At the recent ASPO 2013 conference, Roger Bentley and Werner Zittel gave a joint presentation on the limits to global energy flows mainly from oil, gas and coal.
Their findings are nothing new to those who have followed the PO debate for the past years, but bare repeating:
Global conventional oil peak is now (will continue for some years)
Global natural gas peak in c. 10-15 years
Global (hard) coal peak perhaps within a few years
Alternatives have much lower energy densities and returns
Prices will keep going up, may go down in the short term (due to economic hiccups)
Move to alternatives will put a stress in form of a growth slowdown to the economy
Official & Industry sources (IEA, EIA, BP, OPEC) have been systematically wrong in their oil production estimates
We have plenty of reserves under ground, but we can't get to them fast
If we consume everything, we will create a lot of environmental risks & damage
And oh yes, official policy is still mostly in denial about all this in most countries. Apparently people believed the fracking fairy tales and the future of 1:1 substitution of oil with natural gas (over night).
Cost-benefit analysis works, until it stops working. After that, it offers no consolation, no idea of risk, no idea of backup, no idea of how to recover.
And as Nassim Taleb has so eloquently put, modern risk analysis is not just wrong, it's stupid.
The idea is to let people play around with energy supply, like fossil fuels, nuclear and alternatives, and then match this with the demand coming from industry, housing, heating, transport and travel.
Now, some issues that the model behind the game doesn't lay bare:
There is extremely low probability that oil will flow at 50% of current levels in 2050. There just are not enough resources, drill holes, tankers and manpower.
Not using fossil oil creates a liquid fuel problem, which the model suggests one fix with biofuels. The problem is that the model assumes we can burn the rest of the developing world's (who have all the money, btw) food for fuel. And the model further assumes this will reduce CO2 emissions and be net energy positive. The premises behind that logic are faulty.
Clean coal and gas power are supposed to give a 15 point CO2 cut. Eh, where exactly do we have clean coal? And oh, the North Sea gas is mostly in decline by 2025 (remember the model is originally for UK).
Hydrogen cell powered cars. Sigh, that's like selling second order financial derivatives on a lollipop you have already eaten. Most sane thinkers thought we we past that already.
What the system does underline, is that it is impossible to not to have a liquid fuels problem, unless one goes all out on biofuels overseas in developing nations. What the system doesn't tell is that there is no arable land left to do this, unless we take it from food production or burn down the rainforests.
And all this is done with extremely low demand scenario, where people will be living in 16C temperature homes and travelling very little privately, doing mostly car sharing and public transport.
Good luck selling that scenario to the ignorant masses at large.
The more technically minded can download the 2050 Pathways Excel spreadsheet (Office 2010 format, thank you DECC idiots) that reveals some of the thinking behind the model.
This should be a last wake up call to even those who don't get the fact that energy will be our multi-decade challenge - peak oil or no peak oil. We need energy miracles to combat the challenges of population growth, poverty reduction, CO2 emissions and dirty energy:
He also reminds us that the combined total battery capacity of the whole world (including your ipods and cell phones + those batteries inside all Priuses) would hold:
10 minutes. Even if we'd get an order of 10 times improvement in batteries (100 minutes) and replaced them all, it still isn't enough. We need an order of 100-200 preferably. That's a tall order, ask any battery researchers.
Then Mr Gates moves onto nuclear power - not the usual type reactors, but what he calls a travelling wave reactor.
Nothing too ground-breaking about it - it's a variation of the old breeder ideas: burn all the fuel, not just the first 1% of it. We should really have had these 60 years ago, but better late than never. It's mostly an engineering challenge to get it working, no fundamental physics issues involved.
He also breaks down the population growth, economic growth (service demand), energy efficiency (energy/service unit) and greenhouse gas emission reduction efficiency (emissions/energy unit) into a useful simple high level equation:
Watch the whole video to get a better idea.
What Gates did not mention, and I'm sure he gets, but is too tough cookie to throw at the over-optimistic TED crowd is this.
Electricity counts for c. 14% of total world energy demand. The rest is pretty much all fossil fuels and wood burning.
Of that 86% of rest, almost third is liquid fuels, which is what the world runs on. The world runs on trade. The trade runs on wheels, ships, trains and planes. And they almost exclusively run on oil.
Now, the real equation that Gates should be looking at is this:
Total Energy utility = EROEI x Scaling Factor x 1/Price x 1/Infra x Emissions/Joule x ROI/time x availability/geography x Liquid Fuel Replace Factor x 1/Ecosystem depletion
Whatever energy systems we build, it needs to give out more energy than what it consumers - and do it rapidly. Unlike most nuclear plants that start returning net energy after 10+ years (starting from construction).
