Jevons’ Law: Enforcing the Age of Energy Decline - Part 1
Posted by Gail the Actuary on January 11, 2010 - 10:32am
This is a guest post by Lionel Orford. Lionel is a professional electrical engineer with an interest in peak oil and sustainability. This past year he has been researching and developing a book with the working title, "Peak Capitalism: Our Opportunity to Choose between Transformation and Collapse." His web site can be found at this link.
In his 1865 book “The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of our Coal-Mines,” English economist William Stanley Jevons made the observation “Of the Economy of Fuel” that when improvements in technology make it possible to use a fuel more efficiently, the consumption of the fuel tends to go up, not down.
This is known as Jevons’ Paradox. It occurs because as the efficiency of a type of machinery is improved, it becomes profitable for many more customers and feasible to apply it to new applications. This results in rapid growth of the number of machines in use and consequently, an increase in fuel consumption overall.
Jevons’ observation was made regarding the application of coal power to steam engines. The first commercially applied steam engine was invented by Thomas Newcomen to pump water out of coal mines. It used a very large amount of coal compared with the amount of useful pumping it achieved and was only viable at coal mines where coal was plentiful and ready to hand.
When James Watt recognised that a major improvement could be made by using a separate condenser vessel, he built an engine that was so much cheaper to run that applications for it blossomed. This enabled Watt to go on to further increase the level of technical sophistication and efficiency of his engines. This led to the common belief that Watt ‘invented’ the steam engine.
In 1865, when Jevons published his now famous paradox, steam engines were only efficient enough to be used where they could be frequently refuelled, such as for stationary applications (mines and mills), railway locomotives, harbour tugs and paddle steamers. They were not efficient enough to carry enough coal to cross oceans and still have room for cargo. The subsequent development of the triple expansion steam engine, which was markedly more efficient, made ocean going steam ships viable. Consumption of coal again escalated, as Jevons had predicted.
This dynamic has now played out in several technologies, notably:
• The development of modern fan jet engines for aircraft that have increased efficiency (passenger mile per unit of fuel) of jet airliners by 3 fold from the Boeing707 to the Airbus380. The result – rapid growth of air travel and fuel used.
• The development of modern high efficiency coal fired power plants. The result – exponential growth of electricity used and greenhouse gas produced.
• The development of efficient and powerful computers that can be manufactured very cheaply. The result – exponential growth of the amount of energy used for manufacture and running of computers.
As is implied by the full title of the book, Jevons’ concern was that the exponential growth of consumption of coal he was observing would result in the exhaustion of economically viable sources of coal. He warned that coal production would inevitably migrate away from the easily mined deposits near the surface to the deeper deposits that would require more capital and more labour to extract. He predicted that British coal would become increasingly expensive to the point that more and more applications would cease to be profitable. He concluded that this would result in the eventual reduction in coal production and industrial output with potentially disastrous effects for the British economy.
About a century before M King Hubbert’s prediction of Peak Oil, Jevons was making very similar observations regarding Peak Coal. The ideas of both men were denied and even ridiculed by their peers, but both have subsequently been proven correct. British coal indeed did peak in 1913 and almost no coal industry remains in Britain today.
This didn’t result in disaster for the British economy, but only because of the rise to prominence of a new fuel – petroleum – which Jevons could hardly have predicted. Oil partially replaced coal and also enabled another technological revolution that made it viable for coal to be imported into Britain.
What Jevons was noticing was that as more useful work (more utility) was obtained from a given amount of fuel compared with the amount of work it took to get that fuel, the more profitable applications there were, and hence, usage increased as more and more applications emerged. That’s the now famous part of what Jevons had to say. What is less well known is that he realised that the reverse would also be true as the work required to get the coal increased comparative to its utility.
Like Hubbert a century later, he was widely misinterpreted as saying that we were “running out of coal”, when he was actually realising something much more subtle – that coal would become too expensive to be profitable and would decline due to a lack of demand – not that there would no coal left in the ground. Indeed, something in the order of 70% of Britain’s coal endowment is still in the ground today. The parallel with our current situation regarding oil is blindingly obvious – we are not running out of oil; we may never completely run out of oil; oil will simply become too expensive as more productive capacity is needed to supply it and demand will decline accordingly.
Scientific laws are based on observations that over time prove to be such a reliable basis for predicting the behaviour of a natural phenomenon that they are elevated beyond hypotheses, beyond theories, to a status where they are recognised as laws. Examples include Newton’s Law of Gravity, Faraday’s Law of Electromagnetism and the Laws of Thermodynamics. I propose that it is now time for the recognition of Jevons’ Law:
As the utility provided by an energy source increases or decreases in comparison to the amount of utility expended to obtain it, so does the overall usage and utility provided by that energy source, over time.
I use the term ‘utility’ to mean ‘work of real economic value’ or ‘productive capacity’.
I hasten to point out that I am not putting this up as a fundamental law of the universe like the scientific laws mentioned, but contend that it is least as secure as any so called “Law” involving social sciences such as White’s Law and is actually valid over the long term, unlike that piece of techno-triumphalist nonsense - Moore’s Law. Also, I am not saying that Jevons stated this definitively, but that it can be concluded from the arguments he makes in The Coal Question.
It is important to note that this law doesn’t apply on an instantaneous basis, but has a lag effect that extends over decades. In the short term, it is possible to disobey Jevons’ Law, particularly by distorting the market – for example:
• Although the long term price of oil must be determined by its cost of production, economic booms, speculation and supply squeezes can send the price spiralling way above the cost of production, resulting in subsequent demand destruction.
• Government subsidies can push the uptake of an uneconomic energy source for social and political reasons – e.g. subsidised petrol and diesel, biofuels, wind power, nuclear power.
• For OECD economies, particularly the US, a deficit of economic productivity gained from importing oil compared with the cost of those imports has been masked by an economic feeding frenzy of consumption, financed by escalating overall debt comparative to the productive means to repay that debt.
I contend that such distortions of the market are unsustainable over the longer term. Speculators lose their money when speculative activity drives prices to levels not justified by the cost of production; countries suffer from misguided government subsidies that waste their national wealth on uneconomic programs; and debt bubbles always end in financial ruin.
In terms that are familiar to this readership, Jevons’ Law is very closely related to saying – The use of an energy source rises and falls in accordance with its Energy Returned on Energy Invested (EROEI). However, this is not strictly true because energy does not directly equate with utility.
A particular case in point: The EROEI of oil has been declining since before Jed Clampet “went out huntin’ for some food, when up through the ground came a bubblin’ crude”, but this has not caused the demand for oil to fall. I contend that this is because, even as the cost of production has steadily increased, the amount of utility obtained per barrel of oil has increased substantially faster due to increases in efficiency of machinery and the development of new applications, such as jet airliners, which provide enormous utility compared with the oil they consume. These new applications have been the basis for a whole range of service industries that also have real economic value. Jevons’ Law has held true.
We seem to have now reached the point where the investment of capital and labour needed to increase the supply of oil is no longer justified by the additional economic value that it provides. Beyond this point, the use of oil will be relentlessly forced into decline.
The oil industry is now in a vicious circle whereby huge investment is required even to maintain the supply of oil. This investment can only be justified by reliably high prices for oil in the order of $100 per barrel, but it is quite clear that the world economy cannot maintain demand for oil in that price range. Hence I am of the school of thought that argues that this investment will not be made, that decline of both demand and production is inevitable, and that Peak Oil is now behind us. Time will tell.
A declining oil supply spells certain death for our economic system because it relies on growth to remain viable and that growth is in turn reliant on commensurate growth in oil supply. It is nonsense to believe that we can continue to grow the economy by growing areas of enterprise that are not dependent on oil such as finance and other services or by continuously improving efficiency to gain more economic value from less oil. The financial and service economy is only as strong as the productive economy on which it feeds. Although some efficiency gains are possible through frugality, such as using public transport rather than private cars, these changes can only be made over many years, and such frugality would result in reductions in economic size overall, rather than growth. For example, if most of us used public transport, there would be dramatically reduced market for cars and the service industries they support. This is Jevons’ Law in action.
Furthermore, our cultural addiction to oil and economic growth has led us into a condition of overshoot, where we have been spending more to obtain oil than the economic value generated from it for decades. This has been a major factor in the accumulation of vast debts by western countries, most of all the USA. The accumulated debt seems to be way beyond our productive means to repay, which is effectively the definition of bankruptcy.
The only probable outcome from all this is ongoing economic dysfunction, as governments and the corporate sector repeatedly make futile attempts to return to business as usual, leading to the eventual collapse of the current economic system. This dysfunction is likely to be accompanied by a corresponding crash in both demand for oil and investment in new oil production.
As the economy fails, there will be great social hardship as millions of people are rendered unemployed, and there will be great political tumult as the electorate holds the government accountable for their great loss. I contend that this process is now underway and unstoppable.
However, while economic crashes happen relatively quickly, cultures change over much longer periods. When things get tough, modern countries do have a track record of dealing with their problems somehow, rather than undergoing societal collapse. Modern examples which have suffered economic collapse, but avoided societal collapse, include Germany, Argentina, Russia and, most recently, Iceland. However, if we continue to deny and mismanage our situation, we could proceed through all of Orlov’s Five Stages of Collapse, and catastrophic collapse of our society could be our fate – as it was for the Easter Islanders, the Mayans, and others.
We do have a culture capable of solving problems – but only when it is widely understood by the general populace that emergency measures and major changes are required. Once we shift to emergency mode, we can overcome our cultural resistance to change and make major changes to the way we operate our society. I believe (and hope) that once the failure of our economic system becomes obvious to all, we will have an opportunity to form the political will to make the fundamental changes required to avoid catastrophe.
In Part 2 of this article, I will examine what is required to deal prudently with the reality of energy decline and economic collapse that is imposed upon us by Jevons’ Law, so as to steer away from societal collapse.
Note: For further background on the economic issues raised in this article, I recommend Chris Martenson’s Crash Course.
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Thanks for an interesting post!
It seems like that there are several things going on simultaneously:
1. Ongoing increases in real efficiency. It is hard to measure this, because Real GDP/Btu measures are affected by increased "offshoring" and a change in mix toward more services and less manufacturing (and poor inflation estimates). My guess would be that in recent years real efficiency gains have been on the order magnitude of 1% per year, but I am sure someone else has studied this more than I have.
2. Decreasing EROI for oil and other energy products. While this has been going on for a long time, one would think that the impact would be more recently because the decrease in net energy is a lot greater when one goes from, say 8:1 to 7:1 (.875 - .857 = .018) than when one goes from 100:1 to 99:1 (.9900 - .9899 = .0001)
It would seem like we are now down in the range where decreasing EROI would start offsetting increasing efficiency, unless efficiency increases are larger than I am estimating. Note: This is a different graph than I posted earlier. This updated graph is from a paper called, "A Preliminary Investigation of Energy Return on Energy Investment for Global Oil and Gas Production" by Nathon Gagnon, Charles A. S. Hall, and Lyse Brinker, published in Energies 2009, 2, 409-503.
3. The overall EROI level that society needs to function has probably gotten higher and higher over the years, as society has gotten more complex.
4. Growth in debt in recent years would tend to cover up problems with inadequate return on investment, at least temporarily.
It seems like the net impact would be in the direction you suggest, but it would be hard to precisely measure the components.
Jevon's Paradox is often named on these sites not only in combination with tech. innovation but with societal efficiency in General - which has to do with conservation. On this point I was always sceptical. I'm happy that Lionel kept these topics mostly separate.
There is a point in the analysis, however, where the discussion has nohting to do with Jevon, beginning with "Time will tell".
I also agree that our ec. system depends on growth to remain somewhat stable. However, I do not see that this necessarily needs to be tied into (or logically follow from) Jevon's Law. Where does this jump in logic come from? I see this as a problem of our monetary system - similar to the way Hubbert saw it.
What do you think?
Thanks!
Greetings from Munich.
I agree with you.
This started as a great article, with careful background,and reasoning around JP. The English example is very good.
Then it turns into the standard doomer rant.
Not that there is anything wrong with that - I am inclined in that direction - but the logic and topics have been covered many many times, up down and sideways (and much better and more thoroughly) elsewhere.
My 2 cents - if you are going to extend the logic of JP - do that - with specific examples backed up by hard data.
Don't get into an editorial diatribe. Its been done.
The JP line of reasoning, especially the "downside" of it - has not been fully discussed and explored. The link and overlap to EROI is good too.
It seems like it would be helpful to do some quantification of the pieces, and where they are headed--see my comment above. Unless one has real numbers, it is hard to draw firm conclusions.
Yes, I am saving my more serious commentary for the 2nd part of the story..
This is the weakest thing in the otherwise decent post. The part I italicized seems to be an oxymoron as this could not continue for decades without someone going bankrupt. At the very least it needs careful support in the article if it is to be believed.
Also in need of support is the assertion that the supposed overextraction of oil has been a major factor in the accumulation of debts by foreign countries. I read this to mean that the overextraction supposedly helped cause the debts, although that was not precisely what was stated.
I can't think of why debts would not have been accumulated without overextraction of oil, even supposing extraction of oil where the cost of said extraction exceeds the economic benefits obtained from it ( overextraction ) existed. Maybe all that was meant by 'factor in' was that their was an association between overextraction of oil and debt accumulation. Or maybe it was meant that the accumulation of debt could have caused the supposed overextraction. It's hard to tell.
The financial system is one factor in society and peak oil is another. The financial system has also been around for good or ill much longer than oil or even coal. Problems involving limited resources and the bounds those limits put on growth will impact the financial system, and problems with the financial system may affect how/when/and how much resources are extracted, but asserting any causal relationships would require detailed support.
One force for debt accumulation in the WEST is that others are willing to lend the west money to support a trade deficit. However everyone burns oil, both debtors and creditors. It's hard to see how overextraction of oil would be causing debt or how debt could cause overextraction of oil. Maybe an end to growth might end creditors faith in the debtors ability to pay?
Trade deficits have and would exist without novel resource concerns. They balance when currencies revaluate. Are currencies being unduly prevented from revaluating? If so, does this have to do with oil OR NOT?
Here are a few things I've noticed:
Some have complained that China has been keeping the Yuan artificially devalued WRT other currencies by accumulating foreign currency reserves in the form of foreign government debt. ( One exchanges say Dollars for Yuan to buy a boatload of cheap plastic crap. You buy the crap from the factory, and the factory pays it's workers in Yuan. Because the Chinese government does not turn around and use those dollars to buy Yuan but instead purchases US Treasuries, the Yuan is devalued representing a tax on the buying power of the average Chinese citizen. That buying power is to the PRC government which holds the foreign currency.
In the past, Japanese citizens have saved their Yen rather than investing in the Japanese economy. The savings are used by banks to buy the huge Japanese govenrment debt at extremely low interest rates given that Japan is the biggest debtor nation in terms of GDB behind only Zimbabwe. Also there has been a carry trade where the central bank of Japan exchanges Yen for US Treasury securites ( and other government securites ) to devalue the Yen, exporting deflation to boost exports.
The Japanese stock market looks as if the past 25 years have never happened. A lost quarter century of stagnant growth, probably because Japan is already developed - they already have all the capital they need. The US stock market looks to have lost about a decade.
Is it Petrodollar recycling that has boosted investment in the US ( another highly developed country ) so that it has appeared to be a good place to lend money to? Dollars are freely tradable. I find it unconvincing that others would choose to invest dollars in the US economy just because they happened to have dollars in their hands when they could easily be exchanged for any other currency.
Resource peaks are only one thing that's going on in the world. Lots of other important things are happening and they no doubt interplay with each other. I don't pretend to understand it but it's fun to try.
PeakPlus,
You are correct - this doesn't follow from Jevons' Law, but I didn't claim or imply that it does. Jevons' Law implies that as the amount of utility (work of real economic value) expended to obtain the oil goes up, demand will be forced down.
I am then pointing out the economic effects that follow from that. Yes - I also see this as a problem with our monetary system - just as Hubbert saw it, but I go further than that - the addiction to growth is deeply embedded in our culture. Jevons also realised this and remarks on it in The Coal Question. I intend to explore this in more detail in Part 2.
