Energy Comments on Prestudy

Gail Tverberg – Green Economy Workshop 560 -10 Feb. 2014

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Peak OilForecast

Limits to GrowthForecast

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We know what has happened in the past

Based on Secular Cycles, by Peter Turchin and Sergey Nefedov, Princeton University Press, 2009.

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Hubbert symmetric model only applies with identical replacement

Source: M. King Hubbert, Nuclear and the Fossil Fuels, 1956. http://www.hubbertpeak.com/hubbert/1956/1956.pdf

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Ways Collapse Occurs Inadequate government funding

Increasingly impoverished workers Not enough tax revenue

Inadequate oil to “grow” the economy Need oil for extraction Need oil for road repair, wind turbines, mining, etc. Not enough left over for “growth”

Defaulting debt Need economic growth to repay debt

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Difference in Views

Tverberg Randers 2052

1972 LTG limit is hitting Dennis Meadow’s

model Verified by Hall;

Turner Appears as Financial

Limit Debt related Comes from

inadequate investment capital

High energy costs adversely affect economy

Peak oil limit Based on depletion Lots of substitution No adverse financial

impact

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Specific Energy Problem Areas

C. Hall Quote Tverberg view

‘The problem is not that oil is running out, rather than what happens when oil production can no longer meet the world’ s and national economies’ increasing needs.’

The problem is that we are reaching Limits to Growth in the next few years. We can expect Government funding

problems Debt defaults Inadequate oil to

“grow” the economy

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Specific Energy Problems

2.3 Current Economy view Tverberg view

Renewable energy and improvements in energy efficiency will be phased in automatically once renewables have become competitive in relation to fossil energy.

High energy prices of any kind will sink the economy.

High priced oil + high priced electricity sink the economy simultaneously.

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Specific Energy Related Issue

2.3 Green economy view Tverberg view

The higher the EROEI and scalability (volume) a form of energy has, the higher its potential is.

EROEI does not measure intermittent renewables well.

Does not reflect debt needs, payback.

Market cost calculation is extremely important.

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Example of EROEI Problem Solar PV EROEI supposedly 9.4 to 1 With batteries reaches1.3, after 30 years.

Dynamic EROEI with batteries, off-grid, based on figure by Graham Palmer in “Energy in Australia,” Springer, 2013.

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Very little sustainable “renewable energy” High cost of wind, solar PV lead to financial

problems for countries using them Today’s wind, solar PV are very fossil fuel

dependent

Intermittent electricity very low quality energy Requires huge costs to fix Not reflected in EROEI

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Specific Energy Related Issue

2.3 Green Economy Tverberg view

Energy taxes help to accelerate the rise in energy efficiency; prevent development that is not energy-efficient; and bring about lower costs in the long term.

Energy taxes move manufacturing to high carbon parts of the world.

Ultimately counter-productive

Exceptions: Worldwide tax Private citizen gas tax High tax on imported

goods made with coal

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4. Role of Business Large businesses may fail as world changes

Need international trade; debt availability

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5. Financial System Credit overexpansion will fix itself very shortly

Massive debt defaults likely in the next couple of years

Lack of credit will lead to rapid decline in energy production of all kinds

Real Question: How does one develop a financial system for a shrinking world economy?

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6. The goal of development We are facing massive shrinkage of the

economy in the near term

A Steady-State Economy is a pipe dream Possible 40 years ago; not possible in the future

Knowledge depends on today’s fossil fuel world No longer have 90% of humans involved in

agriculture Availability of electricity, Internet, computers,

books

How do we keep knowledge, as we shrink back?

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Climate Issues Mentioned in several sections

Far less important, if fossil fuel use is shrinking rapidly, with no action on our part

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Problems began as extraction became difficult

Assumes hyperbolic growth in extraction costs.

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Recent price rise due to depletion

Based on BP 2013 Statistical Review of World Energy data.

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Now subsidy to economy is disappearing

Reflects technology and efficiency improvements

Subsidy to economyfrom oil

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Recessionary forces – Same countries with fall-off in oil consumption

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China’s growth since joining World Trade Organization

Contact Information

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Gail E. Tverberg E-mail: GailTverberg at comcast dot net Website: OurFiniteWorld.com Twitter: @gailtheactuary Cell: (407) 443-0505

See my article “Oil Supply Limits and the Continuing Financial Limits,” Energy, Vol. 37, Issue 1, January 2012, Pages 27-37. (Free version at http://ourfiniteworld.com/oil-supply-limits-and-the-continuing-financial-crisis/ )