Not so good news

16 04 2019

This is Tim Watkins at his best I think….. I wish I had time to write well researched articles like this, but I have a flailing mower arriving today, the double glazed windows at the end of the month, and the front wall to build in preparation of this event. Never a dull moment around here.

Put simply, if you cannot turn on your lights, operate your business or recharge your electric car, because there is no electricity, it is little comfort to learn that on a good day the grid is capable of supplying more electricity than you might need.

From the truly amazing Consciousness of Sheep website…

Protesters today intend bringing central London to a standstill by blockading several major arterial roads into the capital.  For once, this has nothing to do with Brexit.  Instead, it concerns the increasingly urgent call for government to “do something” about climate change.  Exactly what that “something” is that must be done is a little less clear, since current environmental concerns are almost always pared down to concern about the carbon dioxide emitted by cars and power stations.  Although how exactly this relates to the mass die-off of species resulting from industrial agriculture and deforestation, or growing oceanic dead zones and plastic islands, is far from clear.

Protesting environmental concerns involves a high degree of denial and self-deception; as it is based on two gross errors.  The first is the irrational belief that governments have the means to respond to the predicament we find ourselves in.  As a corrective to this, just look at the dog’s breakfast that the current British government has managed to make out of what is a simple (by comparison) trade negotiation.  Anyone who seriously thinks these clowns are going to do anything positive (save for by accident) for the environment is displaying almost clinical levels of delusion.   The second error is in believing the often unspoken conspiracy theory that insists that the only thing standing between us and the promised zero-carbon future is corrupt politicians and their corporate backers, who insist on putting the needs of the fossil fuel industry ahead of life on planet earth.

To maintain these deceits, a large volume of propaganda must be put out in order to prove that the zero-carbon future is possible if only the politicians would act in the way the people want.  So it is that we are treated to a barrage of media stories claiming that this town, city, country or industry runs entirely on “green” energy (don’t mention carbon offsetting).  Indeed, left to their own devices, we are told, the green energy industry is already well on the way to building the zero-carbon future we asked for; we just need the politicians to pull their fingers out and we could easily get there in just a few years’ time.  For example, Joshua S Hill at Green Technica tells us that:

“Renewable energy sources now account for around a third of all global power capacity, according to new figures published this week by the International Renewable Energy Agency, which revealed 171 gigawatts (GW) of new renewable capacity was installed in 2018…

“This brings total renewable energy generation capacity up to a whopping 2,351 GW as of the end of 2018, accounting for around a third of the globe’s total installed electricity capacity. Hydropower remains the largest renewable energy source based on installed capacity, with 1,172 GW, followed by wind energy with 564 GW and solar power with 480 GW.”

Stories like these play into the fantasy that we are well on our way to reversing climate change, and that all we need now is some “green new deal” mobilisation to replace the final two-thirds of our energy capacity with non-renewable renewable energy-harvesting technologies to finish the job.  If only it was that simple.

Notice the apparently innocuous word “capacity.”  This is perhaps the least important information about electricity.  Far more important is the amount that is actually generated.  The US Energy Information Administration explains the difference:

Electricity generation capacity is the maximum electric output an electricity generator can produce under specific conditions. Nameplate generator capacity is determined by the generator’s manufacturer and indicates the maximum output of electricity a generator can produce without exceeding design thermal limits….

Electricity generation is the amount of electricity a generator produces over a specific period of time. For example, a generator with 1 megawatt (MW) capacity that operates at that capacity consistently for one hour will produce 1 megawatthour (MWh) of electricity. If the generator operates at only half that capacity for one hour, it will produce 0.5 MWh of electricity…

Capacity factor of electricity generation is a measure (expressed as a percent) of how often an electricity generator operates during a specific period of time using a ratio of the actual output to the maximum possible output during that time period.”

In terms of understanding where we are and where we are heading, “electricity generation” is far more important than “capacity”; which only tells us how wind, wave, tide and solar technologies would perform if it were possible (it isn’t) for them to generate electricity all day (and night) every day.  Put simply, if you cannot turn on your lights, operate your business or recharge your electric car, because there is no electricity, it is little comfort to learn that on a good day the grid is capable of supplying more electricity than you might need.  From a planning point of view, knowing the capacity factor for various generating technologies matters because it gives an insight into how efficient they are.  A nuclear or fossil fuel power plant that runs more or less continuously for more than 60 years is likely to require far fewer inputs and far less land area than, say, vast solar farms (which have to be replaced every 10-20 years) that can only generate electricity when the sun is shining.