Lionel
On our "addiction to growth," isn't this a long-standing claim of Marxist analysis? Certainly I heard it repeatedly from a Trotskyite professor in the late 70s, who was claiming at the time that it was uniquely capitalism's flaw, and would lead to the demise of capitalism in Western Europe within a decade - that is, before 1980. Where she got the notion (of addiction to growth) I don't know, as the seminar was on 17th Century England, not modern times.
So how does this presumably Marxist meme enter so often into Oil Drum analyses? And does it serve any better at predicting some cliff we're about to go off than it served to predict the end of European capitalism for my old professor? There are so many narratives here which start with well-argued discussions of oil and other energy and raw materials depletion, but then turn crucially on the notion that "capitalism" just has no way of succeeding in a time of resource decline. The basis for supposing this always seems drastically underspecified - as if you had had the equivalent of my Trotskyite professor's assertion made in some seminar once, accepted it, but were as vague as I am on whether there's any solid historical or economic case - outside the Marxist faith - to be made for it.
Also, a "red flag" goes up in my mind whenever anyone says "addiction" in a situation not involving, say, real opiates. The thesis of addictions as a general principle of human behavior strikes me as largely ungrounded - one of those common sensical claims where everyone nods and says "yes," but really more of a black box where an argument deserves to be. Hopefully the next installment will expand on the "addiction to growth" meme, replacing "addiction" with some less loaded term, and expanding on "growth" to show why a society can't be said to continue growing (in the sense of being viable and alive) even as it's energy and raw materials inputs go through shifts and transformations, including periods of attenuation.
I'm not an expert here, but its pretty clear if you think about it. Capitalism is based on a banking system entirely dependent upon compounding growth; its used by every government to generate funds by selling bonds, its used by every depositor and every investor: the future value of money as a whole must increase or there is no incentive to activity.
The world is finite, therefore growth has a limit.
Having enjoyed, in general, hundreds of years of growth, its hard to predict what the other side of the hill might look like.
Agreed. Recognizing limits to growth doesn't make one a Marxist. Physical limits aren't dogma. Finite resources aren't politics. I see red flags when people try to equate these things.
I'm not going to try and flesh this out too much, but if the basic needs of the populous can be met at relatively low cost constant economic growth could come from value added economic sectors that are not intensive users of resources. That just takes a shift in perception in what is of high dollar value, (plenty of that in our economy). Of course even the most pie in the sky incarnation of such a future scenario is impossible without limiting resource consumption. Reality does tend to make this sort of optimistic view bump its ass a little considering the basic needs of food, clothing and shelter in the west have been kept at an artificially low cost by subsidies made possible by drawing down the principal in our fossil fuel account. But economic growth doesn't have a limit if it can maintain a sustainable resource base--we of course have never approached the threshold of that sort of scenario.
And it would be possible to create a quasi steady state economy based upon this principle. The members of the society see the economy as growing because they value Y more than X and the economy is steadily changing from production of X to production of Y. Then after the changeover is complete, switch the valuations around so that X is highly valued, and begin switching back. As long as the period to complete a complete cyle is longer than the length of social memory, this economy always has the feel of relentless growth, even though the longterm output is static. [Yes it is a slight of hand(mind), but if you can fool investors into continuing to invest, the system can function]
While it may or may not be possible for "capitalism" in some form to survive a time of declining resources and industrial output (though by no means guaranteed), the current form practised in Western countries today --based on fractional reserve lending and perpetual growth of debt-- would not be tenable. As long as debt keeps on increasing, interest payments are made and everything keeps happily humming along. As soon as aggregate debt contracts, interest cannot be paid (much less principal) and the system collapses. That's just the way the system is built.
From an accounting perspective, debt, with or without interest, can always be paid back whether the general level of debt is increasing or decreasing.
These days, money is debt. For every dollar in somebody's pocket or bank account, there is a corresponding dollar owed by somebody else. This is true whether the dollar's origin was principal or interest. When the debt is paid, the dollar vanishes out of the person's pocket and the dollar owed vanishes too.
Essentially, the total net monetary value in the system stays at zero. It starts at zero, stays at zero as money is borrowed, and just continues to be zero as debts are paid.
The economic system may well depend on growth to stay alive, but not for accounting reasons. Economic activity is a matter of money in motion, after all, not just money stuck in place. Certainly in a deflationary regime, money tends to freeze up.
I'm no economist, so these macroeconomic patterns rather boggle my mind. But I was a bookkeeper for a couple years there and can still add three digit numbers in my head (WOW!).
Money is really just a kind of mass hallucination. I guess these days the folks in Venezuela are getting their faces rubbed in that uncomfortable truth.
My background is physics, so that's how I like to look at things. Start off by ignoring the money. Look at the physical reality - natural resources, people, machinery, stockpiles of raw materials etc. How can these be organized and used in some way or other so that folks get fed, housed, etc.?
This is basically a problem in control systems design. The countless parameters involved are never known precisely and are always changing in very noisy ways. A distributed control system is surely going to work a lot more effectively than a centralized system. That's at least one dimension of the perpetual capitalist versus communist debate.
Another dimension - I've been reading Poundstone's Prisoner's Dilemma. He's got the capitalists as those advocating the Nash equilibrium, i.e. defectors. Whereas the communists advocate the solution where everyone comes out ahead, i.e. cooperation.
Mutual trust is really the foundation of society. If we find a way to keep that alive, we will never collapse. But once trust dissolves, all the resources and technology you can dream of will not put humpty-dumpty back together again.
Our capitalist system seems largely to be a matter of condensing all trust into money. Money is basically a control system tool, a way to communicate about the uses of resources. I fear that we too often have things up-side-down, that we think of trust and resources as ways to make money. That is a really dangerous instability that could trigger collapse!
Good post Jim.
"Mutual trust is really the foundation of society. If we find a way to keep that alive, we will never collapse. But once trust dissolves, all the resources and technology you can dream of will not put humpty-dumpty back together again."
Wow - now that's something to think about!
HARM - I believe you are absolutely spot on.
When I talk about growth, I am not talking about some essoteric metaphysical growth of human well being - I'm talking about growth of actual economic transactions and these are always facilitated by resources with limits. Nothing can grow forever - not even a tree in the forest, which slows to almost zero growth for a long period as the tree ages and dies. I stopped growing taller about 30 years ago but that didn't render me non-viable as a organism. The same is true of an economic system - there must be viable way to run our exchange of goods and services that is not dependent on growth, but that way must not involve a monetary system based on interest bearing debt that must continuously expand to remain solvent.
Many people confuse Capitalism with free enterprise. I all for Free Enterprise based on a rational and fair monetary system, but Capitalism, which is a system where money is bank debt is unsustainable because of its reliance on ongoing growth. Capitalism arose out of the need to create money to facilitate growth - particularly the enterprises of the New World and it depends on growth for its ongoing viability. We can no longer sustain that growth without destroying ourselves.
I'm not so sure we couldn't fake growth by monetary inflation. As HARM so succinctly put it, it is not about increasing the absolute size of economic flows, but about retaining trust. So inflating money, and continual gradual change to things that look more valuable than the current pardigm, just might do the trick of creating the illusion of neverending growth.
Lionel
To some degree I disagree with the presumption that our economic system is incapable of operating under a zero growth scenario. By the way I have undertaken the Crash Course by Chris Martenson. My arguement is as follows. I am an engineer not an economist so please forgive me if I don't get the terminology quite right.
Wealth creation comes in a number of forms including interest, but it is essentially an economic return on investment. Wealth destruction is also an intrinsic part of our economic system, also in several forms but usually in the form of failure to repay debt. From what I understand the "system" necessitates growth to equal the net of wealth creation and wealth destruction. Not just wealth creation (interest). Therefore logically, a zero growth economy only requires there to be a balance between wealth destruction (debt default) and wealth creation (interest).
It therefore seems to me, that the problem with linkage between systemic need for in interest, and growth, has been overstated. The problem we have to date has been, that interest rates have not been a true representation of the risk of loss. In the equity sector there is a much clearer understanding of the balance between risk and reward. If in the banking system there was an acceptance that interest was a representation of the risk of loss then this would obviate the systemic "need" for continual growth ie. it is not the system that is broke, but the expectation of the people using the system. Of course the change required in peoples expectations should not be underestimated in its difficulty and implications for the banking system.
If the above is incorrect then can someone please point out the flaw in the arguement.
BTW - Looking at the current economic situation it appears we have entered a period where the risk of bank default will in fact be more alligned to the intrest rates paid.
Pheonix,
I am also an engineer trying to understand economics and I also don't get the terminology right in the view of economists. However, the problem is that conventional economics is a load of BS, full of assumptions that are disconnected from reality - the Naked Emperor of the Social Sciences as Steve Keen has named it. M K Hubbert was also an engineer (of sorts) who realised this and developed his own economic theories, which I contend remain valid today – and highly relevant to this discussion.
In simplified terms, Hubbert showed that real economic production and money creation (bank lending) must expand at the same rate as the overall rate of interest for the system to remain stable. If lending expands faster than production, there are too many trading tokens relative to actual goods and services, resulting in inflation. I.e. the money reduces in value to represent its actual value relative to the goods and services available to spend it on. If lending expands slower than the interest rate, there is insufficient money to repay the loans at interest and a certain proportion of loans must default – the system becomes insolvent. So for the system to remain solvent, real production must expand at a minimum of the overall rate of interest so that the banks can be repaid at interest in money of a similar value.
Obviously, if there is no growth of real production, and lending continues to expand at the interest rate, the banks can be repaid, but in smaller trading tokens - overall they have gained nothing – all they have done is devalue their own currency. They have not made a profit and cannot continue to operate.
Yes – the original justification for bankers charging interest was that they must cover their risk of default, but this was always self serving and disingenuous. Obviously, if the rate of interest equals the default rate, the bank makes no profit and cannot continue to exist.
“Wealth creation comes in a number of forms including interest, but it is essentially an economic return on investment.” - absolutely not! Wealth is the Fruits of our labour – the outcome of real economic production. Interest is a tax on wealth, whereby the lender says I will take a cut of the wealth you produce in return for providing the trading tokens you need to go about your business.
Another tax on the wealth created by others is the profit made by wealthy individuals so that they can accumulate vast wealth relative to their own productivity. For this to occur, without direct impoverishment of the creators of this wealth, the wealth creation (economic production) must continue to expand – the pie has to get bigger and bigger.
“Looking at the current economic situation it appears we have entered a period where the risk of bank default will in fact be more alligned to the intrest rates paid.” – well said. You could also view it as the banks lending beyond the real productive capacity of the borrowers to repay – which of course ensures that there will be defaults.
It's a claim of some Marxists, and it's no surprise that you heard these claims from a Trotskyite. The growth/anti-growth debate is probably one of the main underlying disagreements between Trotskyites and all other Marxists (the ones the Trotskyites would call 'Stalinists'). I'd say most Marxists in history world wide were not very much better at recognizing limits to growth than anyone else.
So being anti-growth does not make one a Marxist or vice versa.
Who are you referring to with the word "our"? I expect the answer is modern humanity. If so, the use of the word "our" is not helpful as it implies that this is an issue specific to the culture of the writer and who ever he is talking to in the comment, and that there may be another culture out there with a viable alternative.
Jack - "our" refers to anybody that would be able to read this and others in their societies. I didn't say that there were no other cultures out there or none other were possible. Why would you want to make such a nit picking point rather than choosing to understand what I am quite clearly saying?
Thank you for your reply!
First of all, just logically:
If oil production becomes less efficient, then the demand for oil (and all that goes along with it) will generally fall. Wouldn't it make sense that demand in other energy sectors would rise - to fill in the gap? That is what an economist would usually claim. That is also the gist of the Uranium/Thorium, solar and wind freaks..
Anyway, am excited to read your second piece!
Thanks, Dom
Why would other energy consumptions go up if a F-150 commuter becomes a Civic commuter or lives closer to the work place?
Why would other energy consumptions go up if a badly insulated house gets insulation and new windows?
Why would other energy consumptions go up if old inefficient appliances are replaced by efficient appliances?
To quote Niles Crane: "Oh good! These cookies are calorie reduced! That means we can eat twice as many!"
The fallacy in your argument is that you seem to believe that conservation will cause demand destruction. Your examples do not take into account that the oil companies and the governments of the oil producing states are going to sell that oil because they want the money. If you aren't buying it because you have improved your efficiency, they'll just sell it to somebody else, who will now be able to afford it because of the increased efficiency(more work can be accomplished, so it is more valuable, even though the price has not increased).
Your examples are also too short-term to take into account longer-term system effects. For example, your hypothetical conserver's children-and their children- will want a car and a house of their own.
So even if you don't eat the cookie, someone else will. Conservation does not lead to demand destruction. In our economic system, it leads to increasing the size of the market.
(My position on this is that we should (and will have to) conserve and reduce, but we also must work for population reduction, because only these two things in concert will lead to lower energy requirements. And yes, I believe that is unlikely that we can make population reduction and sustainability happen in a pleasant way... it's still a goal we should aim for, however.)
Your examples are also too short-term to take into account longer-term system effects. For example, your hypothetical conserver's children-and their children- will want a car and a house of their own.
But they won't purposely drill a hole in their gasoline tank of their efficient car or drive aimlessly around town just to be able to consume more gasoline.
If you aren't buying it because you have improved your efficiency, they'll just sell it to somebody else, who will now be able to afford it because of the increased efficiency(more work can be accomplished, so it is more valuable, even though the price has not increased).
And next time the oil price goes up to $147 a barrel they will certainly react more sensitively to it than people who wisely diversified their portfolio beforehand.
Oy. At the risk of stating the really, really, obvious, there will be more of them. Exponential population growth is the main long-term system effect I was speaking of. Because we haven't had the courtesy to die yet, our children cannot use the fuel we use and the sunk energy costs of our cars, homes, offices, and infrastructure. They will require their own. Whether they use the energy unwisely is not at issue. If there are more of you living at the same level of energy usage, as I posited in my reply, say, for example, twice as many, you will use twice as much. Even an incremental increase in efficiency (or reduction of usage through other means) of less than 51% will not result in an overall saving(assuming 2 child fertility rate and you dying before the grandkids arrive... if not, the required improvement increases.)
We are discussing a momentary change in the delivery of a hypothetical barrel of oil that had already been (hypothetically) produced. Because it is momentary, there can be no change in the price. I actually stated that the price did not increase("even though the price has not increased)."), so your comment about the possibility of oil prices rising over time is irrelevant to my explanation. Which is convenient, because beyond figuring out that it was obviously irrelevant, I have no idea what you intended that sentence to mean.
For $12 I can get a couple six packs and some pretzels at the corner deli. The supermarket across town has better prices - the same stuff will cost me only $10. Maybe I'll drive over there and save $2. Ah, but I should factor in fuel cost, too.
Driving my old beater station wagon, the drive across town and back costs me $3 in gas. I'm better off just walking to the corner deli.
Driving my shiny new hybrid, I can get across town and back for just $1. Now, with my much greater fuel efficiency, I am better off getting my beer and pretzels at the supermarket.
The gain in fuel efficiency just increased my fuel cost from $0 to $1.
Jim - you forgot to factor in the amount of eanings you need to replace your old banger with the shiny new hybrid. Keep your old banger and walk to the corner shop. Better still, get yourself a second hand bicycle (negligible cost) and ride to the supermarket - you save money and get some exercise to work off those 6 packs.
I believe that this is the type of change we need to deal with energy and hence economic decline. Not that the optimum solution for you involves less economic production overall.
I was just trying to show a concrete example of Jevons' paradox, how an increase in fuel efficiency can lead to an *increase* in fuel expenses.
Another example could be... maybe I have a choice between a low paying job that is close by, and a higher paying job that is far away. If I have low fuel efficiency, I'll take the close by job. If I have high fuel efficiency, I'll take the far away job. Again, increased fuel efficiency leads to higher fuel cost!
It's a fun thing to think about. Take any kind of optimization problem. Slowly shift the relative costs of the various inputs. With a linear programming problem, for a while the optimum might stick at one vertex of polyhedron of valid solutions, but then it will suddenly shift to some neighboring vertex. It's this kind of jumping from one operating point to another that seems to lead to the paradox that Jevons observed. More general types of optimization problems will still involve the movement of the optimum as the relative costs shift, with the attendant paradoxes.
