The November issue of Gregor.us Monthly, Coal World, has now been published and it carries an unhappy message. I am forecasting that the world will not successfully transition from oil to a broad basket of renewable energy and power sources over the next twenty years. Instead, I strongly favor an outcome in which oil, the construction fuel for the global buildout of new power generation, becomes so expensive that the world becomes energy poor, and turns instead back to coal. In case you hadn’t noticed, the process of energy impoverishment has already begun.
Those who would propose a successful energy transition over the next 20 years have failed, on a number of fronts, to produce a holistic model that pays respect to both the history of previous energy transtions, and to all (not just some) of the hurdles that lay before us. For example, one group of transitionists will lay out the technical feasibility of running the world exclusively on clean power. But they ignore the construction phase, or the energy required to fund it. Other transitionists will appear to address the construction phase, but instead will elide over crucial engineering details by invoking historical examples of national will–like the space program, or the retooling of Detroit during WW II. Most neglected however is the history of previous energy transitions. And here we find the largest hurdle of all. For, in humanity’s last two transitions, from wood to coal and then coal to oil, the trajectory each time was to a higher power density energy source. Energy transition is disruptive enough, but much less so when you are gaining energy density. And how do you suppose transition will be this time, going in the opposite direction, to lower density sources?
Last night I was on the phone discussing some of these issues with a journalist out of San Francisco. Once you begin to comprehend that 60% of the world’s oil supply is now in well delineated decline, and you understand the unchangeable fact of power density, then drilling offshore California in order to transform high energy oil into vast solar, wind, and grid infrastructure sounds less like a creative idea and more like an urgent necessity. This is precisely what I have been advocating this year here at Gregor.us and in TV and print media.
Today I’ll be making a presentation that speaks to these issues at the Agoracom Online Gold and Commodity Conference, broadcasting out of Toronto. Anyone can watch for free. In addition, while the recently published Gregor.us Monthly newsletter mentioned above has more detail on this issue, I intend to compose a much longer paper on the subject that will quantify my thesis and will attempt to bring all of the moving parts together.
From my newsletter:
Here in the West, I think we already have an excellent example of how well we confront and then treat large scale problems in the example of the 25 year credit bubble which burst two years ago. We did not admit to the problem as it was being constructed. And now, that the problem is laid bare, our chief policy makers will still not admit to the problem…If we agree that it’s hard for the Developed nations to solve large problems, whether of a financial nature or with regard to energy, then how likely is it that the Developing nations of the world will conduct energy transition any better? In the same way the Developed world is hooked on oil, the Developing world is hooked on coal…The developing world meanwhile is not likely to enter into onerous climate and carbon control agreements. Even if the BRIC countries were to do so, I could envision a decade (at least) in which year after year passed with widespread Climate Treaty compliance failure…It’s hard to beat coal. Coal is both slippery in price, and versatile in use. Coal burns either with big infrastructure, or, without much infrastructure. You can load up large ships with coal or you can carry coal in a basket. Here’s the problem: Coal often prices itself just below other energy sources.
When confronted with the task of our current energy transition, I include the potential of innovation, breakthroughs, and behavioral choices as highly influential mitigating factors. But they do not have primacy. In truth, a good dose of deterministic thinking is precisely what’s called for now, and it should not be avoided. I’m not sure what color is the pill marked Determinism but swallowing a few of these would hardly be injurious. It might even be motivating. Because unless we get serious about using the remaining oil to fund the 25 year construction phase for a new class of power generation, the world will become ever more energy impoverished. And when you’re impoverished, you don’t burn expensive oil. And you certainly don’t build out vast wind power and solar capacity. When you’re impoverished you burn coal.
Photo: Library of Congress