So where do non-renewable renewable energy-harvesting technologies stand when it comes to electricity generation?  According to the latest BP Statistical Review of World Energy, in 2017 human civilisation generated 25551.3 Terawatt hours (TW/h) of electricity.  Of this:

  • Non-renewable renewable energy-harvesting technologies provided 2151.5 TW/h (8.4%)
  • Nuclear provided 2635.6 TW/h (10.3%)
  • Hydroelectric dams provided 4059.9 TW/h (15.9%)
  • Fossil fuels provided 16521.7 TW/h (64.7%).

What this tells us is that far more non-renewable renewable energy-harvesting capacity has to be installed than the electricity that it can actually generate – it has a low capacity factor.  Indeed, Hill’s “around a third” figure includes the much larger capacity of hydroelectric dams (which have environmental issues of their own) for which there is little scope for further installation.  Only by adding in nuclear power can we get to a third of electricity generation from low-carbon sources.

Even this, however, misleads us when it comes to environmental impacts.  The implicit assumption is that non-renewable renewable energy-harvesting technologies are still valuable despite their inefficiency because they are replacing fossil fuels.  But this is not why countries like the UK, Saudi Arabia and (for insane reasons) Germany have been deploying them.  In the first two cases, the deployment of non-renewable renewable energy-harvesting technologies is primarily to maximise the amount of fossil fuels available for export.  In Germany’s case, renewables that might otherwise have weaned the economy off coal were deployed instead as a replacement for nuclear; leaving the economy overly-dependent upon often dirty (lignite) brown coal; and forcing them to turn to Russian gas as a future substitute for coal.  These states are not, however, where most of the world’s largely fossil fuelled industrial processes take place.  Asia accounts for the majority of global industry, and Asian economies use non-renewable renewable energy-harvesting technologies to supplement fossil fuels rather than to replace them; although Hill does not clarify this when he tells us that:

“Specifically, solar energy dominated in 2018, installing an impressive 94 GW… Asia continued to lead the way with 64 GW — accounting for around 70% of the global expansion last year — thanks to dominant performances from China, India, Japan, and South Korea.”

While, of course, electricity generated from wind, wave, sunlight and tide is energy that might otherwise have come from fossil fuels, the impact should not be exaggerated.  According to the 2019 edition of the BP Energy Outlook, in 2017:

  • Non-renewable renewable energy-harvesting technologies provided 4 percent of global primary energy
  • Nuclear provided 4 percent
  • Hydroelectric 7 percent
  • Gas 23 percent
  • Coal 28 percent
  • Oil 34 percent.

Just our additional energy demand since 2015 has been sufficient to account for all of the non-renewable renewable energy-harvesting technologies deployed to date.  That is, if we had simply accepted 2015 levels of consumption, we need not have deployed these technologies at all.  And, of course, if we had stabilized our energy consumption a couple of decades ago we could have left the bulk of the fossil fuels we now consume in the ground:

World Energy Consumption 2017
Source: Global carbon emissions 2007-17

What is really at issue here is that – to quote the late George H.W. Bush – “The American way of life is not up for negotiation.”  That is, we can have any energy transformation we like, so long as it does not involve any limitation on our continued exploitation and consumption of the planet we live on.  The too-big-too-fail banks must havepermanent economic growth and that, in turn, means that we have no choice other than to keep growing our energy consumption.

The trouble is that infinite growth on a finite planet is impossible.  Worse still, as the energy return on investment (aka Net Energy) declines, the increased energy and monetary cost of energy production causes the energy and monetary value available to the wider (non-energy) economy to decline.  In the first two decades of the century, this has caused an intractable financial crisis coupled to a massive decline in prosperity across the developed economy (resulting in the collapse in consumption of the “retail apocalypse”) which is beginning to generate political instability.  In the 2020s the crisis is set to worsen as the energy cost of producing a whole range of mineral resources raises their market price above that which can be sustained in the developed states (where most of the consumption occurs).  The result – whether we like it or not – is that we face a more or less sharp drop in consumption in the next couple of decades.

This raises questions about the purpose to which we deploy non-renewable renewable-energy harvesting technologies.  For several decades, people in the green movement have engaged in private arguments about whether they should spell out the likely localised and de-materialised economies that giving up or running out of accessible fossil fuels necessarily entails.  Since this would be politically toxic, most have chosen to promote the lie that humanity can simply replace coal, gas and oil with some combination of wind, wave, tide and sunlight without economic growth even needing to pause for breath.  This, in turn, has allowed our young people to believe that intransigence is the only thing preventing our political leaders from de-carbonising our economies.