Personally, I do prefer the bicycle! Here is my glorious Azor:
Jevons implies that with greater efficiency of consumption the market clearing price (of the type of energy in question) would go up. In a time of declining oil supply, this would imply that the volume of oil that society could afford to extract would increase as our usage becomes more efficient. I.E. a society that uses oil for hybrid Priuses can afford to tap low (but >1) EROI whereas one that uses the oil to run Hummers would have to stop at a higher grade of ore than the more efficient society. So the paradox, is that the more efficient society ultimately consumes more of the available resource.
Now of course Jevons might not work if energy were a small part of overall cost, say the critical resource cost wise was Iron, not oil/coal. Then even though I could afford the fuel cost of more marginal uses of the fuel, I couldn't afford to build the machines that consume it. I.e., if we swicth to hybrid Priuses -but they cost $50,000 apiece, our oil demand won't go up -because we can't afford to buy enough of them, whereas with $50000 Hummers we could probably saturate the supply of oil.
I have summarized all EROEI articles of the ASPO 2009 conference in this post on my web site:
Jan 6th, 2010
Diminishing Returns of Fossil Fuel Energy Invested
http://www.crudeoilpeak.com/?p=909
Nice, and bookmarked for later use.Cheers.
As far back as 1943, Manhatten project scientists including Phil Morrison, Harrison Brown and Alvin Weinberg began to understand the energy implications of nuclear energy. Weinberg later wrote:
"Phil Morrison could hardly contain his excitement as he showed me his calculations. If uranium were burned in a breeder, the energy released through fission would exceed the amount of energy required to extract the residual 4 ppm of uranium from granitic rock."
Later Weinberg came to see that thorium was an even more inviting resource. The crustal concentration of thorium averaged 12 ppm, three times that of uranium. Thus if uranium can be recovered with a favorable ERoEI, crustal thorium would yield an ERoEI that is three times better than. In a thorium breeder, such as the LFTR, one tone of thorium will yield the energy equivalent of 3 to 4 million tons of coal. My calculation indicates that the if all world energy output were derived from thorium, and every person on earth consumed energy at modern Western European levels, in one billion years, we would use about 15% of recoverable thorium. The sun will turn into a red giant, and snuff out all life on the earth, before we run out of recoverable thorium.
Weinberg's vision was huge in scope as he later explained:
"In this essay I speculated on the very long-range future-hundreds, even thousands, of years in the future. Where will our energy come from at that distant time when coal, oil, and natural gas have been used up? Solar energy is one obvious inexhaustible source. Another, if it works, could be controlled thermonuclear energy based on deuterium from the sea (thus "Burning the Sea"). My main point, however, was to stress what Phil Morrison and then Harrison Brown had already noticed: that the residual and all but infinite uranium and thorium in granite rocks could be burned with an energy yield larger than the energy required to mine and refine the ore—but only if breeders, which could burn nearly all the fertile material, are used. I spoke of "Burning the Rocks": the breeder, no less than controlled fusion, is an inexhaustible energy system. Up till then we had thought that breeders, burning 50% instead of 2% of the uranium, extended the energy derivable from fission "only" 25-fold. But, because the breeder uses its raw material so efficiently, one can afford to utilize much more expensive—that is, dilute—ores, and these are practically inexhaustible. The breeder indeed will allow humankind to "Burn the Rocks" to achieve inexhaustible energy!"
In his autobiography Weinberg confessed:
"I became obsessed with the Idea that humankind's whole future depended on the breeder. For Society generally to achieve and maintain a standard of living of today's developed countries, depends on the avaliability of relatively cheap, inexhaustible sources of energy."
Clearly then Phillip Morrison, Harrison Brown, and Alvin Weinberg all realized that Jevon's paradox need not apply if we chose to derive energy from breeder reactors.
As far back as 1943, Manhatten project scientists including Phil Morrison, Harrison Brown and Alvin Weinberg began to understand the energy implications of nuclear energy. Weinberg later wrote:
"Phil Morrison could hardly contain his excitement as he showed me his calculations. If uranium were burned in a breeder, the energy released through fission would exceed the amount of energy required to extract the residual 4 ppm of uranium from granitic rock."
http://nucleargreen.blogspot.com/2009/06/sustainable-energy-recovery-wit...
Later Weinberg came to see that thorium was an even more inviting resource. The crustal concentration of thorium averaged 12 ppm, three times that of uranium. Thus if uranium can be recovered with a favorable ERoEI, crustal thorium would yield an ERoEI that is three times better than. In a thorium breeder, such as the LFTR, one tone of thorium will yield the energy equivalent of 3 to 4 million tons of coal. My calculation indicates that the if all world energy output were derived from thorium, and every person on earth consumed energy at modern Western European levels, in one billion years, we would use about 15% of recoverable thorium. The sun will turn into a red giant, and snuff out all life on the earth, before we run out of recoverable thorium.
Weinberg's vision was huge in scope as he later explained:
"In this essay I speculated on the very long-range future-hundreds, even thousands, of years in the future. Where will our energy come from at that distant time when coal, oil, and natural gas have been used up? Solar energy is one obvious inexhaustible source. Another, if it works, could be controlled thermonuclear energy based on deuterium from the sea (thus "Burning the Sea"). My main point, however, was to stress what Phil Morrison and then Harrison Brown had already noticed: that the residual and all but infinite uranium and thorium in granite rocks could be burned with an energy yield larger than the energy required to mine and refine the ore—but only if breeders, which could burn nearly all the fertile material, are used. I spoke of "Burning the Rocks": the breeder, no less than controlled fusion, is an inexhaustible energy system. Up till then we had thought that breeders, burning 50% instead of 2% of the uranium, extended the energy derivable from fission "only" 25-fold. But, because the breeder uses its raw material so efficiently, one can afford to utilize much more expensive—that is, dilute—ores, and these are practically inexhaustible. The breeder indeed will allow humankind to "Burn the Rocks" to achieve inexhaustible energy!"
In his autobiography Weinberg confessed:
"I became obsessed with the Idea that humankind's whole future depended on the breeder. For Society generally to achieve and maintain a standard of living of today's developed countries, depends on the avaliability of relatively cheap, inexhaustible sources of energy."
http://nucleargreen.blogspot.com/2008/11/rosy-fingered-dawn-of-second-nu...
Clearly then Phillip Morrison, Harrison Brown, and Alvin Weinberg all realized that Jevon's paradox need not apply if we chose to derive energy from breeder reactors.
Hi Charles,
Just to say that there is at least one TOD regular who greatly appreciates your contributions -- indeed you've proposed just about the only 'deus ex machina' that might actually work. A pity you appear to have been getting the silent treatment over here. Keep it coming.
Pessimism is probably more about character than openness to the views of others. If you are a pessimist, you simply are not open to hope. I do not expect to convince the pessimists gather here like vultures preparing to pick bare the bones of what they believe to be a dying civilization. I am not going to spoil their fun.
Volumes have been writen on the concept of unfounded hope as a character flaw, whereas, in my case, any pessimism I harbor is the result of an ongoing honest assesment of real conditions and current trends. Any hopes I have are a result of the same process. This morning, my pessimism has a solid lead, though I insist on a good dose of hope to keep things balanced.
Volumes have been written about irrational pessimism. A lack of openess to realist home is called defeatism.
My take is that you didn't read my post very well.
Volumes have been written about irrational pessimism. A lack of openess to realist hope is called defeatism.
Most of those in America I suspect, LOL.
Allow me to ditto CO's appreciation.
TOD is so doomerish, comments like this are allowed to stand, while my rebuttal to this (which makes claims which are highly questionable even based on its own cited evidence) disappeared and is currently invisible. The illogic of the doomer case as set out in the first link implies that even wind and solar energy are undesirable as they allow humanity to be "greedy" for energy; the only reason they are not being demonized at the moment is that they are currently too small.
Allow me to say that I do not "remain silent" on the breeder reactor ideas that appear on TOD because I have anything against nuclear power or the whole breeder reactor technology, but simply because the math and science is VERY complex and I do not feel qualified in this area.
The world's biggest breeder reactor to produce commercial power was the "Superphenix" in France, but it is no longer in service after, and very seldom was able to produce anywhere near the amount of power predicted from it. It was also very expensive, possibly as much a 9 plus billion Euro, (now about 15 billion dollars U.S.), it can only be described as a major failure. It must be admitted that "eco-green" attacks (including rocket attack) was a real issue contributing to the failure of the program, beside the technical issues the project confronted.
The Americans have not had much greater success, this being the description given in Wiki of the Enrico Fermi Nuclear Generating Station unit 1, no longer in service:
"The world's first commercial LMFBR, and the only one yet built in the USA, was the 94MWe Unit 1 at Enrico Fermi Nuclear Generating Station. Designed in a joint effort between Dow Chemical and Detroit Edison as part of the Atomic Power Development Associates consortium, groundbreaking in Lagoona Beach, Michigan (near Monroe, Michigan) took place in 1956. The plant went into operation in 1963. It shut down on October 5, 1966 due to high temperatures caused by a loose piece of zirconium which was blocking the molten sodium coolant nozzles. Partial melting damage to six subassemblies within the core was eventually found. (This incident was the basis for a controversial book by investigative reporter John G. Fuller titled We Almost Lost Detroit.) The zirconium blockage was removed in April 1968, and the plant was ready to resume operation by May 1970, but a sodium coolant fire delayed its restart until July. It subsequently ran until August 1972 when its operating license renewal was denied."
Obviously the science is very challenging, and the cost of such reactors has been very high, so failure is expensive.
This does not mean that breeder reactors will not work, because the obviously will, but whether or not they can overcome operational issues and very violent opposition by radical environmentalists remains to be seen.
As easy as it seems to be to slander solar here on TOD, to this date both PV solar and concentrating mirror solar have been able to produce far more usable energy than breeder reactors ever have, and with far less environmental and cost issues. As we often say, only time will tell...
RC
94 MWe is quite small, as I'm sure you understand. Fermi II is 1122 MWe.
Among the issues of Superphenix is the choice of oxide fuels. This requires very complicated chemistry for reprocessing. Fermi I used metal fuel, but the molten-salt electrolysis (pyroprocessing) scheme would not be developed until around the time of the IFR effort. The IFR would have been quite different from both the Superphenix and Fermi I, including doing all the fuel reprocessing on-site in the reactor hot cell.
I have to wonder what radical opponents could do to a real IFR-type reactor. The power density of a metal-fuel FBR can be huge; the EBR-II developed 65 megawatts thermal from a volume not much bigger than a football. High power density means a small reactor. The lack of pressurized coolants means a containment not much bigger than the reactor itself, which you can literally put in a hole and pile dirt over. How do you attack something that's sitting under 30 feet of dirt? You'd have to use lawyers and sit-ins; rocket-propelled grenades would be useless.
I don't think the rocket attack itself did any real damage from all I have been able to read, but the violence of the eco-green movement against nuclear was growing across France at the time, and seemed to be growing ever more militant. The issue was whether the site would have to endure increasingly bad press and ever growing security costs over its lifetime.
It seems curious to me that France has been able since those days to carry on with a rather sizable nuclear program using the old fashioned fission reactors, so maybe conditions would be ready to try the breeder or fast breeder reactors again, but the expense of such a project would mean that failure could not be an option, especially in the current economic climate. I frankly just don't know enough about the economics to make a judgement on that...the reactors seem to require a lot of raw materials, a lot of concrete, safety systems, and almost certainly security costs...how long would it take for a reactor of this type to pay for itself in delivered power? I have no idea, and reliable numbers are hard to come by.
RC
Hard to figure where to jump in here. Supposing the breeders work out OK, we are coming up on other limits to growth. Sure it might be possible to mine granite for its trace content of U, Th and perhaps minor apatite minerals for phosphorous, which we are also going to run out of soon. What about the fresh water scarcity? Desalinate seawater and recycle all waste water, I suppose. Meanwhile, the clock's ticking on the cheap fossil fuel that needs to be available for construction, capital is drying up and societies based upon the old FF-fueled growth paradigm are teetering. Longer term, the climate's changing. It may already be too late for the oceans, at least the ones that used to have fish in them. I think we missed these opportunities for nuclear power a few decades back, about when our last serious president, Carter (a nuclear engineer, BTW) was replaced by Reagan (ex-movie actor) in the US and everyone in it went around sleepwalking, and we became global bullies lead by a few greedy bankers with their economist witch doctors.
In sum, WE are the problem, both in numbers and in impacting lifestyles. THOSE are the problems to address, not its myriad symptoms. The rest is technotriumphalism, a great word that I should probably learn how to spell.
D3PO, since thorium deposits often appear in combinations with phosphorous and rare earths, the favorable ERoEI for thorium mining at even crustal levels will mean that the recovery of phosphorous and rare earths will be possible from very low grade ore. In addition, large scale desalinization using rejected heat and electricity from LFTRs, will produce large amounts of concentrated brine, from which minerals can be extracted. Thirdly, the stable fusion products from breeder reactors would be a further source of a number of rare minerals. The thorium economy will bring with it many of the supposably rare resources. This is of course very bad news, for the Oil Drum pessimists.
RC, I support a very different breeder technology, the LFTR. The LFTR would have many attractive features, and in addition it has the potential of dramatically lowering nuclear costs. It would be a very simple, easy to construct reactor, that could be started with plutonium for nuclear waste. It can be built underground. The LFTR fuel cycle is based on thorium which is 3 to 4 times more abundant than uranium in the earths crust.
'TOD is so doomerish' - I suppose that's true. It's because energy is not the only issue. If we did solve the energy problem by whatever technlogies, the impact on our soils and water, the biosphere, would continue to get worse. We might be able to beat Jevon's law, but how do we beat Malthus's law without extra planets?
I wonder why it is that he didn't call this his "Theory of Futility" :-).
He tells us that he is going to tell us a way around these issues. It does sound like a challenge, though.
Yes, it is not news to us.
Perhaps he can get a book out of it though, so good luck to the man.
I am only drinking the cool aid if dancing girls are involved.
...so the paradox is that "when improvements in technology make it possible to use a fuel more efficiently, the consumption of fuel tends to go up", as profits drive proliferation; while the Law bundles in the downside of this - that fuel costs over-ride efficiency at some point, and lack of profit drives down consumption?
daxr - Yes that's pretty well spot on how it works.
What we are now seeing is oil becoming much more expensive because much greater Utility (work of real economic value) must be expended to maintain supply from a depleting resource, causing more and more enterprises to be unable to make a profit from that oil, leading to a demand led decline.
This is basically Jevons Paradox operating in reverse of how we conventionally understand it.
LOrf
Glad you brought in the term utility.
Became part of main-stream thought 2nd half of 19thC after death of original thinker Jeremy Bentham
(Still to be seen in his glasscase in the foyer of University College, London; see picture here http://www.utilitarianism.com/bentham.htm )
Bentham's theory concerned inter alia a method of choosing actions (including societal priorities) according to promotion or otherwise of 'happiness'.
I guess that Jevons would understand the implications in the longer term of promoting a coal-based utility that subsequently was going to prove unsustainable. I can well remember in UK the realisation around 1957, after the fragile recovery from vast WWII debt, that we could not be a competitive economy on coal. And that was when we were still producing vast coal (and training Hungarian refugees to work in our pits) at around 225 million tons per year, down only somewhat from peak around 1913 of ~270-290 mt/y (pdf file) http://www.parliament.uk/commons/lib/research/rp99/rp99-111.pdf We now produce less than 20 mt/y (and that includes surface mining not technically feasible in the past, that also has a limited sustainability.)
The answer in 1957 seemed obvious - nuclear. That proved not to be the case and we went down the oil and NG route, as did everybody else with perhaps the exception of expansions of French nuclear and the Danish use of imported coal for combined heat and power (CHP) and District Heating. Our UK reprieve seems to be close to an end.
How do you know that? There were a great many failed approaches to steam power (starting with classical Greece), and the UK's efforts to develop a suitable technology appear to have fallen prey to political forces (as France's did not).
