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96 comments on The Trouble With Energy - Part 2.
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96 comments on The Trouble With Energy - Part 2.
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A fair analysis overall, but I'd take issue with a few things.
The first is the assumption that consumption must increase. There's a lot of scope for efficiencies in our economy. Many states have by a combination of advertising, progressive pricing and advertising significantly dropped their water consumption - domestically, anyway. The same is surely possible for energy.
The second is that the assumption that renewables need to replace fossil fuels one-to-one. This isn't necessarily so. For example, it's well-known that around two-thirds of coal's energy is lost to heat when converting it to electricity. So 100 units of coal-fired generation don't require 100 units of renewables, only 33.
More electrical use lends itself well to certain economies of scale, since transporting people and freight by electric train is a well-established practice, while transporting them by electric vehicle is not so well-established; and electric trains are indifferent to how the electricity was generated.
This I think makes easier the big ask you're making of renewables.
Thirdly,
That's one way of presenting it. However, I note that in many public discussions, we find that while renewables, hospitals, schools and railways are called a cost, fossil-fired plants, mines, railways for coal, submarines and the like are called an investment that'll create jobs.
Of course, the truth is that all of those things are both a cost and an investment that'll create jobs. The only reason to mention one and not the other is that you support one bit of spending but not the other.
Fourthly, I do not think it fair to call it a "huge erosion of individual wealth", since after the spending we'd have the infrastructure. If I knock down a rotting old house and build a shiny new one, I am "simply replacing the old [housing] infrastructure" and some may argue I have "no net gain in wealth". But in fact I have a shiny new house. I am in debt, but... I have a shiny new house.
Fifthly, what the essay misses is that we're building new infrastructure to replace the old all the time. Power plants, roads, railways, hospitals, schools, housing and so on wear out. We have to rebuild and replace them. The only question is what we replace them with: something like the old thing, or something new?
So rather than the cost accounting you give here, a better accounting would simply look at how much X amount of renewables would cost compared to X amount of fossil fuel generation, combined with the cost of fuel over the plant's lifecycle. We then find that while the bill is high, it's not as high as this one - and may even be cheaper.
Lastly, the essay ignores the possibility of creating exports. Historically, when countries spend several percent of their GDP on an industry, they get large exports from it. The Big Five spend a lot on arms, but export a lot, too; Denmark spends a lot on wind, but exports a lot, too; China spends a lot on solar, and exports a lot of that.
So it'd be more true to rewrite your conclusion as,
That is as biased as your own conclusion, but contains more of the truth.
Oh, and you missed geothermal as a generation method. I can understand if you say something like, "possible resources are not well-studied so it was excluded from this analysis", but you just failed to mention it at all.
Kiashu
I will take these one at a time.
1/ Agreed, there is the potential for us to improve the energy efficiency of our economy. We have not taken this factor into account in any specific way apart from the forecast growth figure being nominated at 2.5 % compared to the long term GDP growth of 3.5%.
2/The energy replacement efficiencies have been taken into account. You will note that in the conversion table where oil is replaced by electricity the consumption has been discounted by 70%. In the case of fossil fuel based electricity being replaced by renewable electricity the relation is 1:1 because the base is calculated on the electrical energy not the fuel energy.
3&4&6/We wanted to convey the understanding that there would be no direct individual wealth benefit from this expenditure. The user of the electrical power that comes out of the socket does not gain any benefit dependant on the source of that power. We wanted to convey this concept to identify that possible public resistance to the implimentation of renewables.
You are correct that it is possible that wealth could be created by the generation of export oportunities. However, this linkage is quite complex and depends on a number of other inputs. While Australia is pursuing a renewable future the rest of the world is doing the same. With the current state of the renewable industry the pursuit of a large renewable energy increase will be result in much higher inports than it will exports. This is not a pleasent reality but it is the current unfortunate truth.
4/ Again you are correct but the magnetude of the effect is not large. Current expenditure on replacement/refurbishment of existing fossil fuel fired stations only amounts to about $2b per year. Similarly if the growth indicated in the analysis was to be provided by fossil fuels generation it would also amount to less than $2b per year. These are small numers compared to the $90 b that the analysis indicates is required.
5/ No bias against geothermal. As you say the technology is not sufficiently developed so that we are able to get a reasonable stab at the implimentation costs and utilisation.
Thanks for your response.
1) It's something to consider, if only in an appendix. "We could make the transition easier if..."
2) I didn't see the efficiency gain bit, browser formatting issue, the table was a bit wide. I'd quibble with some of the numbers but that's a bit pointless, and anyway only time will tell.
3&4&6) "We wanted to convey the understanding that there would be no direct individual wealth benefit from this expenditure."
As I noted, this only seems to happen with renewables, hospitals and so on. When someone whacks down a road or builds a frigate, we speak of investment, and jobs gained. That is, a direct indiviual wealth benefit. When renewables and the like are built, we speak of "cost" and "loss of wealth."
So building things gives us wealth, unless they're things we disapprove of. No.
4) "Current expenditure on replacement/refurbishment of existing fossil fuel fired stations only amounts to about $2b per year."
You missed "fuelling" them. Any generation system you choose has three basic expenses: building, fuelling and maintaining the things. Let's assume the maintenance for all is about the same. Fuel's not required for renewables, except for biofuels. So that removes a large cost.
How much does it cost Hazelwood to get its coal? How much does it cost Altona to get its gas? Okay, take those annual figures and multiply by 41 for the years till 2050. That adds some billions to the cost. Billions we wouldn't have to spend if we were replacing them with renewables, whose fuel (except for biofuels) is free.
But aren't we talking about fossil fuel depletion here? Won't fossil fuels get more expensive over the next forty years? That puts the cost of BAU up further compared to renewables.