Exactly what our politicians are told about our predicament is a matter of conjecture.  Most, I suspect, are as clueless as the population at large.  Nevertheless the permanent civil services across the planet have produced a raft of reports into the full spectrum of the catastrophe facing us, from the damage we are doing to the environment to the rapidly depleting stocks of key mineral resources and productive agricultural land, and the more imminent collapse in the global financial system.  And the more they become aware of this predicament, the more they realise just exactly what the word “unsustainable” actually means.  One way or another, six out of every seven humans alive today is going to have to go – either by a planned de-growth or via a more or less rapid collapse of our (largely fossil-fuelled) interconnected global life support systems.

With this in mind, there is something truly immoral about perpetuating the myth that we can maintain business as usual simply by swapping non-renewable renewable-energy harvesting technologies for fossil fuels.  This is because maintaining the myth results in precisely the kind of misallocation that we already witnessed in those states that are using renewable electricity to bolster fossil fuel production and consumption.  The more we keep doing this, the harder the crash is going to be when one or other critical component (finance, energy or resources) is no longer widely available.

There is a place for renewable energy in our future; just not the one we were promised.  As we are forced to re-localise and de-grow both our economies and our total population, the use of non-renewable renewable-energy harvesting technologies to maintain critical infrastructure such as health systems, water treatment and sewage disposal, and some key agricultural and industrial processes would make the transition less deadly.  More likely, however, is that we will find the technologies we need to prevent the combination of war, famine and pestilence that otherwise awaits us will have been squandered on powering oil wells, coal mines, electric car chargers, computer datacentres and cryptocurrencies (none of which are edible by the way).

At this stage, all one can say to the climate protestors and to the “green” media that encourage them is, “be careful what you wish for… it might just come true!”





IEA 2018 World Energy Outlook: Peak oil is here, oil crunch by 2023

11 04 2019

Posted on March 10, 2019 by energyskeptic

Preface. I’ve been working on a post about the latest IEA 2018 World Energy Outlook report, but the excerpts from the cleantechnica article below states most clearly why there is likely to be a supply crunch as soon as the early 2020s and the investment implications.

Meanwhile, here’s what I’ve gleaned from other summaries of the report.

Although many hope that oil companies will drill for oil when prices go up and close the supply gap looming within the next few years, very little oil has been found to drill for for several years now. The IEA 2018 report also says that shale oil will not rescue us, and likely to peak in the mid-2020s.

Oil companies do have money, but they haven’t been drilling because there’s no cheap oil to be found, so instead they’ve been spending their money buying their shares back.

From  crashoil.blogspot.com: World Energy Outlook 2018: Someone shouted “peak oil”

This excerpt is in Spanish translated to English by google.  It shows a civilization crashing 8% decline rate that the IEA hopes will be brought to an also civilization crashing 4% rate with new oil drilling projects.

“How is this alarming graph interpreted? According to the text, the red is what they call “natural decline” and corresponds to how oil production would decrease if the companies did not even invest in maintaining the current wells; As explained in the report, it is 8% per year. The pink area corresponds to the “observed decline” and is what the IEA inferred how production will actually decline if companies invest what is needed for the correct maintenance of the current deposits. This decline corresponds to 4% per year. If new deposits are not produced, in just 7 years from now we will find that the production is 34 Million barrels per day (Mb / d) below where it is expected that the demand will be, or about 25 Mb / d below the demand much more moderate scenario of Sustainable Development. It is a huge hole of more than 35% of all the oil that is produced today.

In the text, the IEA warns us that there is nothing particular to worry about in this terrifying graphic because there will be exploitation of new deposits that will cover that hole to a large extent. However, they warn us, to avoid that hole we would need to find deposits with resources around 16 billion barrels each year…In short: the IEA is assuming…that production in 2025 will be lower than today’s (a deficit of 13 mbd in 2025). In essence, peak oil.”

It isn’t likely oil companies will make up the difference In 2016, only 2.4 billion barrels were discovered (versus 9 billion on average the past 15 years). In 2017, about 7 billion new barrels were discovered. As you can see below, there’s been an alarming lack of new crude oil found.

And it’s not just cleantechnica saying there will be oil shortages, here are some other articles about the coming oil crunch:  BloombergNASDAQoilprice.comaxios calls the shortage as by 2023financial times also by 2023

Enjoy your life for the next few years, beyond that there’s no guarantees. Some regions will fare better than others though.

On page 159 of the IEA 2018 World Energy Outlook the following graph can be found:It is clear that Peak Oil will be hit well before 2020, while demand keeps on rising, unless the world’s Oil Majors and State Owned Oil Companies massively invest in new exploration.