Just because politics killed one effort or even several, does not mean that there is no potential. The USA's efforts were also killed by politics (the Molten Salt Reactor and Integral Fast Reactor) but there is enough experience to show that there are no technical barriers. The UK has about 170,000 tons of uranium and equivalent in inventory. Burned in IFRs at 0.8 tons/GW-yr, this would produce about 210,000 GW-yr of energy.
It's very hard to compare this against actual UK energy consumption because the UK energy ministry obfuscates its data by publishing all figures in tons of oil equivalent, but the USA only consumes about 450 GW of electricity average so the UK, with less than 1/4 the population, could be set for a millennium with just what it's got.
EP
For example, when I was at school we read the brand new New Scientist magazine. One of the earliest editorials said just that; vis nuclear, circa 1957, we could no longer expect to be competitive running on coal, and that nuclear was the only salvation. In 1965, however, I spent a birthday with tunnelers building what was for those days a large (1GW) oil-fired power station next to a major oil docking point for super-tankers from the ME. I was also offered a job around that time checking oil pipelines being constructed in the Libyan desert, (but went back to college). During the 1970s the UK turned off the oil-burning power station I had worked on and into the 1980s we were still building a few (it turned out slightly idiosyncratic, if very safe) nuclear power stations, and the UK nuclear power authority, (lobby), were still telling us a load of rubbish about fast-breeders economics and serving us dodgy data on nuclear economics in general. (Thatcher's attempt to privatize nuclear revealed the figures, and Fast Breeder was closed forthwith. I received an entertaining personal account of the technical meeting when the data was called to account.) The French were the only ones (?) who not only grasped the strategic problems of oil for power generation but rolled out their huge, modular, government guaranteed nuclear scheme.
The prospect of North Sea oil (and huge NG assets) did not really begin to emerge until the mid-70s. The infrastructure costs were enormous and the technical work (was it most of it?) was done by US companies. However, from late 80s, NG was obvious and very cost-effective for both power generation, especially load-following, and domestic heating.
I have little idea how nuclear (and UK off-shore wind) will scale over the next 2 or 3 decades. It seems to me to be a moot point whether our economy will bear the up-front costs of either or both, and remain competitive.
Phil
I don't know what NS was like then, but today it is like the American magazine Popular Science: little rigor with a great deal of gosh-wow tittillation (quite literally, in the case of an article which used an under-dressed prostitute as a marginally relevant illustration; American mags could not get away with this).
And the UK is headed for a power crisis due, in no small part, to a lack of attention to nuclear power. As Dr. Chu wrote in this discussion, the world appears to be bankrupting itself trying to prove that it doesn't need nuclear.
The USA's electric production from oil followed a similar curve. It climbed rapidly post-war, with a first peak in 1973 and a final peak in 1978. After the second oil-price shock it went on a steep decline, and I suspect that the only reason it's as high as it is today is because of the inclusion of petroleum coke in the totals. It was largely supplanted by nuclear.
There are quite a few wrong ways to build fast breeders—an infinity of ways, actually. Fast breeders don't make sense if uranium is cheap and disposal of Pu, Am and Cm is free. But that was then. Now people are talking about uranium shortages, the disposal of nuclear waste is a much bigger issue, and the radical reduction in both fuel requirements and waste volume/half life plus the ability to destroy the wastes of previous generations of nuclear plants (as fuel!) merits a renewal of effort.
The real irony is that if Hazel O'Leary had not succeeded in killing the Integral Fast Reactor in 1994, we would not be having this discussion. The technology would either be proven and heading into production, or we wouldn't be talking about it. From all the info I have, the IFR is as much of an advance on LWRs as Watt's externally-condensing steam engine is over Newcomen's.
Black and viscous, bound to cure blue lethargy
Sugarplum petroleum for energy
Tightrope balanced payments need a small reprieve, oh please believe
We want to be, in North Sea, in North Sea oil.
That worked for about 30 years. On the other hand, the UK already has hundreds of years of uranium in stock, and thorium is not exactly in short supply. What's the way to bet?
I note that we do have energy supplies which are in the position oil was in at the turn of the 20th century: wind and nuclear, to name two. It will be hard for e.g. air transport to convert to electric power, but the application of Jevons' paradox to sectors with both petroleum-powered and electric-powered segments will drive users away from the former toward the latter. There may even be conversions.
The assumption (continually and thoughtlessly stated as gospel here at TOD) that EROI for energy production is declining over time is obviously total nonsense.
The 'lifting' cost of world oil in 2007 is 50%lower than it was back in 1980. Even the 'finding' cost is still at 1980 levels. What is clear is that both these costs are tied to the price of oil and that is determined by the underlying supply situation.
http://www.eia.doe.gov/neic/infosheets/crudeproduction.html
Technology is continually increasing the efficiency of energy extraction ahead of declining ore concentrations. Even oil sands is profitable if the oil price is high enough.
EROI is junk science.
Depletion is the problem.
You can't get any useful or proper perspective on EROI by looking at costs in currency. You need to look at the energy inputs vs the energy extracted. Then its not "obviously total nonsense" anymore.
Majorian may well right, the EROI on oil lifting etc may be as low as it was in the 80's etc etc.
Energy
Return
On
Investment
BUT
Energy
Return
On
ENERGY
Invested
That's another kettle of fish.
don't bother arguing with someone who can't even get their acronyms right. Or who deliberately slides in a red herring.
It is well understood by regular readers of TOD that EROI and EROEI are the same thing.
Majorian is right that EROEI/EROI is junk science as I have complained many times. It does have some validity though if the forms of energy input and the energy output are the same so things that are different are not being compared. This is true in the case of oil where oil is the main input and also the main output and was also true in the case of coal powered coal mines back in the day.
But in these cases simpler financial analysis should give the same result as EROEI/EROI so all the pseudosophisticated complications of EROEI/EROI are redundant.
In the case of oil as it was in the case of coal the problem can be subsumed in the simple statement: It costs more to get the oil/coal to the surface than the market is willing to pay for it. Forget EROEI/EROI.
EROEI/EROI chief use has been to denigrate efforts to find substitutes for oil by fallaciously comparing things that are different and not recognizing that other characteristics of other energy forms are important such as renewability, utility and price.
That is why EROEI/EROI is junk science and should be dumped in the energy analysis trash can. But don't hold your breath. EROEI/EROI and also Net Energy have devoted followers who care little for logic or common sense.
If you don't like EROI, a similar argument can be made in monetary terms. People's incomes are fairly fixed. If the price of oil goes up, and people find it essential for food and transportation, they have to cut back on something else (discretionary spending, debt repayments, or savings). The result is a recession and debt defaults like today.
If somebody doesn't get it after Gail posted this chart about the tenth time they are just dense.
The industrial society we have created since the early days of the industrial revolution would not be possible if there had not been a parallel revolution in agriculture, freeing up the people , enabling them to leave the farms.
The return on investment in HUMAN ENERGY in agriculture has been increasing ever since.If something happens such that eighty or ninety percent of us have to return to farming by hand to produce a surplus to feed the other ten or twenty percent of us, thereby lowering the EROEI (human ) but a factor of forty or so , and there is no longer a supply of people to operate the welfare state, the military industrial complex, or Madison Avenue , then perhaps even the blind will see the concept illustrated clearly in terms of human eroei.
It cannot be otherwise for fossil fuels and other natural non renewable resources although decreasing EROEI might very well be masked for a while by increasing efficiency and changing lifestyles.
Suppose eighty percent -or even twenty percent-of the population has to go to work in the energy field?Is anybody here unable to understand that bau is then kaput?
As the percentage of energy CONSUMED out of the TOTAL energy PRODUCED in the production process INCREASES, the NET amount of energy available for ALL OTHER purposes, from keeping the lights burning on Broadway to keeping your beer cold, DECREASES.
Perhaps it is possible to keep increasing the total energy production for a few more years or decades in the face of ever poorer quality resources in the ground.
If so the actual results will parallel the results of Westexas's ELM oil model-except we customers(the rest of the economy minus the energy production industry) are all going to be , effectively, importers, from the industry , which will consume an ever larger share of its own output in maintaining ITSELF.
Now I think it is possible and even probable that we may have an escape bolthole in nuclear.Whether there is sufficient time and will time to make use of it is another question.
I can't make up my mind as to whether it is possible to maintain anything like bau on renewables-but techno miracles are not unheard of and there might be game changing break throughs.
'They' call it 'doomer rants'.
I call theirs 'denialist trash'.
Its very obvious to a farmer type at harvest time. Did my 'costs' eat up my harvest? Or more easier said and as they state it "input vs output"...Input costs versus what I get for the crop.
Nothing on Gods green earth could be simpler and in fact so simple that us dirt clod, rednecked , flyover trash can see it in action.
Those who lived in gilded cages seem to get free birdseed but even that has a cost. Result= dead bird.
And as for me, and possibly others,,,EROEI is far clearer and cleaner than mucking it up with money and finance, as in EROI.
I seem to be recovering from the flu for now I can address arguements far better when before all I cared about was surviving this henious H1N1.
Airdale
If the price of oil goes up, and people find it essential for food and transportation, they have to cut back on something else (discretionary spending, debt repayments, or savings).
Actually, people in Europe pay close to $8 a gallon on gasoline and yet they pay at least one order of magnitude more on rent and health insurance than on gasoline.
Considering the much lower gasoline prices in the US, Americans must therefore get extremely cheap health insurance, breathtakingly cheap rent and of course free college education...
... or more d-e-b-t.
Yes indeed... there's no cheaper health insurance than no health insurance, and last time I checked, being homeless was free, too. Isn't massive income inequity a beautiful thing?
Gail, there are some implied constants in the chart you post that I would have difficulty with (but hey, maybe I am just a difficult person!). So we assume that debt payments remain constant? Why?
We have seen a sizable decrease in debt payments in the recent crisis as people reduce debt and or are basically defaulted out of debt (the less desirable option obviously). It is interesting that so much of the pie is given over to "everything else" (?). I guess that would be what the late George Carlin called "stuff". The question becomes how much of that "stuff" was in anyway useful or helpful to a better quality of life, but I would feel elitist picking on other peoples "stuff".
Now let us return to the "Food and gasoline" category. Are we making the assumption that as gasoline costs go up, people cannot reduce the amount of gasoline they consume? I reduced my gasoline consumption from a year and a half ago over 80% by simply relocating (I now find myself having to drive a bit just to keep the battery in my car charged!). Frankly, I have not bothered with shopping for a more efficient car because I now consume so little that it would not make financial sense, but if the price of gasoline goes higher I can change vehicles and my gasoline consumption would be almost marginal (already my cable and cell phone bill far exceed my gasoline cost, and if I take my heating/cooling costs in, the cost of information still costs me more than the cost of energy!)
I guess what I am trying to say I have said here before: The cost of wasted energy is so high in the U.S. that it almost becomes our friend when energy costs go up...we can cut out a huge amount of fat without any reduction in muscle. And reduction of debt payment is only a good thing no matter how you look at things.
RC
All of the categories probably change somewhat. Food and energy is adjusted somewhat by eating at home more, buying store brands, and staying closer to home on vacations. Debt repayment is often adjusted by defaults. Discretionary payments are reduced. Some people might even have savings that can be adjusted, but they were often negative before for many in the US.
Common sense would be to factor in the injection of credit as an artificial "energy" stimulus. I think this makes the concept of EROI valid and you guys ignore this. I agree with Gail, that when you factor in all inputs including inputs from (fiat) currencies you get a better sense of where we are and where we are headed. I'm not devoted to EROI/EROEI as such when they stand on their own. We will see how things play out as investment continues to dry up.
...or you could say that EROEI is the fundamental figure, if you want to look only at the utility of an energy based on an energy input/output equation. If you want to make EROI all about monetary costs then, it still bases from EROEI but factors in all manner of changeable subsidies, market conditions, currency fluctuations, etc, to get numbers that may well lead you astray in the long run. Its less useful that way.
What is even worse is the mixing of terms - energy inputs on one end, monetary values on the other, or some selective variety thereof. At which point you can confuse things so as to make about any argument you want seem plausible to the incurious reader.
Which is the way the real world works and why most people are "baffled by the bullshit". TOD is testament to how complex this really is.
X posted:
This is not my understanding. I submit that there is a very subtil yet important difference. EROEI example would be that it takes 10 btu of energy to produce a 20 btu energy return. EROI is much more fleeting: It took me three hours to drive to a meeting to get somebody to invest 10 btu of energy to return 20 btus, and he had to borrow 6 of those btus from someone else, and then that energy had to be transported to the sight where the energy is to be produced, so we had to build a road or boat to get it there. We also had to pay a middle man to sell the resulting energy, then transport that energy to the buyer, except there are bandits along the route so we had to hire protection to make sure that our energy reached the destination, but we haven't made a profit yet so we have to borrow money (that was made using someone else's energy) to pay for the transport costs and the protection...............At some point it will take 30 btus to produce 20, but we don't see that. We borrow from the collective capital pool and inject credit energy into the system that will be paid back at some future date, so we can keep the cost of our "net" 20 btus down and the buyers can afford to keep using the cheap energy which really isn't cheap, they just think it is, so all is good.
Of course, if everyone understood the full cost of producing the above energy then I might agree that they are the same thing.
This is why I always use EROEI instead of EROI, because the former is less prone to misinterpretation. I think you have more or less proven that allowing any confusion with the idea of "return on investment" (e.g. with the financial concept or any other) is prone to ridiculous misinterpretation and confusion, so it's best to insert that extra 'E' in there to nip that in the bud. Still, I have to say that this is the first discussion I can remember on TOD where people were interpreting EROI as so wildly different from EROEI.
Perhaps there needs to be a new term such as EROTICA (energy returned on total integrated & combined assets), a mating of the two concepts if you will.
LOL
Maybe "energy returned on total invested combined assets" works better. My point is that it would be nice to know what the real world total cost of various forms of energy is. Tall order, huh?
Sign me up Ghung...you are my new hero.
Your top of my list, Rock. But isn't erotica illegal in Tejas?
+10
LOL! I think I'd like to start a company called "Solar EROTICA". We can keep your integrated assests fully charged while you have more fun in the sun. Returns on investment go straight to your battery bank. Guaranteed to keep the juice flowing and your circuits glowing.
I like it F. We may have a future after all! We could do the TOD Comedy Hour, PO with a sense of humor. Maybe FSTV would pick it up. God knows they need some kind of comic relief. We could sell this. Stranger things have happened, like "Life With Ed".
Worthy of 'over and out' himself ?- )
Why not just quit using acronyms and talk about NET ENERGY. In certain situations we accept net energy of less than 1 such as the generation of electricity where the net energy is 0.3 at best. But overall we need a substantial amount of net energy (>10) for a healthy economy.
(Sigh..)
Sadly your post proves that the definition of 'net energy' is not more obvious to the lay person than EROEI. I would generally not apply the term 'net energy' to electricity production, but if I did (for, say coal fired generation) I would calculate it as -0.7, not +0.3, because it is an energy losing process.
Hence, my preference for ERoEI, where the 'o' stands for 'over' (and thus the 'return' is the gross, not the net). Least linguistic confusion possible, among the options discussed so far. One option not yet discussed is to use ERR (Energy Return Ratio), as some have suggested, to mean the same thing, and get the word "investement" completely out of the discussion.
Then you are likely new to TOD for it was discussed at very great lengths back when it first surfaced.
I do not recognize your ID as being of ye oldense dayse.
Airdale
They care little for faulty logic (such as yours) and do care for common sense, which, unfortunately, isn't common. What they really do care about is science. Learn some and then tell us how 'junk' science EROI/EROEI is.
Hear him!Hear him!
Airdale
I think we misunderstand what he was trying to say (because he didn't clarify his thoughts). His claim is that EROEI is a function of technology, as well as geology. So if technology improves, then an ore which was evaluated as having too high an EROEI at time zero, might be extractrable with newer better technology with better EROEI. Thats where his concept of a race between the need to utilize lower quality ores and technology comes in. Frankly I think any victories in that race will be short lived, but we can't rule it out a priori.
My other problem with the constant evoking of EROEI, is that if something like oil, which we currently utilize as primary energy became a specialty fuel, then we could still extract it for specialty uses (using non oil derived energy for the extraction). For instance five hunded years from now a rich owner of an antique automobile might be willing to purchase fuel that was produced at an EROEI of less than one.
