Energy in Australia: Peak oil, solar power and Asia's economic growth

[GliderGuider]

Graham Palmer, an industrial engineer from Melbourne, discusses energy use and needs. He predicts that the declining energy surplus of fossil fuels will be one of the defining features of energy systems in the twenty first century.

Energy in Australia: Peak oil, solar power and Asia's economic growth

While neoclassical economics is interested in the functioning of market economies, ecological economics is grounded in the laws of thermodynamics, and takes the perspective that the vast energy flows since the birth of the industrial revolution has been integral to economic development. Importantly, it takes energy and capital to drill the oil wells, build the power stations and erect the wind turbines. The ratio of the useful energy for society relative to the energy invested to get that energy is known as the energy-return-on-investment, EROI, or sometimes the “net-energy”. It is the energy surpluses made available with fossil fuels that has enabled the development of the modern state, with its advanced education, healthcare, welfare, and the richness and diversity of modern life.

But what if global net-energy is on a downward trend? The EROI of global oil supply is currently taken at between 10:1 and 18:1, and declining [3]. Capital investment for the oil industry has tripled in the past 10 years, but production has plateaued. Oil supply is increasingly reliant on deepwater drilling, enhanced recovery, and unconventional oil [4]

Now, if we take the commonly quoted net-energy figures for solar PV of somewhere between 10:1 up to 60:1 [5] - and still increasing - it might be assumed that PV is an irresistible “disruptive technology” on an assured upward trajectory. Yet, intuitively it’s not at all obvious that PV provides the same value to society as oil and other energy sources - every one of the more than a million grid-connected PV systems in Australia could be turned off for a week and few would notice, nor would the electricity system reserve margins be adversely affected. Yet even minor disruptions to petrol supplies, natural gas or the internet can have a major effect on daily life. The curious thing is that the literature on PV life-cycle analyses seems to readily accept these high numbers without probing into what they really mean.

it’s clear that PV tends to add to the mix without replacing conventional generation in the usual sense. Germany has seen a net-32% increase in capacity over the past decade, most of it wind and solar [11], but consumption has barely changed. Despite wind and solar contributing a greater share, we are also seeing an upward trend in coal-fired generation due to the dynamics of the energy and carbon markets. As the reluctant hegemon of Europe, Germany has far more discretion than most to implement its pioneering energy experiment, the Energiewende, committing them to a disruptive technological pathway. But despite strong political, social and economic support since the 1990s, greenhouse intensity for electricity remains stubbornly high at 10 to 20 times the best performing European nations [12].

But from a global perspective, the idea that advances in energy storage will enable solar to take on a primary energy role is enticing, but misleading. Similarly, it is often assumed that solar can be incorporated into a “suite of renewables” with smart-grids and electric vehicles to achieve some sort of “optimized synergy”, but the reality is that this imagined synergy rarely exists. As John Morgan observes [13], the Catch-22 is that in overcoming intermittency by adding storage, the net-energy is reduced below the level required to sustain our present civilization.

Even the engineers are figuring out what's what. Can the economists be far behind? Well, maybe they can.

[caraher]

1. The economists are mostly paid not to get it

And even when they have some genuine intellectual freedom, they tend not to see beyond their own disciplinary indoctrination.

It's amazing how many of them I've spoken to who consider the malleable constructs of economics as somehow less negotiable than the laws of physical science. Their notion of "risk" is tied more to upsetting the economic systems we have than disrupting the conditions that make life possible.

[hunter]

2. People who want to call themselves "economists" ought to have...

... a solid understanding of reality-based complex systems first, maybe undergraduate degrees in ecology, various sorts of biology and chemistry, or engineering, before stepping into any upper division or graduate economics course.

It seems to me many economists drift off into impossible worlds of ideology, circular reasoning, tautology, and magical thinking. If the tools seem to work for awhile, it's often because most everyone believes the tools work.

It's continuing to rain, so the rain dances must be working... and if drought comes, we must not be dancing correctly or sincerely enough.