However, the Oil Majors already have heavily spent money on new oil exploration in the years after 2000, where a fossil fuel hype with an accompanying coal boom lead up to an oil price of over $150 in 2008. While this oil price proved unsustainable for a crashing world economy, this oil exploration boom lead to very little new findings in the big scheme of things:

So what does that mean?

It means that a collapse of oil supply to half of its current size within only six years simply cannot be compensated by new oil findings and certainly not by unconventional oil sources like oil sands and fracking. That the Oil Majors did not pick up with new oil exploration after the oil price rose again to $100 per barrel in the years after 2008 is another sign that the world is already “overexplored,” as geologists put it. Instead the Oil Majors concentrated on a stock buyback, knowing full well that further exploration would be a waste of money while they are sitting on oil that will become very valuable even though the amount of oil they will extract will decline significantly.

In summary, the Oil Majors and State Owned Oil Companies (in this field notably the Initial Public Offering (IPO) of Saudi-Aramco, the world’s biggest oil company, has been scrubbed) are waiting for an oil price bonanza to happen, while the IEA is very concerned about future oil supply.

Notably the Peak Oil graph from the IEA (first graph in this article) has been unearthed by the Association of Study of Peak Oil and Gas (ASPO), which as an organization has itself published multiple studies on Peak Oil. While ASPO has put Peak Oil sooner than the IEA, in its latest study already at 2011 for conventional crude, it is remarkable that the IEA refuted this claim back then with the statement that Peak Oil would not be reached before 2020. Well, it surely looks like they corrected that statement for themselves now.

So what does that mean for investors in oil and the world economy?

Surely there could a handsome profit be made by riding the coming oil shortages, but one has to keep in mind that while the oil price may go through the roof, the barrels that can be sold also shrink fast and drastically. So there remains the question of how high the profits of the Oil Majors will rise and how much will this be appreciated by the stock price for these clearly dying companies. Furthermore, with these rapid stock swings, you compete with banking supercomputers that act in a millisecond timeframe, so you would have to be alert night and day for the point when the crash will come because of the world economy not being able to take the oil price anymore. As a conservative long term investor, this can only mean to get out of these stocks as soon as possible, while risk-loving investors can try to make a quick buck on the coming stock volatility, with the world economy crashing a couple of times due to ongoing undersupply in oil.





The need for a new Matrix…

9 04 2019

How many years have I been saying jobs are unsustainable? Here’s Tim Watkins explaining it better than me…

The (other) economic madness of the green new deal

Remind me again why you go to work in the morning?  Is it because you are so committed to the mission of your corporate employer that you would willingly work for nothing if they asked you to?  Does your job provide you with so high a degree of life-meaning and personal satisfaction that you would gladly do it in exchange for the minimum income required to feed and clothe yourself? 

No, I thought not.

For almost all of us, work is a means of obtaining money; and money is merely the means by which we are able to consume the goods and services we desire.

Now let me ask you a multiple choice question: why do you think that the oceans are currently so full of plastic that it has polluted the entire marine food chain?  Is it (a) because evil petrochemical companies simply dump plastic into the sea; or is it (b) because it is the inevitable product of mass consumption by 7.5 billion humans (especially those of us in developed states)?

Plastic pollution, along with all of the other fallouts from the globalised industrial economy, is the end consequence of our collective consumption of the goods and services that we desire.

The various versions of green new dealism that have hit the headlines recently have no alternative but to avoid both of these questions.  Instead, they reduce a human impact crisis – aka “the Anthropocene” or “the overshoot” crisis – to the single dimension of greenhouse gas emissions.  They then reduce the greenhouse gas emission crisis to a carbon dioxide crisis; which is further reduced to only the carbon dioxide emitted in the course of electricity generation.

The proposed solution – the mass deployment of non-renewable renewable energy-harvesting technologies like wind turbines and solar panels (and, tacitly, the grid infrastructure to support them) – has the primary aim of pulling the global economy out of the post-2008 doldrums by creating millions of new jobs.  Exactly how many new jobs has yet to be determined, although at least some proponents argue for a mobilisation on a par with the Second World War or landing humans on the Moon.  As Brian Murray at Forbes notes:

“Commentators have frequently compared the GND’s potential deployment to two examples from twentieth-century U.S. history that involved dramatic, rapid shifts: 1) the decision to send astronauts to the moon and 2) World War II.”

“The speed of progress toward the moonshot was staggering—and the effort was highly targeted, focusing on the specific technologies necessary to transport a single vehicle to and from the lunar landscape 240,000 miles away while keeping the occupants alive. At the height of the moon effort in 1966, relevant spending amounted to 0.7% of GDP.  In today’s dollars, that would be $150 billion.”