George
EROI/EROEI is that the same as EIOI. The mind boggles.
Interesting theory: ERoEI/EROI is nonsense. Why not... But there is one scenario that you should explain:
I am an energy producer (this is a nonsense word, but we know what I mean). I produce all kind of energies from all kind of energies. I am very big so I just mix them all. So I have to pay a price to someone for his energy and than I will ask for a price for my energy, say on a energy market place.
Now please answer me: Which price do I have to ask for at the market for my energy the day I need 1,1 kWh to produce 1,0 kWh?
Thank you,
-Snomm
I haven't got clue but I'd suggest talking to the guys who managed to raise a few million euros to finance Steorn's venture. I'd say it would be right up their alley. They already know how to sell that one ;-)
We expect the apologists for the religion of corn ethanol to say this, because their dogma collapses otherwise. It's like creationists vs. geologists. Meanwhile, even biologists evaluate animal food-seeking behavior based on the number of calories found vs. calories expended in the effort: EROEI.
That's only because animals don't have bank accounts, stock exchanges and credit default swaps.
MCOEI = 0
You are wasting your energy if you are trying to change X's mind. I imagine he puts himself to sleep at night repeating his mantra.
Make him understand, when his paycheck depends on him NOT understanding? I'm not that idealistic.
On the other hand, directing ridicule at the ridiculous is a great way to keep the uninitiated from taking his claims at face value. My snark isn't for him, it's for them.
Engineer-Poet, actually, it is the biological example that convinced me and I think it is a very useful one in educating newcomers and non technical people...I had never thought of until a naturalist on PBS was explaining the amount of energy a Cheetah needs to make those beautiful short bursts of speed...and if said cat does it too many times without bringing back food the animal starves, pure and simple.
I have often debated the way in which EROEI is calculated by many (for example, externalizing the cost of disposing of carbon and pollution with carbon based fuels), but never dismiss its extreme importance.
RC
LEARN the laws of thermodynamics
http://en.wikipedia.org/wiki/Laws_of_thermodynamics
Matt, don't waste your time, to him the laws of thermodynamics are a fallacy of ambiguity or as he likes to say, a reification.
Its not just the lifting energy, its also the energy to make it useful. The poorer the oil quality the more energy to transform it into gasoline and diesel. Also we are now using tar sands which have a high ERoEI. It is the ERoEI of all the energy needed to run our society that matters. If we have to use tar sands to get all we need the total ERoEI is down. Same with deep drilling in the Gulf. The true ERoEI also includes exploration for more oil to replace what we are drilling.
I've attempted several times in previous postings to point out that using the abbreviation "EROI" tends to confuse the reader who isn't a regular around here. "EROI" is too easily associated with the widely used term ROI, which is based on currency values, such as dollar costs, not the energy required to accomplish the task. Using EROEI leads to the more precise term, Energy Return on ENERGY Invested, as mentioned.
The original term was widely used by various investigators in the aftermath of the oil crisis decade of the 1970's. Why is it that TPTB around TOD insist on adding to the confusion? This latest round of posts just demonstrates the problem. Why not agree to use "EROEI" to prevent further confusion from now on? Inquiring minds want to know...
E. Swanson
Agreed! I just made the same point upthread.
Unfortunately there's a lot of disagreement on definitions, and you're in no position to declare what's what for the rest of us.
To a lot of people EROI and EROEI are the same thing. But there are different practices regarding EROEI. (It's not even clear if the 'O' stands for "on" or "over".) Some people regard the return as the gross energy returned and some people regard it as the net.
Probably the only way to solve this problem is to ask people to clarify which definition(s) they are using at the start of a discussion. Making assumptions and declarations (which, no offense, is what you did here) isn't helpful.
That's a matter of debate, and I dare say you have some catching up to do. The problem with "looking at the energy inputs vs the energy extracted" is how you draw the boundaries on energy inputs (not to mention actually measuring the inputs). Do you have to count the food eaten by the employees of an oil company doing extraction? Do you have to count the energy inputs that went into making that food? What proportion of those energy inputs are necessary for the extraction work, and where do you stop?
The "price-as-proxy" idea for measuring EROI is an attempt to make an end run around those problematic questions by assuming that monetary prices somehow account for that "long tail" of inputs. It's not clear that it's a useful way to look at EROEI/EROI, but it's equally unclear that any other method can properly account for the entire lineage of energy inputs that go into extracting a resource.
Jeff Vail among others has discussed these issues seriously at length on this site and on his blog.
The place where EROEI helps is when someone comes along and says something like "oil from shale will be economically viable when oil exceeds $XXX/bbl". The problem is that they have priced all of their energy inputs at today's prices, and if the price of oil goes up, many other forms of energy will also go up as people try and make substitutions. This in part is why you have the receding horizons - the price of economic viability keeps increasing and is always out of reach.
If you count the energy inputs in BTU, then it becomes clearer what the net result is for a given process.
Not picking one side or the other in the debate but a simple question: if one could magically produce a EROI/EROEI what might one use that number for? I suppose the answer would depend on the project involved. I can only comment on two types of projects: exploring for oil/NG and producing oil/NG. The industry never has, nor ever will IMHO, utilize such parameters in determining a course of action. Its $'s in vs. $'s out (at least the anticipation of those $'s). But that's not to say that on some level EROI/EROEI don't relate back to the economics. As jag correctly asks: how do you calculate the embedded energy. More importantly, does doing so change anything. I know many drilling contractors that are charging so much less for their services that they'll never recover the investment on new rig build outs. More wells will get drilled because such costs are down. How do you factor that into the calculation. OTOH, not every well drilled produces. Do you use that energy expenditure for dry holes in the calc? And if you do what about the embedded costs again? Perhaps in the aggregate but how does that effect the decision to drill the next well?
As far as the amount of physical fuel used to drill a well it represents a very small percentage of the total well costs...typically less than 10%. Fuel cost could triple and it would have little bearing on what gets drilled. But as material/rig costs fall fuel typically becomes a higher percentage. Fuel used to produce even a marginal well is a very small factor. A well making one bbl of oil/day can still make a profit at $40/bbl even when it has to be pumped. It seems part of the debate is at what point will EROI/EROEI be so low that any meaningful number of wells will be drilled. I have no idea nor would I spend any time trying to figure it out. Wells will get drilled because of the anticipated revenue will be adequate to justify the cost to drill it. And that will depend on the drilling costs and the oil/NG prices at that time. But that's a moving target also. Right now we're producing NG from shale gas wells that will never recover the initial investment due to the high initial costs and current low prices. These projects made sense when many thought the NG would be selling for more than $10/mcf and not less than $5/mcf. So these well have a negative ROR but they are still producing and adding to our supply. And wells that I drilled when NG was $3/mcf and made sense economically are looking really good at $5/mcf. But EROI/EROEI (whatever it is) hasn't changed in any of these examples. But the monetary values certainly have. And I've even completed wells that I knew would never pay back the total investment: Cost to drill to find out how much oil/NG is there = $6 million. But only found $4 million worth of oil/NG. But it only cost $1 million to complete it. So the well loses $2 million but we make a 4 to 1 return on our completion decision. This is not that rare a situation. How do you unscramble that egg in the world of EROI/EROEI?
It would seem to me that EROI/EROEI should mean something in the big picture. But from a practical point of getting from Point A to Point B it's difficult to see its application
Rockman,
I largely agree with your analysis. It is for this reason that what we are really interested in is UROUI - Utility Returned On Utility Invested - how much work of real economic value is provided by a resourse compared with the work of real economic value needed to bring it to market.
EROEI is certainly a major factor in UROUI beacause the all the Utility involved requires energy to achieve. EROEI is notoriously difficult to ascertain and often largly irrelevant, whereas Utility is fairly accurately quantified in $, providing all the $ are counted - including subsidies, etc.
EROEI is irrelevant if we are talking about 2 different fuels with totally different Utility - eg. the EROEI of coal might be great, but you can't sell it for the price of gasoline because it doesn't provide the utility of gasoline.
The same applies to nuclear power - we could argue endlessly about its EROEI, but what is relevant is how much of our society's productive capability is consumed in building and maintaining the vast infrastructure required compared with the benefit it provides us.
Jevons Law can be restated as: The use of a resource rises and falls with its UROUI.
Lionel -- UROUI...interesting. I'll chew on the idea after my coffee kicks in. "Real economic value": be interesting to see how different viewpoints quantify this point. One of the walls I keep bumping into is that much of the discussion involves rather static conditions. But nothing last forever. We can model UROUI today but that just represents current conditions: right now we have adequate gasoline and NG stocks. Meaning no lines and no crippling costs. Thus the utility of adding more domestic oil/NG doesn't appear to great at this time. Better to same our reserves in the ground and use up the exporter's stash. But these conditions won't last. The utility of additional US oil/NG development today won't be realized until consumption rises/imports decrease. At that time faced with very high costs and potential shortages the value of previous efforts would be greater. Even if there were more capital flow into the oil patch today there wouldn't be a rush to drill based upon what demand might be a few years down the road. Oil patch economic analysis is very front loaded on short term expectations. Especially true for the public oils. Price declines at the end of '08 crippled many companies. That lesson is still very much on the minds of the companies and the capital sources.
This is where, IMHO, the US free market dynamics fail to address the country's longer term needs. We've tossed around various ideas as to modifying the tax code to allow more benefit from longer term goals but nothing really gelled out of that effort. My company is taking a longer term view but not as an effort to address future needs of the country. We're just being opportunistic and, fortunately, have the capital to do so. The fact that our efforts will add oil/NG assets to the economy when they might most be needed is coincidental.
Lionel/Rockman, you had better be careful what you say - if we start talking about "real economic value" then much of the "work" and subsidies of our governments are shown up as useless. Are you then a friend or an enemy of the State?
But agreed that Utility is where it's at, a positive EROEI is no good if the end energy is something you can't use or sell, or is less useful than the energy you started with. Usually subsidies (e.g. corn ethanol) are implemented to shift the Utility return to a different (almost always lower) level, i.e. to make people do things they would not otherwise do (as they are "uneconomic") for other reasons, normally political.
A good theoretical example of the difference might be a an isolated diamond mine in the high arctic, that happens to be next to some oilsands. They can set up a small oilsands mining and upgrading and refining operation. They burn 50% of the oil extracted to run the extraction and upgrading process, so definitely a low EROEI. But they need fuel to run their diamond mine, and their alternative is to truck fuel in across the sensitive arctic land, and bridgeless rivers, which they can only do it on the ice road for a six week season, and at great expense. Trucking it has a better EROEI, but costs much more (staff, equipment, having to bring in and store a whole year's supply, etc). making it on site consumes more energy, but less resources overall, as measured by $.
In the real oilsands, they use natural gas to run their process. In effect, they are using a non transport fuel (NG) to make a transport fuel. The EROEI is less than one, but we value oil much, much higher per GJ than gas. The EROEI doesn't change, the the utility of the process depends on the relative values of oil and NG. A few years ago, NG was close to the same value as oil per GJ, and the oilsands slowed production to a crawl. We see things like this sometimes with aluminiuim smelters, where they are better off to stop smelting, and re-sell their cheap electricity at high prices. An even better, (the best?) example is pumped hydro electric storage. You get about 85% efficiency on the way down, and about 80% on the way up, for a round trip efficiency of 68%. But if the peak hour power on the way down is worth x and the off peak power consumed to pump back up is worth 0.5x, your EROEI is 0.68, but your $ ROI is 0.68/0.5 for 1.36 - pretty good, and you get to do it every day. So society values the peak power more than off peak, and as long as you can pay off your capital, you are making money, and turning a less useful product into a more useful one. You are actually increasing utility even though you are losing energy.
But here is a different EROEI question. There is a new oilsands extraction process, where they inject air into the ground and "burn" some of the bitumen, which heats up, and partly hydrocracks, the unburnt bitumen around it, which can then be extracted with minimal mechanical energy. So we are putting some air in (which does use some energy, but less than conventional steam extraction), and getting hot, partly upgraded oil out.
We definitely have an EROEI of less than one, as we are burning some of that oil. Assuming we extract the same oil per cubic metre as we could get with state of the art steam extraction, this means the bitumen we are burning in situ is actually the non-recoverable portion. So if we could never et it out, but can make us of it in situ, do we consider this "free" energy, and exclude it from the energy invested? if we do, the oil energy invested (for compressing air, pumping to the surface) is very small, the same as conventional oil extraction.
BUt we have made use of what was previously unusable, and this by definition, is an increase in "utility"
This would illustrate Jevon's paradox perfectly, as, if this process can be perfected (and they are working on it), we will increase the efficiency of use of the unrecoverable portion from zero to something. As the oilsands operators adopt this process, and the use of the previously unrecoverable oil will increase dramatically, as it is now very profitable to do so.
An interesting side note is that the combustion products (CO2) largely stay in the ground, so it is a self-sequestering process, and therefore there are minimal CO2 emissions. Note that the EROEI hasn't changed, though the sources of the energy investment have.
Quite a game changer, if they can get it right.
On the EROEI of oil sands:
Similar to the reasoning used in thermodynamics we need to draw system boundaries.
If you use only the external inputs like the mining energy, both direct and to produce the equipment, the upgrading energy and the natural gas, you get a decent EROEI, although a large CO2 footprint. This is the real world economic case.
The case where you consider the fuel value of the oil sands fraction consumed to run the process of mining/upgrading, etc. gives a lower EROEI, but the oil sands have no other value, ignoring the destruction of the environment.
Agree on the need for boundaries. I like to work in Exergy returned on Exergy invested, but since that is a rarely used (though very useful) term, I think the boundaries should be set such that we look at "useful energy" returned on "useful energy" invested (which is essentially the same as exergy). Wherever we can invest otherwise "useless" energy, such as low grade waste heat, or, in this case, non recoverable bitumen, then I think it should be excluded as an energy input.
The land area impacted by oilsands (and they certainly do have an impact) is less than the land area impacted by Los Angeles, or that impacted by coal mines, and much, much less than the area impacted by hydro dams, which is still less than the area of forest cleared for farming. Local destruction, to be sure, but about the same level as any other surface mining industry - just more publicised. Also, it is hardly a unique environment - there are vast swaths of essentially similar boreal forest area across northern Canada.
The in situ extraction processes (both steam and air combustion) will represent most future projects, as, like conventional oil, most of the easy stuff (surface mineable) has been done first.
And, like conventional oil, it is ultimately the $RO$I that determines their viability.
A few details:
That's a nice argument for using net energy instead of EROEI.
Suppose during the inner workings of some extraction process that K energy units of the resource get burned up, to yield a net N energy units of resource extracted. Maybe we bring in another X energy units from other sources to get the job done.
The net energy would be N-X.
The EROEI could be calculated as N/X or alternatively (N+K)/(X+K). Those K burned up units might be disappearing before we ever really see them. But still, we could say that we extract them and then turn right around and invest them. It's an arbitrary accounting convention. The bigger K is, that will push EROEI closer to 1.
You could always compute net energy as (N+K)-(X+K) if you like, but that just gives the same N-X. The change in the accounting convention cancels itself out when you compute net energy.
Net energy is a measure of the value of some extractable energy resource that is less sensitive to arbitrary accounting conventions.
JimK, that is a good explanation of net energy, and yes, in most cases it is better measure.
With oilsands, as EP says, we burn part of the resource, but if that part what not otherwise recoverable (or very expensive) to recover, then I would not count it as part of the resource. Not surprisingly, there has long been debate in Alberta about "total" and "recoverable" volumes from the oilsands. Total doesn't change, but the reCoverable fraction, the important part, improves with technology.
One scenario of oilsands production has it that when they get to 4-5mbpd (currently just under 2), they they will consume all of Alberta's (sizeable) natural gas production.
The THAI (Toe to Heel Air Injection) seems like an elegant solution to me as you ultimately get more output energy from the oilsands, by using part of the unrecoverable fraction, without using more NG. As always the market $ of oil and NG will determine whether this process is worth doing, but using THAI removes any influence of NG prices or availability on oilsands production.
