Gail Tverberg calls the Energy Desert

2021.05.05 – Ian Page

https://ourfiniteworld.com/2021/05/04/how-the-worlds-energy-problem-has-been-hidden/

I don’t fully agree with Gail, but she has arrived at her description of the CHON energy desert from her financial perspective, and also identified the GDP energy relationship we have also graphed.

She also creates an interesting presentation indicating that wars happen when the "excess" GDP hits zero and are often only resolved with a new form of primary energy.

She indicates that we are at the zero spare energy point now and says this is the basis of many of our current ills and our dire future.

The CHON scenarios see this as leading to a fight for resources within a zero/negative sum game, resource retention by countries with great strategic focus on capturing the resources in imported goods, and an inability to afford the multiple layers of government in modern societies and centralized manufacturing and offices.

Plausibly good news from my point of view is that I underestimated the cost reductions of renewables. I suspect that generally people underestimate the future cost reductions potential of batteries and demand profiling. Whereas fossils and materials are, as she indicates, getting more costly to produce while commanding lower prices

We are going through a phase, which Gail has in the past identified, where the majority of the energy to make renewables is supplied by coal, oil and gas. However, I see this as an artefact of the exponential rate of increase of renewables. Once renewables pass the inflection point the coal and oil inputs to renewable expansion drops rapidly.

Gail is right to distinguish climate change, the energy desert, poverty, and peak anything, as different issues. She also understands better than I the issues of feeding back high wages from fossil energy related jobs into the economy so that consumers can buy the products of such activity. She has also come round to some variant of the EROI/MROI issue of resources being less energy efficient, which leads her to predicting lower prices for resources not higher as fewer people can afford them. I have come to agree with her view. (Rune Luneberg in his studies of oil has a similar view showing that as oil prices rise interest rates have to drop to keep consumption up and predicted zero interest rates, reached fairly recently, which is presumably the end.)

However, I think Gail is taking an H1 view of the failing industries and not seeing the H2 and H3 job creation that’s going on.

I would point out that according to a submission by a US Minnesota utility, both utility and home solar are cost effective in their particular applications with coal and gas, and home solar employs 30 times as many workers as utility (I imagine Tesla roofs employ less but hopefully at higher wages).

Analogous claims are made about highly efficient robotic factories also employing relatively few people per unit output. Yet they also employ a lot of highly skilled people in setting them up, design, and controlling them and their outputs (see Tesla Berlin - remarkable number of jobs for hire with an ultimately automated facility).

One needs an economist to pull all this together and show the overall impact on average wages etc. as a result of the renewables transition, but I think at present the situation is moot.

The fundamental graph needed is one that shows the energy / GDP relation for renewables. Generally, it's a straight line for coal, oil, and gas over each fuel's main period. If more energy is needed per unit GDP for renewables, then I guess people will get poorer, or activity will have to rearrange to produce more assets for less GDP. We have mused on this in CHON. Lonnie and I have been trying to find a way to think about it to update Lonnie’s original fossil graphs, and the CHON document guessed that with a change from a focus on activity to a focus on wealth increase, the world would reconfigure in the right direction with minimal impact on jobs that add real value while wiping out the many jobs that have negative added value yet generate GDP.

In summary. Gail says we are in the energy desert (my words), I think she is not seeing the H2/H3 aspects and their potential. She is seeing only the problems of transition. I think there is still some hope if we can use up the last affordable fossils to drive the transition, and not waste them on ICE's and heating. 

From this point of view, accelerating climate change activities and clamping down on fossil use that does not contribute to the transition shows that actually there is a strong link between climate change, the energy desert, poverty, and peak anything!