Green Building Forum - Seven ways to think like a 21st century economist

Seven ways to think like a 21st century economist

Ed Davies — Mon, 22 May 2017 09:39:00 +0100

Taking fragments of text [Â¹] out of context:

Global proved oil reserves in 2015 fell by 2.4 billion barrels (-0.1%) to 1697.6 billion barrels, just the second annual decline in our data set (along with 1998). Reserves have nonetheless increased by 24%, or 320 billion barrels, over the past decade; and are sufficient to meet 50.7 years of global production.

World oil production growth in 2015 significantly exceeded the growth in oil consumption for a second consecutive year. Production grew by 2.8 million b/d, led by increases in the Middle East (+1.5 million b/d) and North America (+0.9 million b/d). Global oil consumption increased by 1.9 million b/d, nearly double the 10-year average, with above-average growth driven by OECD countries.

[Â¹] http://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2016/bp-statistical-review-of-world-energy-2016-full-report.pdf

Seven ways to think like a 21st century economist

SteamyTea — Mon, 22 May 2017 10:05:50 +0100

So we are still awash with the stuff

Seven ways to think like a 21st century economist

fostertom — Mon, 22 May 2017 11:14:10 +0100

Yes peak oil didn't happen - but 'peak EROEI' did (Energy Return on Energy Invested - anything less thar EROEI of 1 and you're actually going backwards).

The current oil glut is caused not just by Saudi Arabia continuing to flog off its low cost, still-excellent-EROEI stocks cheap before even that is out-priced by solar - but even more by principally US/Can tar-sand/fracked production at spectacularly poor EROEI. The energy content of ouput product from tar-sand/fracked sources is only slightly higher than the energy input required to produce it.

That US/Can tar-sand/fracked production is happening
a) for home-politics and geo-political reasons - US has in 10yrs gone from a massive oil/gas importer, dependent on middle east, to near-self-sufficiency;
b) despite idioticically poor EROEI, MROMI (Money Return on Money Invested) keeps blipping from good to negative and back, with oil price swings - and tar-sands production is very easy to stop-start accordingly.

How an energy industry can fail to notice that its product is eating up almost as much energy 'from elsewhere', to produce it, is beyond belief. And how 'the market' can fail to respond to that fundamental, and give good money returns nevertheless, just shows the bankruptcy of the 'hidden hand' of 'market forces' to make things right.

Future oil stocks look higher and higher but only because low- even sub-unity-EROEI stocks are now included, and prospected with enthusiasm.

https://www.amazon.co.uk/Burn-Out-Endgame-Fossil-Fuels/dp/0300225628/ref=sr_1_1?s=books&ie=UTF8&qid=1495447883&sr=1-1&keywords=burn+out+dieter+helm
lays it all out - should be read in tandem with
https://www.amazon.co.uk/Switch-solar-storage-means-cheap-ebook/dp/B017T7DZ76/ref=sr_1_1?s=books&ie=UTF8&qid=1495447942&sr=1-1&keywords=the+switch

Seven ways to think like a 21st century economist

SteamyTea — Mon, 22 May 2017 13:38:52 +0100

Posted By: fostertomHow an energy industry can fail to notice that its product is eating up almost as much energy 'from elsewhere', to produce it, is beyond belief

Or it could be because it is not so.
Just as the stories that PV and Wind energy take more energy to manufacture than they ever produce are false, I think you will find that the stories about oil taking almost as much energy to extract as it produces are false and way off the mark.

Nuclear fusion does take more than it uses at the moment, but in 20 years time it may not.
Nuclear fusion is 20 years off, and it always has been.

Seven ways to think like a 21st century economist

fostertom — Mon, 22 May 2017 13:57:46 +0100

https://en.wikipedia.org/wiki/Energy_returned_on_energy_invested shows it's a complex calculation, as is all LCA (Life Cycle Analysis) but on the face of it the trend is clear - see the chart and table on the right. US Bitumen tar sands EROEI 3, Wind better at 18. EROEI figures reducing year by year. At bottom, 'Solar breeders' - where the Energy Invested is itself actually negative.

Seven ways to think like a 21st century economist

SteamyTea — Mon, 22 May 2017 19:30:55 +0100

Oil is still almost twice that of solar and coal almost 12 times 'as good'.

Don't get me wrong, I am all for getting rid of combustion technologies and am a huge fan of solar, but no matter which metric you use to compare technologies against fossil fuels, you are not going to beat them in the near future.

If you add in the EROEI of battery storage, or even pumped hydro, into wind and solar, the ratio is even worse.

Seven ways to think like a 21st century economist

Ed Davies — Mon, 22 May 2017 20:36:53 +0100

Posted By: SteamyTeaâ€¦but no matter which metric you use to compare technologies against fossil fuels, you are not going to beat them in the near future.

Price? Solar has been winning bids for electricity on /kWh for unsubsidised prices in India and South America of recent.

Seven ways to think like a 21st century economist

SteamyTea — Mon, 22 May 2017 20:59:41 +0100

I think that is problematic as well.