E-P, note the correction re sequestration, and absolutely agree about your comment regarding corn ethanol. It seems they break every rule of logical accounting to justify themselves. Ultimately, the only thing that can justify them is if they can do it without subsidies, or even mandates, and the current example of the biodiesel industry suggests what will happen then - for me, that day can't come soon enough.
I believe the convention with oil is to count all of the oil originally in place (OOIP) as "resource". The various fractions recoverable with current technology, at the current price, etc. are categories of reserves, not resources. Reserves < resources.
THAI creates a partially-upgraded syncrude without any above-ground input of fuel (beyond what's needed to drill the wells and start the flame front). This is a game-changer, and I suspect that NG prices will make it very attractive relative to sand mining or SAGD.
Depletion is *a* problem. Depletion is a problem which EROeI exacerbates through its impact on net energy.
Energy Return on Financial Investment is also important, but for different reasons.
OK, I'm open to another viewpoint.
If EROEI is continually increasing, why is the capital cost ($ per barrel produced) increasing? Declining EROEI provides an obvious partial explanation for this phenomenon. What's your explanation? Why does the 'real' cause overwhelm the effect of increasing EROEI?
You mention depletion as the problem. Do you mean "the annual amount extracted as a fraction of the original reserves, expressed as a percentage" - the usual meaning of depletion? Why is that a problem?
Open-minded, eh?
Check out the chart below.
Notice 'lifting' costs fell between 1981 and 2005 but 'finding' costs are now higher in constant dollars. Between 2002 and 2007 costs of both are rising with the price of oil but finding is increasing much more.
That means that oil is harder to find and the price rises as a result. Between 1980 and 2000, people were living off the North Sea, Alaska oil giants (as well as KSA), which are now depleted.
Depletion means living off past reserves is ending. Nobody can find much more despite great improvement in exploration technology.
The new (unconventional) oil is a different animal. We can create syncrude from tar sands at about $30 a barrel
in production costs--some people can't afford oil at that price.
Technology lowers production costs and therefore raises EROI--do you really think that technology makes energy extraction MORE wasteful of BTUs?
There was just a study posted at TOD that said reorganizing refinery units could save energy.
One problem with EROI is that it assumes a BTU = a BTU = a BTU, which is totally wrong. My car can only run on gasoline with a bit of ethanol thrown in. It's very expensive to turn a BTU of coal into a BTU of gasoline.
I don't buy the meme that 'it's the size of the tap, not the tank'. Nobody would put a 4" tap on a 30 gallon tank--the tank size matters too.
EROI computations do not assume a BTU = a BTU of different form. I don't know where this comes from. It is true that as a first approximation (to get a picture and see a trend) we can ignore fuel types, electricity, etc. as quality issues. But a deeper analysis takes conversions from one form into another into account (e.g. the newer analyses of corn ethanol). Those energy costs are factored into the EROI calculation to arrive at an apples to apples comparison. Unfortunately, for very complex energy capture and conversion systems dependent on a complex industrial process getting those additional data is quite hard.
But here is the situation, attributed to Charlie Hall, if the first pass shows bad, how is it going to get better on more passes that include more subtle energy conversions? It's the trend that matters.
Question Everything
George
I think your running into problems there with that sort of thinking
EROEI and all that is a recipe for conflated boundary issues but technological improvements only increase net yield if the circumstances of the resource are static while technology changes
if the nature of the resource changes your yield per unit effort may drop despite new technology that allows you to exploit that resource
the term more wasteful is a unhelpful wording... weasel words if I'm uncharitable
I am very skeptical of the statement made in that post. With today's computer modeling of energy and material balances there are many engineers who routinely run process simulations on various configurations in order to optimize processes. Software like ASPEN is very sophisticated and takes all of the technical aspects of the process into consideration. If there are unused options that can save energy, then there is some drawback like capital, product mix, safety or pollution.
Your second sentence doesn't follow from the first, which just shows that many people who may be making stupid assumptions about EROI aren't actually doing scientific research. The same can be said about global warming, or evolution.
Or maybe it just shows that those that are doing the scientific research need to do a better job of explaining things to the little people. It's hard, I know.
I'm looking forward to part deux to find out how that solution is suggested. Right now our Govt. is most concerned with 1. political partisanship, 2. the interest of lobbyists (corp's), 3. politicians efforts to bring goodies to their States, and lastly, 4. an interest in making policies beneficial to 'The People'.
In the face of economic problems, the govt. will therefore spend time with each party blaming the other for political advantage. Then try to appease the lobbyists, because the politicians are eyeing those lobbying positions for themselves after retirement from public office. Then they will try to get some benefits for their respective states. And lastly they will use their remaining trickle energy and minute concern to tackle the bigger problems of 'The People'.
So we have to hope that we get a heavy dose of trickle to overcome 1-3, in favor of 4, to move this country in a new, more sustainable direction.
Perk Earl,
I agree that the US democracy is in a terrible state and don't doubt the validity of what you are saying. However, setting aside minor electoral fraud (remember Florida?), the people of the USA continue to get the government they vote for. This system continues because the majority continue to believe that the system, although flawed, is working for them. When it becomes blatantly obvious that it has failed them, we will see the political tumult of which I speak and major change - one way or another.
This post is spot on, except for the idea that we can actually do anything to prevent social collapse.
The oil futures market supports your theory. Oil is presently in sustained contango at a price most would consider high. High prices destroy demand. Meanwhile, producers are unwilling to lock-in production at this price. The high contango doesn’t predict short-term price, but clearly suggests lower production.
I must point out that your examples don’t hold water. All four nations (Germany, Russia, Argentina, Iceland) required massive external relationships. What we face today is the world economy collapsing.
I can’t imagine a political answer. President Carter touched upon the problem in his sweater speech. In the past, economic duress certainly causes political action, but in every case I can think of it has been to increase overshoot.
My response has been personal. I am striving to care for my family, my neighbors, and help boost my community. Everything else requires a miracle.
Actually, I can envision a political answer, but it is ugly and certain to fail. The U.S. could use the military option. We become the world’s policeman, and nudge shipments to North America while inspecting and protecting (harassing) economic activity between other regions. The U.S. economy would decline at a slightly slower rate than elsewhere. It couldn’t succeed, but that’s not the issue. Would the U.S. sheeple buy it? I think they might. Baaa….
Short of personal mitigation or regional suicide, I can’t envision what you’ll suggest that is new as far as a solution. Make sure you think of something not included in the Hirsch report.
One additional concern I’d like to mention. The general presumption is that efficiency will continue to increase post-Peak. This doesn’t make any sense to me. Efficiency should decrease as energy production declines because on the way down, technology (efficiency) becomes the dependent variable. Maybe this seems to be a paradox to others, but it fits right in with what Jevons was saying. Wrap your mind around it, and tell us what you think.
Cold Camel
I'm constantly bouncing around myself on this topic. If we could somehow smoothly transition from a growth economy to a steady state economy and "plan" a path to social simplification, then we could avoid social collapse.
The problem is that in the current political climate, this is impossible, and I do not see a path to achieve it other than a series of economic disasters which could cause the social collapse before we even get a chance to make the changes.
I get your point about post peak efficiency. Its a complicated issue to get your head around. I don't think it is an either/or issue. As society simplifies (or de-complexifies), it will change what technologies are needed and used. It will also change what "efficiencies" are emphasized.
"catastrophic collapse of our society could be our fate-- as it was for the Easter Islanders, the Mayans, and others."
Indeed, I'm sure you're familiar with Jared Diamond's excellent work "Collapse: How Societies Choose To Fail Or Succeed." It really is quite true, AL Gore-- Mr. Global Warming-- actually cast the tie-breaking vote in the Senate in 1994 as VP to make corn ethanol our primary energy direction. Since corn ethanol has a negative energy return, little did he know he was actually hastening peak oil and climate change.
That same year, 1994, team Clinton also cancelled the largest energy research project in the history of the world, the billion-dollar Integral Fast Reactor program:
http://www.sustainablenuclear.org/PADs/pad0509till.html
On the floor of the U.S. Senate, Bennett Johnston of Louisiana got Secretary of Energy Hazel O'Leary to admit that it would actually cost more money to cancel the project and decommission the prototype IFR, since the Japanese wanted to chip in $60 million to finish the project. I'm told Clinton is now embarrassed by his decision after reading Heinberg's "The Party's Over."
Even for a typical light water reactor, assuming centrifuge uranium enrichment, the EROEI is 57.6 to 1, and about 162 tons of fresh uranium are required per gigawatt-year. The IFR has an energy return of over 300 to 1, and would require just one ton of depleted uranium per year. Such an increase in efficiency would likely trump Jevons, for even if it led to a 20-fold increase in nuclear power-derived electricity consumption, less than an eighth the amount of nuclear fuel currently used would be needed. White believed that nuclear would replace the age of oil, as did Hubbert, and the failure of our past leaders to recognize this leaves us where we are today. The world is bankrupting itself trying to prove that it doesn't need nuclear power, but the Obama administration aims to change that.
Steven Chu? Yeah, right. Go away, fraud.
If you look into the background of the IFR project, and the text of the post, "fraud" is perfectly fitting. The IFR was the massively expensive finale of one of the biggest and most costly farces ever perpetrated...
"The Sun in a Bottle: The Strange History of Fusion and the Science of Wishful Thinking" by Seife is recommended reading for anyone who still thinks its a good idea.
Dr. Chu,
If you really are who you say you are, welcome.
While the odds of our new member being named Steven Chu are probably not more than a few thousand to one against, the odds against him being THE CHU, as the mathematicians say , approach infinity of course.
But I must admit that I read his post with great interest.
It is not impossible that two or three decades down the road during his retirement the REAL CHU might write something along these lines.
Or suppose he develops a taste for senatorial politics and like Winston Churchill is willing to tell the truth as he sees it to a country determined not to listen!Perhaps the odds against this are only fifty to one hundred to one against!
I have often wondered if technically savvy people with ample funds who are in the public spotlight do not have an aide ( provided perhaps with a specially customized computer program ) who keeps tabs of thier name popping up in the news and on the net.
The real Dr Chu may get a laugh out of this on his way between the office and his car as his aide fills him in on odd bits of relevant news.
Or maybe I read too many techno anti utopian novels in times gone by.
While expanding the nuclear option may go along way towards mitigating our looming energy situation, I would ask the real Dr. Chu about the bigger question of limits to growth. History seems to agree that more energy results in the accelerated depletion of all resources, regardless of the source of that energy. More energy = more people = more stuff.
Hi Ghung,
More energy = more people = more stuff was once the truth and nothing but the truth, and remains so to a large extent.
But in countries that actually manage to turn the corner to a reasonably well balanced industrialization and prosperity, birth rates invariably fall like a stone.Prosperity and industrialization necessarily imply education and at least a minimal welfare state, making couple comfortable with small families.
My opinion of our educational establishment is low but the next generation of teachers will have at least one course in the sciences and will have some inklings at least to pass along to thier students.It took a generation or two for the public to inderstand clean air and clean water-but now the average literate citizen has a sense of ownership in these resources and supports the clean air and clean water laws, excepting co2-which is not yet obvious to the average taxpayer-he doesn't have to pay for removing it (yet!) from the air the way he has to pay for removing pollutants from his drinking water.
I believe there is a significant possibility that if things don't get out of control and crash too fast that we could evolve into a higher quality of life, lower energy society.Eucation and experience in the school of hard knocks will keep the process moving along, albeit at an apparent glacial pace.
For instance the young people in Japan have turned away from the automobile, having few places to go where they need one anyway in places loke Tokyo, and are spending thier money on other things that use less energy but provide greater pleasure and utility.
Reading the comment, I'm inclined to think it most likely was him. Seemed to be a very well informed and well stated comment -beyond the capabilities of most trolls.
So, I do hope you stick around. TOD is a mixed bunch, but mostly energy enthusiasts. Personally I don't believe Obama can commit to nuclear in any sort of big way, the politics of his party just won't allow it.
There are lots of issues around nuclear power.
At a very high level - while the peak oil and global warming are big issues, there are lots of other environmental challenges. If we somehow enable industrial civilization and rapid population growth to continue for centuries rather than decades... well, that is probably impossible, but it does seem like "the bigger they are, the harder they fall" - we may not really want to enable ourselves to get too much taller!
One central problem with nuclear power is, what to do with the waste. It's probably not an unsolvable problem, but it really is complicated and expensive. It is so convenient and short-term profitable to sweep the problem under the carpet one way or another. As with so much of our current behavior, we are passing really hard problems on to our grandchildren and their grandchildren. It's a very fundamental ethical question: what are our responsibilities toward these people of the distant future?
Probably the core problem, though, with nuclear power is weapons proliferation. How can we somehow make sure that dangerous technology is available only to the "good" people and not to the "evil" people? If plutonium is can be refined from nuclear waste, then the most likely way that buried waste will resurface is by human beings digging the stuff up to create mayhem one way or another. If we can't feel safe with this technology in the hands of our enemies, then we will be sorely tempted to build up a powerful enough security apparatus, military and the rest, to keep control of the technology. Once the State Security Apparatus has that level of power, we will realize again too late, we have met the enemy and he is us.
We are stuck with tons of Plutonium already, and all the rest of nuclear technology. There is no turning back. But that doesn't mean we have to jam down the accelerator and try to out run our problems. Better to slow down and give the situation the care and attention that's truly called for.
Jim, these are the standard anti-nuclear canards.
#1. Waste: *Every* source of energy will produce waste during its life cycle. Even wind is not free of this when you consider the huge penalty in concrete, steel and other resources (all representing embedded energy) to collect, store and / or develop a grid with massive redudancies to handle the 70%-75% of the time when the resource isn't producing. Practically speaking, when looking at baseload generation options, the issue boils down to coal vs. nuclear. Coal, for 1GW-year of electrical energy: roughly 4+ MILLION TONS of raw material to be mined and shipped with attendant environmental destruction (using fossil enegy), 12 MILLION tons of CO2 and thousands of tons of nasties (SO2, particulates, mercury, etc.) released into the atmosphere, plus thousands of tons of ash representing concentrated heavy metals including radioisotopes (Uranium, Thorium included). Gen III Nuclear: 30 tons of spent fuel (a few cubic m in total), safely isolated from the environment. Gen IV designs (fast U IFR or thermal Th breeder): *1 ton of waste*.
Why is nuclear waste such a big deal, yet coal waste isn't when it is a bigger problem by ORDERS OF MAGNITUDE. What about the waste indeed! It is lunacy to harp of spent fuel that is tiny in volume, which will be fuel for next gen reactors at that, and ignore the fossil-carbon elephants in the room. Nuclear can scale to shut down coal and would have done so by now if the nuclear build in the 70s/80s didn't stop. Looking at the relative waste tallies, I think we better get on with it as quickly as possible.
#2. Proliferation: Plutonium contained in spent fuel, so-called reactor grade Pu, has an isotopic mix that renders it useless for bomb-making. There is no documented case of any agency attempting to build a bomb by mining spent fuel from power reactors. It just isn't done that way. Bomb material comes from enriching Uranium or by using "research" reactors tailored to the task of producing Pu-239 efficiently. This is a HYPOTHETICAL scenario not likely to ever happen, dreamed up for purposes of fearmongering. Besides, last time I checked, the USA already HAS nuclear weapons so U-Pu closed fuel cycles won't change that fact. Countries determined to get nuclear bombs will do so without power reactors, and stopping deployment of reactor technology that can produce 1GW-year of power on ONE TON of material for fear of this is NUTS.
I can use similar logic: it is possible for a terrorist to hijack a LNG tanker and drive it into NY harbour and blow up a good chunk of Manhattan. Therefore, LNG is a ripe terror target and all LNG should be banned. BTW, this scenario is a LOT more plausible than someone stealing spent fuel rods and processing them to pull out Pu that's no good for bombs anyway, and neglecting the fact that the spent fuel rods would be so hot that the would-be terrorist would be killed by extreme radiation exposure anyway.