It also needs to be able to be scaled to a Exajoule scale. Biofuels, tar sands need not apply. It also cannot be a flux or a flow, because there just isn't enough storage capacity.
It needs to be relatively cheap to invest, require very little new infrastructure to build and emit very little emissions per joule generated over total lifecycle (including all the new infra, investments, etc).
Then it needs to generate economic payback rapidly, much more than new oil fields, or tar sands, or wind. It needs to beat all those, to take over the minds of energy investors. Remember, investors do not care if the investment destroys the environment or if it's an EROI loser - all they care is about Return On Investments. So any newcomer must beat oldtimers on that equation as well.
On top of this, it needs to be widely and generally available all over the world: in rich countries and in poor countries - south and north - east and west. Otherwise, esp. if it's fuel based - it'll just be the new spice to replace the old spice and wars will be fought over it. Wars are mostly net energy losers, huge greenhouse gas emitters and certainly do not reduce overall poverty.
Then last, but not least, it needs to be able to replace liquid fuels - without speeding up the ecosystem depletion and reducing the carrying capacity. Now, that is a really tough challenge. In this test, all current biofuels in production fail and so do unconventionals. Electricity is not liquid. The infrastructure change needs are huge.
Any way one looks at this equation, the challenge is not easy. And Bill's travelling reactors don't solve even 1/4th of the equation.
Yet, all engineering challenges are hard initially - and very systemic - sometimes wicked. Regardless of these, they do get solved, even if only in part.
Sometimes in part is better than nothing. The ideas presented in the video are certainly more worthwhile than building old dumb-style reactors.
Here's hoping the equation (or it's variation) gets solved and in time - as the challenge on the other side is reduction and potential powerdown. And that, would be a real challenge for poverty reduction and the current population levels.
IEA and EIA - perhaps along with BP - may get the most media exposure for their energy outlooks, but one company dares to show some of the more inconvenient estimates in it's outlook. That company is ExxonMobil. It goes without saying that they have a vested interest in things happening as they lay it out, so one is advised to approach their Outlook for Energy - A View to 2030 with caution.
With that said, here's a short sampling of their scenarios with some comments.
So much for that hybrid & plug-in electric car revolution...
Commercial trucking taking the biggest chunk of oil demand growth
Renewables growing the fastest, but still being dwarfed by the fossils...
Fossils dominating even in electricity generation
Fairly optimistic assumption on efficiency growth...
Yet not overly optimistic on CO2 emission cuts.
Of course, the whole point of these scenarios is to make us think and also reflect our own assumptions of the world and energy. The backing of all this in the outlook is : "Don't worry, there's plenty of oil, gas and coal - where it all came from" as well as "we may not stop greenhouse gas emissions, but at least we'll be ever so more efficient in our economic growth".
Remove just one piece in this puzzle - constant growth of supply flow of oil - and the whole assumption falls apart.
It'll be an interesting next 20 years, that's for sure.
The yearly report from the OECD energy watchdog International Energy Agency is out. It is called World Energy Outlook.
Here are some key points of interest from the exec summary (full report still under scrutiny):
Coal use expected to grow enormously - oil & gas as well
Problem is - we don't know where the oil & gas are!
Sine financial crisis investments in finding & developing oil are shrinking
So we will use LOTS more coal resulting in LOTS more CO2
So the only option is to go on a huge efficiency binge
So, if you are an investor and something like the above comes to pass (unlikely, but possible), keep on piling on oil till roughly 2015 as we'll get our next oil crunch by then, unless the economy goes south again. After 2015, start piling up on efficiency plays and lots more on coal. Biofuels will be a crutch, but will probably fail royally sometime before 2020-2025 due to thermodynamic stupidity.
More when the final report is out and fully analysed.
If you've been waiting for the cheer leading OilCos to save the day by yet again denying peak oil and saying we can battle climate change cheaply and effectively - well now is the time to stop reading.
Shell just put out their yearly scenarios up to year 2050. The estimates, while both critical and optimistic on the surface, are neither.
First, they now admit that the world oil production will peak in 2020 (somewhat optimistic I might add). Quite a change from three years ago, when they said that all people talking about peak were idiots.
However, by some odd magic oil production remains on plateau up to 2040 in their scenarios. No other geologists, oil analyst or oil company is able to manage such munging of data, even if they have tried. Well EIA has succeeded in that, but they have good track record of not being very accurate.
Shell's 20 year plateau would require us finding about hundred new Saudi Arabias worth of oil by 2040. That is not just possible - regardless of what type of weed one is smoking.
Alternatively it would require that the non-conventional oil sources, which in the optimistic EIA/IEA scenarios scale to 6-7 Mb/d by 2030 would need to be wrong on the downside by a factor of 10. Yes, estimates have been wrong before, but physical infrastructures and energy engineering mega projects don't build themselves overnight. They take an average of 10-25 years to complete.
