Key Energy Issues of our Times

So now it’s the global EROI that matters and that, those of us working in this domain, estimate to be around 3:16 and trending rapidly towards 1:1. We estimate that at current rates, an EROI of 1:1 (“ground zero”) is highly likely to be hit before 2030. At 1:1 there is no net energy left and everything grinds to a halt.7 Of course, 1:1 is never fully reached, as things get very chaotic well before this.
In short, for some 50 years the industrialised and industrialising world has been attempting to live well above its means in terms of the net energy it can mobilise each year. At heart, the present crisis is a huge correction in the face of the stubborn realities of thermodynamics. The whole of the world’s monetary mass is no longer convertible into Joules of net energy per year (beside gold) and its value is rapidly and inexorably declining relative to net available energy.
Peak Oil revisited
The above EROI trends are at the heart of the impact of peak oil. The easiest resources get exploited first, then, progressively, some harder ones are discovered and brought on stream. While this happens production grows rapidly and demand is easily met. However, once the peak is passed, meeting an ever-growing demand requires shifting very rapidly to ever harder to exploit resources that require substantially increased energy expenditures and result in a very rapid decline in EROIs (e.g. drilling in increasingly deeper ocean waters, with the dangers highlighted by the recent explosion of the BP platform in the Gulf of Mexico). This is the situation we are now in globally.
A race against time
The present and rapidly worsening situation was anticipated in the early 1970s (e.g. by the Meadows and their team, of Club of Rome fame). Because those early warnings, and ever more pressing warnings ever since, were ignored and even abundantly ridiculed by decision makers who had next to no understanding of energy and its vital importance to economic development, time as now run sort.
The backstop technologies and alternative energy, transport and communications infrastructures that could have been developed and deployed from the 1970s onwards are not in place. It takes some 40 years to replace globally one infrastructure with an other, while the time window to address the present mess is now substantially less than 20 years.
Climate change is a reality and so are the other ecological degradations we now must face as a direct consequence of the huge surge in the use of fossil fuels that took place during the 20th century and up to this day. The consequences will be extremely severe, much more than most lay people realise.
However, these consequences mostly lie in the longer-term. Instead, energy matters are a present, immediate danger.
Energy technology
The above race against time is fundamentally why there will be losers and winners. It is no longer feasible in my view to ensure an orderly transition to sustainability for all globally. The key words of our time are now “Energy Emergency”.
6 See Charles A. S. Hall, Stephen Balogh and David J. R. Murphy, 2009, “What is the Minimum EROI that a Sustainable Society Must Have?” in Energies, 2, 25-47; doi:10.3390/en20100025, and also http://news.goldseek.com/GoldSeek/1250621683.php, http://www.synapse9.com/issues/Spiral&Relief.htm
7 In economic terms it is never a good idea to spend more than what one earns but one can temporarily borrow from a bank. In terms of global net energy there is no bank to borrow from. One simply cannot spend more energy than one earns. The outcome is always simply death.
8 An historical example is the collapse of the western part of the Roman Empire when the Roman aristocracy, bureaucracy and armies drew more energy than the slaves could produce (in the form of food, wood, clothing, etc. – this was a solar/biomass based economy).
However, an energy carrier, be it a lump of coal, a barrel of oil, a cubic meter of gas, or light from the sun, is of no use at all without cost-effective, appropriate technology to convert it into usable energy forms. In response to the economic, fossil fuel and ecological challenges, new energy technologies capable of enabling the sustainable use of renewable resources are now emerging as the fundamental sources and drivers of wealth. In the emerging global environment, sustainable energy technologies condition every other development in every other sector.
The picture here is very contrasted. None of the current and emerging energy technologies that drive towards some form of sustainability (direct solar and indirect solar such as wind, hydro, biomass) can compete with fossil fuels without recourse to heavy handed government interventions (such as carbon credits, carbon tax, high feed-in tariffs, etc.). Nuclear is not even in the league due to its high energy inefficiencies and cost. In regard of this, legacy infrastructures based on fossil fuels are characterised with extremely high inefficiencies. Few people realise that the overall energy efficiency of power grids for example is usually less than 20%.9 In short the centralised model (as in power stations) is obsolete.10
Investment prospects
It ensues that in terms of winners and investments the focus must be very sharply on those few new energy technologies that can achieve very high EROIs by sustainable means. This means nearly exclusively energy technologies that enable to access solar energy directly or indirectly, in highly distributed fashion (since sustainable resources are inherently distributed, that end-users are also distributed, and that the centralised model simply cannot achieve high efficiencies because in that model large amounts of waste energy cannot be recycled). The challenge for these new technologies is to deliver the range of energy streams end-users require on their own premises (i.e. not only electricity, but also hot and cold streams, and transport means).
The other crucially vital range of new technologies that are required to avoid the energy trap everyone is in the process of falling into concerns technologies (essentially Information Technologies) enabling the integration of distributed generation into local intelligent energy networks as this is the only avenue to achieve the required high efficiency, low costs, and sustainability within the remaining time window, at least for some.
The paradox in this is that while the picture concerning fossil fuels is one of dreary scarcity, on the solar side the prospect is one of unbounded abundance. The solar energy influx falling on earth each year is many orders of magnitude greater than what humankind would ever require. Technically, it isperfectly feasible to achieve sustainable energy abundance with high EROIs. However, this does require a radical change in thinking concerning energy technologies and infrastructure developments in industries that are extremely conservative. The know-how exists – I am part of an international community of scientists, engineers and entrepreneurs developing it.
The race I talk about concerns the time it takes to get the new ways accepted and new infrastructures deployed versus the time window left to do so. We see a very bright future, literally speaking, however it requires very rapid and sharp action, especially on the part of discerning investors.
9 For instance, Robert Ayres, Emeritus Professor of the European Institute of Business Administration, has shown that the largest and most advanced economy in the world, the US economy, functions on only 13% energy efficiency, meaning that it wastes 87% of the primary energy it uses. Robert U. Ayres and Edward H. Ayres, 2010, Crossing the Energy Divide: Moving from Fossil Fuel Dependence to a Clean-Energy Future, Pearson Prentice Hall.
10 See for example, Frank Klose, Michael Kofluk, Stephan Lehrke, Harald Rubner, June 2010, Toward a Distributed-Power World: Renewables and Smart Grids Will Reshape the Energy Sector, Boston Consulting Group, http://www.bcg.com/expertise_impact/publications/PublicationDetails.aspx?id=tcm:12-51645).

Dr Louis Arnoux

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