I agree with you regarding coal vs. nuclear. I fear that we have no choice and will bow to both. Regarding nuclear waste: you failed to mention the potential for a dirty bomb or an intentional release. If an LNG tanker blows up and destroys Boston, we can start rebuiling as soon as the fires are out. If a bomb containing a few spent fuel rods blows up in NYC you can start rebuilding..............when? A terrorist doesn't usually care if he gets a lethal dose as long as he gets to his target in time. The expense of securing this waste is virtually forever.
Just a thought. Nasty, nasty stuff. A deal with the Devil, I fear.
( I slept within 30 feet of a reactor core for a couple of years. May have affected my judgement a bit. Here's to good shielding!)
Spent fuel rods are ceramics (metal oxides). If you blew up a bunch of them, you'd make some chunks that would be pretty easy to find with gamma cameras. Small ones might not even be "hot" enough to need more than gloves and a whisk broom to pick up safely. That's the hard part about using radioisotopes as radiological weapons; aside from a few things like tritium and Po-210 which emit weak betas that don't get into Geiger counter tubes, they are very easy to detect.
I suspect that a gamma-camera scan for the big pieces, a good pressure-washing and settling the debris, and a final scan with scintillation counters and gold-leaf electroscopes would be enough to certify a cleanup. You might want to paint everything over just to make sure that any remaining dust doesn't migrate and concentrate.
E-P,
I'll leave the dust pan and wisk broom to you. You seem to have a pretty good handle on things.
Let me guess --submariner?
There's that joke about a comedian convention, where they all know the same jokes, so one comedian just stands up and says "number 23" and the rest of the comedians laugh, because after all number 23 is quite funny.
Just because the problems I point out are well known, doesn't make them problems any less.
It's very true that coal is toxic and LNG is dangerous. The toxicity and danger of nuclear materials aren't of a completely different category - Dresden was destroyed as thoroughly as Hiroshima. Still, some discrimination is due.
It would be great if we could somehow get good estimates of something like "years of human life lost per net kilowatt-hour" or some such, for each energy source. It would have to be a probability distribution - likely with a fat tail, too!
If nuclear technology were so safe, I think we wouldn't be hearing all the saber rattling over Iran!
The toxicity and danger of nuclear materials aren't of a completely different category
It really all depends on which materials you're talking about. If you mean older Gen I-II waste products (Chernobyl, 3 Mile Island), then sure, some of the spent fuel and waste is dangerous for a good quarter-to-half million years, and there is a lot of it. If you mean newer Gen IV reactors, then it's a different story. Some of the reactors can actual *burn* waste produced by Gen I-III designs as fuel, producing far less waste, and much of it with a half life of ~100 years, close to a human lifespan.
No energy technology capable of scaling to meet current demand (and human population) is ever going to be perfectly "safe". Nonetheless, I'd much prefer to live next door to a Gen-IV breeder reactor than a mountaintop-removal coal mine.
I'm not anti-nuclear per se, but I am anti-fusion...based solely on the decades in which it sucked the energy grants well dry and delivered nothing whatsoever. Its as technically unreachable today as it was in 1950 or so when they started trying to build fusion reactors.
On the other hand, if we had a collapse scenario with fossil fuels and needed a substantial energy source to belatedly build a sustainable economy and alternative energy network with, fission reactors would be the obvious (though imperfect) choice.
Daxr, The best description of fusion is that it is the energy of the future, and it always will be.
Steve001:
To your point about mercury from coal, state biologist are telling us here in Alabama not to eat bass more than once per month because of high mercury levels. And this problem keeps getting worse.
That really depends what you're talking about. Are you talking about fission products (the actual waste) or SNF (spent nuclear fuel) from light-water reactors? LWR SNF is still about 95% fissionable or fertile isotopes; it's some of those (various isotopes of plutonium, americium and curium) which can't be split in an LWR but are problematic for disposal because of their lifetime and radiotoxicity.
The solution is to go to "fast reactors", which can convert all the U, Pu, Am and Cm into fission products. The fission products become less radiotoxic than the original ore in about 300 years (the magic of short half-lives).
You can't get bomb-grade material from LWR SNF because of all the Pu-238, Pu-240 and Pu-241. If we go to fast reactors, even that will be down to trace levels.
Ironically, it's the current technology that's our security threat. If we had an IFR design that just achieved breakeven, we could GIVE several of them to Iran along with an initial load of reactor-grade plutonium fuel and a lifetime supply of depleted uranium each. Iran would have no more excuse for building uranium enrichment facilities, and the DU wouldn't be any good for feeding one if they did.
You can thank Hazel O'Leary and Slick Willy for our inability to do just that.
There is certainly no inherent reason why this kind of technology can't work. It's complicated stuff. One difficulty is that it takes quite a while to understand the problems - this doesn't seem like stuff that can be ramped up fast without large risks. But it is certainly worth pursuing. I can't see how we won't ramp up nuclear technology. I just hope we do it smart.
I read a great book a while back, Beyond Engineering by Robert Pool. He had a lot of good insight on the kind of teamwork required to make nuclear technology work. As I recall, his model of the right kind of team was an aircraft carrier. Signal flow is not confined to a hierarchy & shifts depending on the situation.
Welcome to TOD Mr. Chu.
I'm glad you found it and hope it will bring a positive contribution to your energy knowlegde.
I'm also glad there is a better destination for depleted uranium then shells.
Paulus
Depleted uranium has a higher EROI than tungsten, it's cheaper. We gotta watch that military budget so we can keep the oil flowing!
A question Dr. Chu (giving the benefit of the doubt to your bio). Are you implying that a magic bullet solution to the energy problems with fossil fuels would put us back on the growth without bounds curve? If that were the case than Jevons would still apply in the slightly longer run. Our current economic system promotes growth to sustain increasing profits. And that is a biophysical fallacy. Solve the energy problem and you will find the limits transfer to some other resource and attempts to mitigate those limits will certainly require yet more energy (e.g. transporting potable water from the Arctic to Las Vegas!). We will be right back where we are now, but with far more people to worry about.
I would only be for pursuing something like your suggestion if there is a wide consensus developed that says we need to replace our current economics with a rational, science-based biophysical model, which in turn, leads us to Herman Daly's conception of a steady-state (mature) economy.
Question Everything
George
Not speaking for anyone but myself, but Liebig's Law of the Minimum says otherwise pretty conclusively.
On the other hand, lots of cheap energy with minuscule input and waste streams makes many other things a lot easier. If you have lots of energy to throw around, you can use it to reclaim materials and clean up messes (perhaps at the same time). If you have lots of electric energy, you can make things out of magnesium and just let your old machinery corrode and go back to the sea whence it came. You can even pull carbon out of the atmosphere artificially (potassium carbonate process) instead of mining fossil supplies.
While I would love the opportunity to have a discussion with the real Dr. Chu I too am highly skeptical that you are who you claim to be. I would hope that if you are indeed who you claim to be that you would welcome such skepticism.
In the meantime I would ask that TOD Editors weigh in and simply verify the IP address from which you are posting and either confirm or deny your claim.
I do not believe they would take very kindly to the fact that you have posted Dr Chu's email and weblink to the Department of Energy's website should you not be who you claim.
And there's the question of TOD becoming overexposed. Exciting times, here at TOD.
Just another deluded nuker manic who also imagines he can masquerade as Chu at TOD( oh what fun).
If he was Chu, why wouldn't he just approve the idiotic IFR and build one.
Wait, don't tell me---he's afraid of Greenpeace.
(Me too!)
Ah Choo!
I'm just gonna go Chu on this for a while.
Of course it's all Greenpeace's fault,
Undoubtedly, Greenpeace in China has always been orders of magnitudes more powerful than Greenpeace in France as it was possibly even founded by Mao himself.
And that's why China gets only 2% and France 78% of its electricity from nuclear.
My fellow citizens,
I can confirm that he is Steven Chu, as I personally ordered him to vent about the failures of the Clinton administration back in 1994, on this particular website on the topic of an old book written about coal.
http://marta.files.wordpress.com/2006/07/rubens_bill_and_monica.jpg
Mr. President, Just not sure what coal has to do with it?
I just read that Sarah Palin accepted a political contributor position at Faux News.
Steven Chu,
On of the biggest power companies in Europe, Vattenfall AB, has presented a certified environmental product declaration EDP of electricity from one of their PWRs.
http://www.environdec.com/reg/026/
According to this declaration the fossil energy input from the mine to the waste storage for the electric energy produced is 1:100.
Dr. Chu, you have no idea how happy I am to see you say that.
Now I would just like to see your boss say that.
Apparently we can look forward to an exciting state of the union address by Obama, according to the president's post in the new years resolutions section from a few days back. Hey, I doubt the validity of these posts, but if true maybe there's some hope for this country yet. I'm not counting on space aliens to give us fusion technology either, but it's certainly not impossible.
Don't worry.
We already have a reliable fusion reactor in our solar system, which powers over 90 GW of fusion power collectors which were installed in just one single year (incl. hot water).
http://www.ren21.net/pdf/RE_GSR_2009_Update.pdf
Fusion power collectors can power the world several times over, even if we continue to ignore efficiency measures at all costs.
Nice exposition, Lionel! Thanks.
For a while now I have been thinking of this as "Keynesian", or demand-induced, peak oil. "Classical" peak oil focuses on supply. (In reality, they are two sides of the same coin.) Keynesian peak oil shows up as a "lack of opportunities for investment", as Paul_the_engineer put it a few days ago.
A likely result of the decreasing utility of oil is acceleration of the shift to natural gas, making the shift seem sudden in restrospect. This may give us the time we need to develop more durable and relatively low-cost systems for producing energy, such as fast breeder uranium and especially thorium reactors. If complacency sets in, then there's really going to be a problem.
But wont the shift to natural gas as a replacement for oil take a couple of decades? If you check out the graphs Rembrandt sends out each month I dont think we have that sort of time.
Here is my super simple example of how Jevon's paradox can arise, from a micro-economic perspective:
http://peakoil.com/depletion-modeling/the-jevons-paradox-thread-merged-t...
How can we be 50% more efficient lifting the oil? It still takes the same head to lift the oil. Friction head + vertical head in feet. If you are saying the pumps are 50% more efficient. Talk about total nonsense.
Welcome Dr. Chu. I hope you and your aides come to be regular readers of The Oil Drum as, as a long-term energy professional, I have found few sources of more valuable or relevant information on the world's energy challenges and situation.
On the level of simply energy, the paradox may not work in special cases....fusion, for example...assuming it becomes possible.
On the other hand, the paradox is true in the sense that success breeds failure when overshoot occurs, which it inevitably will.
For example, the more successful we become at feeding more and more people, the faster the population will rise. At some point, overshoot will occur...success always brings corrective disaster.
On the micro level what is happening is that as more and more people tighten their belts because they lost their job, someone in the family lost job, or job loss is possible, they are looking for the least expensive options. This in turn economically kills off all of the positive actions that everyone has identified such as, relocating, buying hybrids, shopping local produced, insulating, what have you.
This effect is not steady but happens in the step pattern of collapse making it difficult to perceive and address.
Sure some can down size and transition to sustainable but the percentage that can is very small and shrinking rapidly.
The idea that we can train capital to act responsibly, benevolently, is the biggest pie in the sky fantasy of them all and the sooner we understand this the sooner we can institute real change.
You're absolutely right. I am beginning to realize that the availability of capital is the key to all the changes we need to make, and I can see up close and personal how it's going to go down.
We are living with the effects of one layoff in the family and the energy-saving home improvements are now out of reach. Definitely no geothermal, no new siding / insulation. No hybrid car. No relocation.
Caulking and draft sealing are still OK, though, and the first round we did last winter made a big difference. Growing vegetables and shopping the local farms for produce works, too, and I hope to do more of it next year. Note how these fit into the ELP model.
Here's some hard data on the economic energy efficiency of the US in graphs, courtesy of the EIA:
http://truecostblog.com/2010/01/09/us-economic-energy-efficiency-1950-2008/
BTU per dollar of real GDP has been steadily declining for decades, at a rate of about 1.44% per year.
Many on TOD have disputed the relevance of BTU/dollar GDP, as the claim is made that offshoring, or another zero-sum offset, is responsible for all of the gain.
But a quick glance at technological changes over the past several decades makes it obvious that that is not the case. The computer and tech booms alone have made the US (and much of the world) vastly more efficient on an energy intensity basis. Other efficiency improvements have contributed as well (even residential HVACs have become much more efficient!), but no industry has contributed more to decreasing energy intensity than the IT industry.
Jevon's paradox does apply here, and as long as energy is relatively cheap, decreases in energy intensity (increases in economic energy efficiency) will be used to help grow the economy and material consumption.
But it's important to understand that this process can run in reverse - with the size of the economy held constant, the total amount of energy needed to run it will decline. This is the very nature of efficiency.
Make no mistake - energy efficiency is the greatest single short-to-mid term weapon we have in preserving our economic well-being in the face of resource constraints.
Hi Praveen,
I've only been here a few months but it seems more to me that the the "Many on TOD " you refer to are not disputing energy efficiency per se but the very concept of "gross domestic product" which as Edward Abbey said grows ever more gross.
The recent financial crash seems to validate thier pov-the gross was vastly inflated and existed only on paper(stock market and real estate prices) or when real(millions more of houses, automobiles, etc.) was made possible by buggering the future via excessive credit.
Praveen, the one thing I would worry about is the assumption that energy demand scales linearly with GDP. A society may have what amounts to a "basal metabolism", which is energy expended just to maintain life processes. Without that part getting more efficient at the same rate, a shrinking economy may show a reversal of the GDP/energy gains it had on the upswing.
Here's perhaps a curious take on the "Paradox."
Since my response to the forthcoming EROEI crisis that faces us(in a lot of things, certainly not only oil. Potash!) has been to recognize that my personal response to the crisis can't be one of hedging by economic means--as to keep myself fed if I don't grow the food myself it will always be taking more money to purchase that food, and it will cost more money all the time to provide myself the opportunity to earn that money. In fact, the best way to hedge is to adopt a strategy moving towards extreme simplicity and to focus near solely on first order production--meaning the only safe bet I really see is to become, in truth a first order producer. It seems to me that it's important to point out that there is a certain kind of immunity that can be realized by adopting such strategies if indeed such a status can be had.
Sorry, not so clear, perhaps someone can grab this cloudy thinking and expand on it.
Perhaps Gail's Dec. 30 campfire post on Reducing Complexity will help:
http://campfire.theoildrum.com/node/6085
Actually, I don't think it did. Different strategies apply for large systems than do apply for individuals. The conversation around here largely focuses on large system thinking and there's very little discussion--or at least not enough, to my mind of coherent discussion of individual strategies.
I know it's hard in our society. I shared some of my strategies such as our goal of more self-reliance. Not that it has made things much less complex. It just gives us more control. One thing I have tried to do is to stop multi-tasking. I try to complete one task before starting another, which begs the question: Do we multi-task because life is more complex, or is life more complex because we multi-task? Forming less complex habits helps me, little things like shaving in the shower and combining trips, or asking myself if I really need to do something right now or can it wait (maybe procrastination is born of the desire to reduce complexity). How many things do you do that are necessary or productive vs. things that are distractions? I never let anyone "sell" me anything. If I need it, I'll sell myself.
One thing that has really helped me is to just say no to more things. The world is always pulling at us to do different things and it is OK to say no. I always think hard before saying yes. Yes is usually more complicated than no.
Ghung,
Being trapped in a small apt in south St. Louis county with my wife and two or three large screen TVs on max cable and never being shutoff has made me realize just how precious peace and quiet it.
For example just the one in the bedroom I am lying in. It has 'basic' cable of about 100 plus channels that are nothing but the worst swill in the world. I mean absolute utter trash.
One who isn't desensitized to this garbage can easily realize just how far out society/culture has fallen.
The big news? Oh...someone left American Idol!!!Gasp,shocking!
The blowdried bimbos constant background chants and the foolish men flexing abs makes my gorge rise.
In two more days I will leave this site and back to the rural flyover trashland ,as New Yakkers call it, and get down on my knees to kiss the dirt and praise GOD.
What an absolute waste of electrons and me a former electronics technician who once even built a Heathkit TV. Gag.
Airdale-and even if I come to grips with the death angel I will never again make this trip to the outbanks of hell like this place is.
Go out and give thanks that you are where you are. I always loved my time at RTP in N.C., I remember it fondly. You are luckier than most here.