I'd be interested in your sources for the costs of the renewables, too. They're higher than other figures I've seen.
"While Australia is pursuing a renewable future the rest of the world is doing the same."
That's not clear at all. If the rest of the world were doing so, then it's likely the costs of renewables would be much lower than you suggest. Most likely, though, some of the world will do it while some doesn't. If nothing else, the Third World is unlikely to be pumping out gigawatts' worth of solar photovoltaic cells. But they'll still want electricity. If they have demand and we have supply, well there you go, billions in exports.
"With the current state of the renewable industry the pursuit of a large renewable energy increase will be result in much higher inports than it will exports."
That's the "current state" certainly. But it's inconceivable that we could be spending $90 billion annually and not develop some local industry. I suppose we could bollocks it up if we really tried, perhaps hire some ex-GM or AIG executives. But probably we'll do better than that.
"No bias against geothermal. As you say the technology is not sufficiently developed so that we are able to get a reasonable stab at the implimentation costs and utilisation."
This must be my day for people misreading me. I didn't say the technology was undeveloped. It's very well-developed indeed. I said Australia was not well-explored for geothermal resources. You ought to have at least noted this in passing. If you expect to present this to a Senate committee or something, well Senators are not brilliant, but some of them might notice the omission; it's best to deal with questions before they even come up.
If we are going to talk about geothermal and its implementation costs, we need to define which type of geothermal we are talking about :
Traditional geothermal - very well understood, not much available in Oz though plenty in NZ
Low temperature geothermal - pretty well understood, lots available in Oz
http://anz.theoildrum.com/node/4802
High temperature, enhanced / hot fractured rock geothermal - not well understood, lots available in Oz (maybe could meet all our power needs if it works out)
http://anz.theoildrum.com/node/3215
Kiashu,
Excellent. Your point is so absolutely correct, that when it is something that consumes energy (autos, trucks, washing machines, hair dryers, Walmarts or McDonalds, they the more built the more "wealth benefit!!
If it is something that produces energy (windmills, PV solar cells, thermal or concentrating solar, etc, then the more built, the less the wealth benefit!!
It is a staggering use of economics to try to justify the current depletion treadmill, that the only way to make money is to turn the world inside out, converting ores and fuels to released carbon and landfill as fast as possible. It is astounding to me that people who understand the problems we face can still go on the attack against any alternative, and do it using the idiotic type of economics discussed above!
Your other point is also well taken: Japan in only a matter of a few years is already slicing fossil energy consumption even before their best new alternative energy technology hits the market. How? Conservation design, lifestyle adjustments and organization and logistical changes are potentially HUGE savers of energy waste. It is WASTE that is the greatest of all enemies. How much heat leaks out of homes and buildings providing no additional comfort, how much fuel is wasted from trucks and autos adding NO extra carrying capacity, performance or range to the vehicle. It is not use that is the enemy it is waste.
Closing exercise for the mathematical type: Go into any modern supermarket grocery, and count the calories (which is energy) in the food in the store. Now count the caloric volume of the packaging in the store. Remove the EXCESS packaging that is only needed to hog shelf space and catch the customers eye...only keep what is needed to hold the product (a simple box or can). We read these hysterical reports of how we are going to starve due to lack of food, and we assume that sometime before we starve, no one will suggest that we remove the packaging!!
It is talking to a closed door....
RC
Don't forget the energy spent heating the supermarket while the open refrigerators cool it down :)
This is sort of an off topic personal rant but one of the things that most annoys me is when I'm at the supermarket and see someone holding the door of the freezer wide open standing there trying to make up their minds which frozen food to purchase. Upon occasion I have asked these people if they have difficulty seeing through the glass door. Invariably I am given a blank or hostile stare.
Of course the fact that they hold the door open causes condensation to build up on the door making it impossible to see through it so the next person comes along and opens it so they can see what is in the cooler.
Maybe there should be timers installed on the doors and you have an energy waste cost added to your frozen item price at the checkout if you keep the door open for more than 10 seconds per item. Maybe some combination of Smart Dust and RFID technology could be used to keep track. No, I'm not serious.
Perhaps that functionality can be added to the new "DataBar" system:
New York Times, June 6, 2009, "The Bar Code Is Taking a Leap Forward"
http://www.nytimes.com/2009/06/07/business/07novel.html
-- Philip B. / Washington, DC
Kiashu and Thatsit-- You are making a serious error of equating secondary goods with primary goods. If you have a shiny new house (a primary good) you experience that as higher living standard. If you have had to provide a new supply for your electric sockets you don't look out the window at the big generators (secondary goods) and experience a higher standard of living thereby. Indeed you might even be annoyed by the degraded view.
I always like to add to those discussions how much the actual wheat farmer gets paid for the loaf of bread you buy in the supermarket for $1.50. (typically about $0.08)
IMO, this comment points to the reason why some sort of conversion should be tried. It looks like we won't be able to continue fuelling the power plants with conventional methods - costs will rise long before the "fuel" is depleted. So, we think we can keep on the present path, and reject conversion for cost reasons, but cost of conventionals will catch up with us.
However this does not take away from the cost of renewables. They are unaffordable too. In effect we are choosing to go with the option whose cost is hidden instead of the option whose cost is known to be unaffordable.
FYI, Today sees the publication of the 58th edition of the BP Statistical Review of World Energy. The website has not yet been updated but it should be available soon from bp.com
Edit to add:
Tony Hayward, the BP CEO, says "...Our data confirms that the world has enough proved reserves of oil, natural gas and coal to meet the world’s needs for decades to come. The challenges the world faces in growing supplies to meet future demand are not below ground, they are above ground. They are human, not geological..."
Dead right, the challenges are HUMAN:-(
"decades" could mean as few as two! It also implies less than century.