“By contrast, World War II consumed 35.8% of GDP at its peak (1945), an amount equal to $7.4 trillion today. The massive undertaking involved virtually every aspect of the economy. Over 17 percent of the work force was deployed in the armed forces and nearly five million women entered the work force (a 40 percent increase), many in place of men deployed overseas, to bolster domestic production to support war efforts.”

Murray argues that any attempt to implement the green new deal is likely to be closer to the Moon shot than the war.  Nevertheless, we are still talking about billions of dollars and millions of new construction jobs.  For Murray, the key economic problem here is that wind turbines and solar panels require very little labour to operate and maintain.  As a result, any jobs created would necessarily be temporary.  This, however is a secondary concern and is easily counter-critiqued by the proponents of green new dealism – the additional demand created in the wider economy by the new deal workers spending their wages will create a wider economic boom that will generate new jobs to employ these workers as the construction phase comes to an end.

Let us now revisit those awkward questions I posed at the beginning of this post.  What proportion of several millions of green new deal workers will be offering their labour for free?  What proportion will work in exchange for meals, clothing and a bed for the night?  Most will expect to be paid at least the minimum wage.  And if the promises of the green new dealers are to be realised, a large proportion of the jobs created will need to be high-skilled and high-paid.

Most workers do not simply save their wages every month.  Indeed, one of economist John Maynard Keynes’ observations which informed the original new dealism in the 1930s was that ordinary workers had a far greater propensity to spend than wealthier people.  That is, if someone who is currently only able to eat because of food stamps or a package from a foodbank is given a job at the current average wage – $56,500 (US) £28,600 (UK) – they are likely to spend almost all of it; whereas if the same average wage were given to the CEO of an international bank, they would be far more likely to save it.  So, from a demand point of view, creating lots of relatively well-paid jobs for people who are currently unemployed, underemployed or eking out a living on the minimum wage makes absolute economic sense.

Environmentally, not so much.  The technologies that the new jobs are created to deploy are intended to be greener than the technologies they replace – although they still necessarily involve fossil fuels in their manufacture, transportation, deployment and maintenance.  Nor – at least for now – are these technologies recyclable; indeed, solar panels contain toxic chemicals that prevent either recycling or landfill disposal.  And, of course, in the absence of seasonal grid-scale storage technologies nuclear baseload and gas stand-by capacity will continue to be needed to smooth out intermittency.  These, though, are again secondary problems.

The main issue that any green new deal has to overcome if it is to have any credibility is how we go about preventing millions of new workers from actually spending their additional income.  For all of its many flaws, one of the environmental benefits of quantitative easing since 2008 is that very little of the newly printed currency has seeped out into the real economy.  Most has been used for corporate share buy-backs or investment in various derivatives that do little to increase demand for goods and services across the real economy.  Indeed, this is one of the central criticisms of the current policies levelled by green new dealers.  Any green new deal, in contrast would be increasing global consumption of goods and services by billions – if not trillions – of dollars worldwide.  But mass consumption is precisely the cause of our environmental crisis in the first place.  Millions of new wage labourers are no less likely to purchase such things as single-use plastic containers, corn-fed beef, petrol cars and international travel than any of the current workforce.  The result is that as fast as the electricity generating industry is curbing carbon dioxide emissions, the manufacturing, transportation and industrialised agriculture sectors will be ramping up their emissions – and using up the planet’s remaining resources – to satisfy the new demand.

Far from being a means of sustaining a global economy built upon fossil fuels, a green new deal that creates new jobs and stimulates economic growth amounts to little more than a final blow-out binge before our once-and-done global economy comes crashing down around our ears.  The only means – assuming any is possible at this late stage – of mitigating the environmental catastrophe that is gathering pace around us is to engage in a managed process of de-growth (which may include some deployment of non-renewable renewable energy-harvesting technologies) to create far smaller, localised and less consumptive economies than we have had for many decades.  By necessity, the process would also require a shrinking of the human population to a level in accordance both with what is sustainable and with the standard of living we consider acceptable – i.e., the more consumptive our lifestyles, the lower our life expectancy/birth rate will have to be.

This is not, of course, anything that is going to win votes at an election.  But any detailed examination of the environmental impact of millions of new workers spending their new wages on even more of the same patterns of consumption that have already brought our planet to the edge of extinction should – in any sane world – be no less acceptable.  It is a tribute to our propensity for denial that so many people regard green new dealism as an environmental good rather than the catastrophe it is likely to become.