It is easy to cost out a successful windfarm, solar farm or whatever, but it does not take into account the failed applications/projects.

I was at a talk about 10 years back about one of the large windfarms in Scotland (can't remember which, but they had to move a large CA radar system). The guy doing the talk said that they were willing to spend up to Â£250,000 on feasibility and planning applications for each project. He did not say what the success rate was when I asked. But I know that the IET comic reported that the new CA radar cost Â£5m.

This is true for other technologies too, our 'nuclear future' must have spent 10's of millions on just getting permission to get started.

Seven ways to think like a 21st century economist

Ed Davies — Mon, 22 May 2017 22:27:10 +0100

Sorry, how's that relevant to price being a metric on which, in some circumstances, PV beats fossil fuels?

Seven ways to think like a 21st century economist

SteamyTea — Tue, 23 May 2017 07:07:57 +0100

It is relevant if you think that external costs are important to any business, no reason that the energy business should be exempt from normal accounting.

Seven ways to think like a 21st century economist

Ed Davies — Tue, 23 May 2017 09:57:43 +0100

So why do you think those PV farms were exempt from normal accounting? Because you think they underbid to not take into account the pre-bid costs? If so, why would that apply to the PV farms but not the coal plants?

Obviously there's the possibility of corruption (as there is anywhere) but as far as I know those PV farms won the bidding on the basis of producing cheaper electricity. Cash price is, obviously, not everything but it's definitely an important metric.

Seven ways to think like a 21st century economist

fostertom — Tue, 23 May 2017 10:28:41 +0100

These early star cases where in favourable conditions (sun 24yrs a day etc!) solar has beaten coal (and allcomers) in $/kWh supply bids, are significant because only a year previous it was unthinkable - now it is - because all trends point that way and will happen faster and faster from now on.

And this is still on traditional PV technology - silicon under glass in aluminium frame - heavy, creating installation costs which aren't falling nearly as fast as the cost of the panels themselves. Two new technologies are fast approaching takeoff which are are a quantumn leap cheaper to make, no silicon, weighing practically nothing (film off a roll), transforming installation costs too, wallpapered to all kinds of surfaces, walls, windows, paving - so installed kWp will explode as cost plummets. Accompanying energy storage technology is in similar lift-off mode, so old concerns about intermittency disappear.

The two books I linked to above lay it all out. Just in the space of 2016 everything changed bigtime - time to adjust our conventional wisdoms - no-one is now disputing that fossil has had its day, only question is how soon, with what niche residues.

The question now arises - just what are ecobuilders striving to save energy for? The old idealistic hope that 'we need 80% demand reduction to make a renewable energy future possible' is no longer needed - there's going to be no such low limit on renewable energy production.

So what's PH for, for example? There are still v gd reasons - we need to talk about that, not just majoring on energy demand reduction.

Seven ways to think like a 21st century economist

Ed Davies — Tue, 23 May 2017 10:58:36 +0100

Posted By: fostertomThe old idealistic hope that 'we need 80% demand reduction to make a renewable energy future possible' is no longer needed

That's far from obvious. Maybe not 80% but there's still an optimum balance between, say, more insulation and more PV. Even assuming abundant fossil fuels we're pretty obviously not at that point yet and haven't been for a long time. E.g., people in London from the Victorian (Georgian?) era to the 1950s would have been healthier if the houses were better insulated and less coal had been burned for probably the same net cost. Relatively cheap renewables might nudge the optimum point a bit but don't fundamentally change things.

PV, wind, hydro, batteries, pumped storage, many forms of insulation (particularly the thinner ones), etc, have environmental costs of their own. It's still worth minimising them over all.

Seven ways to think like a 21st century economist

SteamyTea — Tue, 23 May 2017 22:13:48 +0100

Posted By: Ed DaviesSo why do you think those PV farms were exempt from normal accounting? Because you think they underbid to not take into account the pre-bid costs? If so, why would that apply to the PV farms but not the coal plants?

Posted By: SteamyTeaThis is true for other technologies too, our 'nuclear future' must have spent 10's of millions on just getting permission to get started.

I don't.

I think that one area of advantage that installing PV in developing countries has over installing traditional energy sources is they are 'island' systems, so they do not need the vast infrastructure of a national/international grid. They do use a bit of storage though, but not huge amounts.

Seven ways to think like a 21st century economist

Ed Davies — Tue, 23 May 2017 23:04:25 +0100

Nope, India has a single grid: https://en.wikipedia.org/wiki/Electricity_sector_in_India#Electricity_transmission_and_distribution

I assume there are a few rural islands but that doesn't seem to be the norm. They seem to have more on-grid renewables than the UK has generation:

â€œThe utility electricity sector in India has one National Grid with an installed capacity of 329.20 GW (as of 30 April 2017). Renewable power plants constituted 30.8% of total installed capacity.â€

(From the top of the same page.)

Seven ways to think like a 21st century economist

Ed Davies — Wed, 24 May 2017 11:59:46 +0100

http://www.independent.co.uk/environment/india-solar-power-electricity-cancels-coal-fired-power-stations-record-low-a7751916.html