenarios for an Age of Declining EROIs describes consistent correlations of Energy use and GDP:

GDP$ per Energy Unit Consumed is defined as Total Global GDP (in US$ PPP) divided by the sum of Human Labor and External Primary Energy Inputs.

Primary Energy inputs and economic output are highly correlated, even before eliminating distortions from globalization. Mining, agricultural inputs, raw materials and manufacturing contain a significant amount of “energy accounted for elsewhere”, which is not included in traditional energy efficiency reviews. Most differences can be explained from energy transfers from industrial processes. The result is a rough average of 133 US$ purchasing power parity of GDP produced per GJ of energy input.

The first conclusion of the presentation is that most of our increased “productivity” comes from replacing human labor with fuel and machinery. The “productivity increase” leads to immediate gains for an economy and rising standards of living.

The Energy Squeeze-Out

Over the past decades, our fossil energy sources have become less efficient. Independent of the arrival of “Peak Oil”, increasing amounts of upfront energy are required to explore the next new units of energy. The concept of EROI (Energy Return on (Energy) Investment) describes this as: Energy Units Gained from one Energy Unit Used.

A change of EROIs from 80:1 to 20:1 (current estimate for global oil production) equals a “salary increase” of physical work from oil by a factor of almost 4, significantly reducing benefits to our economy. Higher energy cost quickly reverses previous gains from increased “productivity”.

Looking at EROIs and expected changes shows significant trouble ahead. Transportation will be highly affected by declining EROIs (and thus higher cost). The highest impact however will be seen in agricultural production.

High contribution of energy to food production (4-5% of global non-renewable energy consumption goes into food); in OECD countries, another 10-15% is used for processing and transporting food. With rising energy prices, farming and food processing will have to reduce input and thus output directly with higher fuel prices (less fertilizer equals less crop). Food prices will still rise both due to shortages and higher production cost and squeeze out poorer countries.

Lower EROIs will start squeezing out low-efficiency applications of energy. A significant number of industrial transportation and production chains will become unmanageable.
  • Cost of commodity transportation becomes significant
  • Global arbitrage of labor cost for low-cost/high-volume goods will become unattractive over long distances
  • A substantial portion of global trade (the lower cost bracket) will be unattractive
  • Food production and processing will no longer work on todays levels, with more local food and less processing
  • Results might be very different compared to most people’s expectations
Download the full presentation in pdf to learn more.

Wednesday, August 26, 2009

Do Fossil Fuels Have A Sustainable Future?


Check out these recent speeches and papers on the Energy Crisis by Matthew R. Simmons on the web site of Simmons & Company who is the only independent investment bank specializing in the entire spectrum of the energy industry. Some examples:
  • How Did Our Energy Hole Get So Deep?
  • Two Energy Oxymorons: 1. Energy Independence 2. Energy Security
  • Have We "Peaked?"
  • Is There Light At The End Of The Dark Tunnel?
  • Investing During A World-Class Crisis
  • Do Fossil Fuels Have A Sustainable Future?
  • Planning In A Most Uncertain Environment: The Energy Challenges In 2009 And Beyond
  • The Oil Pricing Roller-Coaster: How It Impacts Energy Investment
  • The Risk Of Misjudging Peak Oil: A Real Physical Crisis
  • The Era Of Cheap Oil Is Over