Even if it somehow magically those figures would come to light, the environmental devastation and CO2 emissions from unconventionals production would be something the world has never experienced before. I doubt that is the future anybody wants. GHG emissions might be the least of our worries in such a scenario, due to groundwater destruction, climate pollution, electricity scarcity and utter devastation of environment in huge areas in North and South America.
So, either people at Shell are smoking some heavy-duty ganja or they are trying to pretty up the truth in order to retain our sanity. You take your pick from those two. Of course, it is possible they actually believe the data they published, but that remains a fairly improbable assessment.
As for coal, their assessment is more sober, but not a pretty sight in regards to global warming:
"Limiting GHG concentrations to 450 ppm CO2-equivalent is expected to limit temperature rises to no more than 2°C above pre-industrial levels. This would be extremely challenging to achieve, requiring an explosive pace of industrial transformation going beyond even the aggressive developments outlined in the Blueprints scenario. It would require global GHG emissions to peak before 2015, a zero-emission power sector by 2050 and a near zero-emission transport sector in the same time period"
That assessment is indeed a challenge, considering their view of the global energy mix to 2050:
Coal will dominate and keep growing up to and including 2050
I say we give Nobel prize for physics, peace and everything else for the person who comes up with a time machine, invents working commercial CCS ten years ago and gets it installed in every single coal plant in the world retroactively. The situation is almost that dire.
It is worth noting that at the same time EIA is assuming in their Annual Energy Outlook 208 coal use to go up by c. 1.7% per annum. That would mean the world would hit 560ppm for CO2 already in 2030 from coal emissions alone - unless we magically capture and store that CO2. With the same growth rate the figure would be 785 ppm by 2050 + emission from everything else, like oil, natural gas, biofuels, meat production, etc.
I'm not sure if 350ppm or 450ppm is the absolute safe limit, but I'm fairly sure that even by most optimistic geological records way back a few millennia 1000+ ppm is not a safe level anymore.
Now, there are kernels of truth in the scenarios as always with Shell (they know the scenario methods very well), like this final assessment:
"Neither of the scenarios is comfortable, which is to be expected given the hard truths we are facing. While both portray successful economic development and the globalisation that accompanies this, both also have branching points that could potentially lead towards escalating geopolitical chaos."
Replace the word 'could' with words 'will most likely' and you the situation staring us in the face. Every big multi-nation war has started at the end of a commodity cycle, with nations competing for access to precious primary resources, like energy. Tell me this time it's going to be different, when we are looking at immediate decline in oil and a possible decline in the next 15-20 years of natural gas.
In the end, this quote from the presentation is quite sanguine:
"If historians now see the turn of the 19th century as the dawn of the industrial revolution, I hope they will see the turn of the 21st century as the dawn of the energy revolution." - Rob Routs, Executive Director Downstream, Shell
Revolution it surely will be, but not the one like we are reading in the papers. It'll be something completely different - something probably none of us can yet imagine.
During recent Geopolitics of Oil Congressional hearings (euphemism for "It's Peak Oil time and we need to grab more barrels!") USA senators have stated re-stated Cheney's stance "The American Way of life is non-negotiable". Several senators agree that energy independence for USA is impossible and that USA will ensure it's access to energy, especially in countries which have nationalized their oil fields.
What does this mean in practice? USA needs more evil enemies, which they can liberate from their tyrant leaders and clean up their oil reserves in the process. First of all, the axis of evil is now shifting slowly to Russia, which is a big oil exporter and to China, which is competing with USA for the same oil production supplies (namely in Africa, but also in Venezuela, Cuba and Caspian Sea region).
Still, before that demonisation is likely to get into full force, there are the smaller and more lucrative players to get target: namely Iran (huge natural gas & oil reserves), Venezuela (massive tar sand deposits) and various African countries that can still provide enough oil (likely Angola).
As you may have noticed, the demonisation of both Iran ("they have nuclear bombs!" even though IAEA says the opposite) and Venezuela ("Chavez is a lunatic!") are already well underway. Remember, the first casualty of war is truth. By that measure, the war against both Iran and Venezuela is well under way.
Now, many people are already thinking, "that's crazy, no way USA will attack Iran with the Iraq fiasco on their hands, especially with democrats now holding the majority vote". To this, I offer the following arguments to consider:
Cheney has set forth 1% doctrine: "'If there was even a 1 percent chance of terrorists getting a weapon of mass destruction -- and there has been a small probability of such an occurrence for some time -- the United States must now act as if it were a certainty." Very useful policy, once accepted (it has).
Project for the new American century's white paper shows that Iran must be controlled as a strategic vantage point for USA. US not only needs to take control of those points, but also stay there for our life time.
Iran has huge natural gas reserves. US is building new capacity for liquefied natural gas tanker ports (like they are building capacity for new liquefied natural gas they know they are going to get some time in the future). According to Oil & Gas journal it also has the world's second largest untapped known oil reservoirs. Furthermore, it controls the Hormuz water area, through which c. 40% of world's oil exports pass. Crucial strategic point. Even more important, Iran has a shoreline on Caspian sea and Persian Gulf. This is the major route for any oil from Caspian for USA.
US is preparing to move two air carriers to the Persian Gulf towards Iran. This is called escalation.
IAEA has said Iran does NOT have an atomic bomb or capability in the next ten years. USA dismisses this completely (without any proof), trying to build "evidence" and "reason" to attack Iran. Combine this "WMD scare" with reason 1). USA is trying to build a reason, just like with the WMDs and Iraq (compare the 1% doctrine).
Demonising of the Iran's president, Mahmoud Ahmadinejad, has already started over a year ago in various USA mainstream media outfits. Also, Iran is being claimed as funding Iraq rebels and indirectly Al Qaeda. These are extra reasons to attack.
In January 2007 "Geopolitics of Oil" congressional hearings majority of senators agreed on the politics that USA will "secure the oil it needs, by any force necessary. NATO has also said, that they will respond to any use of "energy as a weapon" [against USA] via conventional military means, including full scale land attack. This NATO link could bring UK again behind US for the attack of Iran, considering UK's natural gas resources are dwindling and they need to start looking for alternatives (other than only Russia).
It's likely that USA has been planning to attack Iran using Israel as a proxy. This has been leaked to the press since last summer already. USA has done this before in collusion with UK, during the Egypt/Suez crisis in 1956. There has even been talks of Israel using nukes. This is another classic "frighten them with genocide and they'll be happy with a mere massacre" tactic often used in international politics.
USA has been flying unmanned missions over Iran air space for months. This has also been reported. When asked about "when will we go to war with Iran", retired USA military specialist said during last summer in an interview in USA mainstream TV that "We are already in Iran, we are running several special operations reconnaissance missions inside Iran", in his opinion USA has already attacked Iran.
Iran has on several occasions offered to have talks with USA on what USA wants (through UN, through Iraqi officials, etc). USA has refused to talk to Iran at all. Only attacking it through the press.
Iran (and Venezuela) have been converting more of their oil trading current basket to Euro from USD. While some temporary controlled devaluation of USD might be beneficial to the current US administration, loss of faith in the USD as the major global trading currency is not. This situation will be monitored closely in the US.
Now, some analysts have already offered their thinking on the issue:
Iran is very weak in military terms. It really can't resist any attack. It's putting it's bets on ties with Venezuela and perhaps to some extent Russia & China. If USA can cut deals with Russia and China, Iran has no major supporters.
If they can "win" in Iran showman style, Bush/Cheney/et al. will win back some support in polls, even though the situation of Iraq may be deteriorating or even reverse the situation in Iraq (Iran may in fact be funding Iraqis factions indirectly).
Bush will use Iraq as a bargaining chip with democrats: yes, we will pull out of Iraq (we support your democrat issue), but in return you support us in the attack against Iran (which dems have to do).
It is of course true, that there are several opinions why USA will not attack Iran:
Price of oil will likely rise. Bush ratings will plummet even more. Then again, crude at c. $50, there's now again room for price increase (which was not possible at near $80).
Democrats could try to derail the move anyway, at least postpone it towards future, so that they can not take the damage from the attack, if there's a bad fallout.
They are afraid how China might react (unless they cut a better "after the bombing deal") with the Chinese
Most ex-Iraq war generals (esp. in land & navy) are against any attack on Iran, but apparently no air force admiral is against it (thus you could get support for bombing Iran, but not easily invade it with huge land forces). Of course, in the end army does what the commander says.
Sometimes it's easier to make things difficult for a country, then support the opposition, make a coup and you don't have to attack directly. After the new leaders (who you have helped) are in place, you can cut better deals with them. BUT the thinking on this is problematic:
in Iran you could probably only support other Islamists, who don't look nicely to USA then coming in, putting up military bases and grabbing all the oil. Sure, they'd like to get the help for a revolutionary fight, BUT would they really support USA after they get into power?
If something "critical" happens, it is very easy to pinpoint it to Iran and get US support back on attacking Iran. This could be: energy shortages, terrorist attack, finding of WMD (planted evidence, risk to Israel), or Iran conducting missile tests, etc.
Personally I believe direct attack from USA has grown less likely in the past couple of months, wheres as an attack using Israel as a proxy has grown more likely.
Of course, only time will tell, but I would not like to be planning any long term trips to Iran myself in the near future.
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