"You are luckier than most here."
Don't I know it, Airdale. We'll always be greatful to my folks for having the foresight to settle here. Hang on to your gorge and turn off those TVs! (I got my wife some cordless headphones for her TV).
Have you seen the documentary "Mountain Talk"?
http://www.mountaintimes.com/movies/reviews/mountaintalk.php3
It's been shown recently on the Documentary Channel (speaking of TV). There's a part where an older woman had been talking about how hard they had to work, but they really didn't know it and they felt prosperous. Then she says that "we didn't even know we was poor 'til the government came in and told us we were, LOL". We can learn a lot from that, methinks.
I'm simply suggesting that a central lesson should be learned from these discussions: Top down approaches are not going to work to provide for us a better future. They're inherently embedded with trouble like the "paradox" which is why we've got the trouble in the first place. Bottom up approaches, however, like personally radically reducing consumption and becoming a first order producer of value, seem to not be fraught with the same problems. But, they're a lot of work and kinda a bummer.
It seems like there's a background call around here for the formation of the "US Bureau Of Complexity Assessment and Management" where astute policy makers lead us through this quagmire. Allow me to gently hint at the complete absurdity of such an approach. Where's Monty Python!
You should probably read Jared Diamond on "top-down" vs. "bottom up" approaches (in his book Collapse) if you haven't already. There's no need to sweepingly dismiss one or the other.
Perhaps the author of Walden's Pond, Henry David Thoreau might have some answers for you.
I keep that book right beneath my side of the bed. Hero worship, so to speak. The man 'wrote the book' on escaping from capitalism and its woes. Back to nature he said and then he did it.
Airdale
Thanks for the post- I'm very interested in studying Jevon's (Jevons'? Jevons's?) Paradox. There may be some version or flavor of it that explains ecological overshoot. More on that later.
I stooped to look on wikipedia, wherein it is written that Jevons Paradox does NOT hold in cases of inelastic demand. Everything I've read appears to indicate that oil demand is inelastic, especially post-1973. Thus we saw increasing demand from 2004-2008 amid wildly increasing prices. The subsequent wild drop in prices followed a slight drop in demand, and demand has not rebounded or dropped strongly as prices have rebounded. This may be a result of the un-substitutability of oil, since it is tightly integrated in every form of production in the modern global economy.
Therefore, technological efficiency may in fact reduce oil demand.
Second, we should clarify whether we are talking about efficiency at the point of use or the point of production. The parallel between the coal and oil situations where they each feed back into their own production is clear, and this is somewhat muddled. Increased efficiency of production fed back into more production which enabled more applications (utility).
Finally, Jevons wrote at a time in which coal was clearly pre-peak, and may have reached different conclusions post-British-coal-peak of 1913 had there been no massively abundant petroleum substitute.
I think that this points up an inadequacy of the idea of price elasticity. Jevons observes the demand goes up as price decreases, but modern experience with oil is that demand does not go down when price increases. There is a stickiness and non-reversibility in the real world that isn't recognized in the standard theory.
IMHO, economic theory is intellectually shallow, and built on a deep and shifting sand.
But also, Jevons really wrote about improvements in efficiency of use causing an increase in demand, not price decreases. Efficiency of use is a technological change, not a price change. e.g. If there were developed some new low-cost technology that enabled one to change heavy sour crude into diamond in 30 carat chunk size ... then there really would be an increase in demand for heavy sour crude! --- At least until the price of diamond collapsed to about the price of heavy sour crude.
There is some confusion here about the meaning of price elasticity.Unless the rules have changed since I went to school back in the dark ages, the price of a given product is said to be INELASTIC IF the demand declines so slowly as the price rises that the sellers gross revenue actually increases while selling LESS product.
If the market will pay say ten dollars a bushel for fifteen bushels of apples , the gross sale is 150 dollars.If only nine bushels of apples come to market and the price rises such that the gross sale of the nine bushels exceeds 150 dollars , the demand for apples is said to be inelastic.In other words the price goes up faster than supply goes down when demand is inelastic.The price will exceed 150/9 dollars per bushel.
The law of supply and demand is NOT violated or canceled but it is perhaps we might say muted or damped.
When demand is elastic, this means, using my example again, that twenty bushels of apples will fetch the growers less gross revenue than fifteen bushels.Price is declining faster than production is increasing such that gross declines.The price in this case will be something less than 7.50 per bushel grossing less than 150 dollars.
This is why an orchardist prays for one good year when all his competitors are taken out by frost or hail or whatever.
And this is why when there is a big crop we often leave it to rot in the field-prices sometimes decline to less than the harvest and shipping costs.
I believe the evidence is that gasoline is an inelastic product-we will pay more for less , such that as the amount sold is declining, the sellers revenue is increasing.
Look at the US gasoline consumption figures 1978-1990. You may agree with me that oil demand is quite elastic over the period of a vehicle's useful half-life (about 6 years, mileage-wise).
You will probably also agree with me that someone driving to work in a Prius or Scion xA is not creating less value than someone commuting in a 4x4 Tahoe. We have a lot of room to squeeze more out of what we're using without even breaking a sweat.
Would this Paradox also extend to "Renewable Fuels" and the machinery that they run? For example, as solar energy sytems / wind turbines / etc. become more efficient, won't that lead to gradually increased use of them, much like the Fossil Fuel machinery that Jevons talks about?
Just a thought.
Yes, it would.
Unless current use is being distorted by subsidies, or there is inadequate capital (or other resources) to scale up their use.
Gosh, Gail, that seems like a real simple knee-jerk against renewables...
I was merely saying that Jevon's Law would apply to renewables just as much as it does to fossil fuels.
Are you saying you disagree? Otherwise your reply makes no sense.
I think she is saying two things that are pretty current:
Government subsidies to the fossil fuel industry make it more attractive vs alternatives than it would be on a level playing field, and:
In a situation where the market says "wait until oil is scarce, then we'll invest capital in alternative energy", we find that scarce oil and scarce capital are linked; when it would be most appropriate, we find little capital available to fund alternative energy projects.
Yeah, yeah, yeah, but none of that causes Jevon's Paradox (or Law) not to apply to renewables. You can see subsidies as increasing the 'utility' of renewables, and it all makes sense from there. Gail's use of the word "Unless" makes no sense, unless she misinterpreted my answer to Cautiously...
Very much so. $1/W(p) is supposed to be the point at which the PV dam breaks and it starts becoming the supply of choice in much of the world.
If we got efficient enough at turning biomass into electricity (perhaps via my suggestion of molten-carbonate fuel cells and direct-carbon fuel cells) the demand for wheat straw and corn stover would jump. The demand for other things would fall. It all depends on what's economical given the technology.
Thanks for giving us both some background and some elaboration on Jevon's work. It's important that people know something about this subject.
I just want to point out that in the context of your discussion of the development of the steam engine, this statement ought to be very clear that the technology involved is inherent to any discussion of EROEI. This crucial fact is sometimes clouded over by our tendency to compare the EROEI of resources, when in fact any discussion about the EROEI of a resource must implicitly include assumptions about the technology being used to extract that resource.
(Some clarity about this might prevent some of the more ridiculous discussion occurring farther up in this comment thread.)
I regard Jevon's Paradox as a subset of a wider economic context - the the more profitable something is, the more it will be done. Profitability can come from reducing cost, such an airplane that is more fuel efficient, or is cheaper to buy/lease, or by increasing revenue, such as the airline selling more seats/higher fares etc.
Cellphones are another example, use has skyrocketed not (solely) because they are dramatically more "efficient" than 10yrs ago, but because they are dramatically cheaper.
Improving oil use efficiency will not result in increased consumption if the price is rising even faster. So I would say as long as the cost efficiency is improving, his paradox holds true, but when viewed in this way, it doesn't seem like a paradox at all.
Also at the individual level, it may not always apply. A city commuter who trades his Accord for a Prius will see a 40% fuel saving , but he will not likely increase his driving 40% as a result. Perhaps we would regard his personal (transport) economy as "mature". BUt for the city/community, it would likely experience transport growth as population grows, but not likely from individual driving more miles.
Bottom line, if it is more cost efficient, more of it will get done, but there are still some qualifiers.
I'll also wade on on the EROEI question. There needs to be consideration that the energy invested is not always the same form as the energy returned. OF the Canadian oilsands start using a nuclear reactor to completely power their mines and extraction, the EROEI is about the same, but the oil EROEI is now theoretically infinite, as the oil input is near zero. Same goes for the ethanol distillery using waste heat from a coal fired power plant for it's process heat.
A more accurate, and usable definition would be EXERGY returned on exergy invested, as exergy is a measure of how efficiently the energy can be used. And this relates to jaggedben's point about technology. Electricity has the highest exergy, and low grade waste heat the lowest. If you are distilling ethanol, you need the same BTU's, whether you are using waste heat or electricity to run your process, but with waste heat you are creating exergy (positive ExROExI) , and if you use electricity you are destroying it (negative return). Using electricity to heat the process is using a "higher" technology, but clearly it's a bad decision - waste heat is a "smarter" technology in this case.
If you want to get an idea of the relative exergy of different energy sources, just look at their prices, electricity is usually the highest (in $ per BTU), with oil next, then natural gas then coal. The the higher the exergy, the more convenient, and efficient they are to use, and thus we are prepared to pay a higher price for that convenience - regardless of the cost of producing them. there are other pricing factors of course, but I'd say that exergy is the largest one.
You could also talk in terms of entropy instead of exergy, but exergy sounds much better.
It ought to go without saying that when comparing different forms of energy, proper conversions need to be performed.
It is certainly true that the concept of EROEI is most easily applicable to technologies where the inputs are the same as the outputs. For example, ethanol as fuel (where the inputs are almost all liquid fuels), or solar PV (where the inputs are or could be almost all electricity). This ease of application is mainly because comparing different forms of energy properly requires so much additional empirical research.
Hold on a minute...if you are using any of that oil to build and maintain the reactor or its fuel supply, that goes back into the EROEI calculation. Using a nuclear reactor to mine oil sands might result in an astronomical EROEI, but even an astronomical number is infinitely smaller than an infinite one. ;-) (Btw, that'd be a technological development that to my knowledge doesn't currently exist and may or may not prove feasible or capable of producing a higher EROEI than using natural gas.)
This is intriguing, I was not familiar with the term exergy. (Spellcheck doesn't like it either! But then spellcheck doesn't like "spellcheck.")
BUT...can you measure the exergy of solar PV or wind electricity generation? Exergy is a thermodymanic concept, so can it be applied?
I ask these questions honestly, please enlighten me if you can.
Jaggedben,
Forgive my typo there, that statement was, of course meant to be "IF the oilsands.."
Yes, you are right in that you would have to factor in the oil used to build the reactor, etc, etc. But, once it is built, for producing, say 500,000bbl/day for 20 yrs, the embodied oil per barrel produced will be very, very small. So maybe not infinite, EROEI but, certainly if you are burning any oil as a process input, then the oil invested is pretty close to zero, and the ratio is very large.
The point here is, that the energy used for process input can be completely different from that output. And, if you can get that input energy for "free", then you are onto a good thing.
Exergy is indeed a thermodynamic concept, and the official definition borders on tech gobbledygook, but a workable definition is;
"Exergy expresses the quality of an energy source and quantifies the useful work that may be done by a certain quantity of energy"
They key word here is WORK, as we are trying to turn heat energy into mechanical work (ususally shaft power). You could also equate Exergy to the thermal efficiency of a heat engine using the energy. The exergy is really an more useable statement of the 2nd law of thermodynamics, so the exergy (available work) is always less than the energy you started with. Or, to use my favourite engineering definition of efficiency: what you get/what you pay for.
For a process like oilsands this is important, because (total) energy is always conserved, so technically, the EROEI is always one. In reality, some of that energy out is waste heat, it is useless and so we let it go up the stack. We are only interested in capturing exergy, useable energy.
So electricity has an exergy of about 95%, because an electric motor gets that efficiency. a battery can discharge about 80% of the energy that went into it, so that is its exergy. Natural gas has an exergy of up 60% Diesel has an exergy of 30-50%, depending on the efficiency of the engine, gasoline 15-25%. What is the exergy of hot water, or hot air at atmospheric pressure (engine exhaust)? it contains energy, but you can't get much useful work from it so it's exergy is near zero. That's why we throw our exhaust away. Now in a combined cycle gas turbine, we can reclaim some energy from the massive volume of hot gas, so it does have some exergy then.
An oil operation in Bakersfield, california has a 50MWe coal fired power plant, and they use the spent steam for injection to their oilfields to improve recovery of the heavy oil. So what is energy and exergy invested into the oilfield? They get the same electricty from the coal as any other plant, so they have used all the exergy they can, but the spent steam is an energy input into the oil process.
So they are investing energy into the oil recovery, but they are not using exergy. A combined heating and power system is the same, the hot water has 2/3 of the thermal energy, but all; the exergy has been captured as electricity.
But it is still energy, and condensing steam can run a distillation process for ethanol, or other things, where we need thermal, not mechanical energy. So for any fuel upgrading process where you need heat input, especially low temperature heat, you always look for a low exergy (i.e. cheap) heat source.
So you can easily see how high exergy energy is more expensive, because you get more WORK out per energy in. And unless we are using fuels purely for heating, we are always interested in work output rather than energy output.
Higher up in this thread, someone else has come at the same concept from the economics direction, where they talk about the "utility return on utility invested". Utility, in economic terms, means the actual benefit you get for the $invested - basically, that same as efficiency, what you get for what you pay.
In business terms, they have a special word for it - profitability, that the end product is worth more than what it cost you to produce it.
But I like exergy as then we are staying in the engineering side, as exergy balances hold true regardless of fluctuations in fuel prices. However, as a general rule, if a process is profitable, it is preserving most of the exergy, and conversely if your process is destroying exergy (e.g. electricity to distill ethanol) it is likely not profitable.
Finally, onto PV's and the like. since they produce electricity the exergy is high, but so is the cost of the PV's. They are usually economic for "off-grid" or "remote" applications, because your next option for electricity is to use a lower exergy fuel, like diesel for generator, and then you need three times the energy (diesel) for the same exergy (electricity). And when you have to truck the diesel in, etc, you net exergy is going down (which means your costs are going up).
I'm sure some others could explain this more elegantly, but I hope you get the picture, total (thermal) energy is not really that important, it's the work we get out of it, the exergy that is important. For any fuel creation process we want to use the lowest exergy inputs possible and have the highest exergy outputs possible, the thermal energy balance (EROEI) is then of merely academic interest - that's why oil companies don't use it. They work in $ return, but really, it's all about exergy.
Finally, onto PV's and the like. since they produce electricity the exergy is high, but so is the cost of the PV's.
Actually, new PV is already at $850 per kW:
http://www.firstsolar.com/Downloads/pdf/FastFacts_PHX_NA.pdf
While new nuclear is at $7375 per kW:
http://www.thestar.com/business/article/665644
Not too surprisingly, a new Russian reactor was offered for over 15 euro cents per kWh:
http://www.turkishweekly.net/news/67392/politics-key-to-russia-turkey-nu...
While wind is at 5 cents per kWh:
http://www.ewea.org/fileadmin/ewea_documents/documents/publications/WETF...
Needless to say that PV is competing at household electricity prices and not wholesale electricity prices, doesn't depend on fuel imports and water and doesn't have costly decommissioning costs. And neither does wind.
http://www.webwire.com/ViewPressRel.asp?aId=55119
People in the future will more likely get rid of their oil-slinging F-150 commuter-car, heat buildings and hot water needs with heat pumps powered by new wind and new PV than keep their dependence on oil with expensive oil-sands produced with new nuclear power and imported uranium.
In the future?! I realize that a lot of folks even here at TOD think this stuff is far in the future. Me? I worked on this install last week. Psst... it actually works now, don't tell anyone!
Working to make the world a better place one roof at a time.
That's promising.
Unfortunately I live in an apartment building and do not have the same option but was able to get our yearly electricity consumption down to less than 1000 kWh by just using more efficient appliances and reduce all stand-by consumption to a minimum.
Anyone,
Since you live in an apartment, you should check out First Solar's link for yourself. This company that is now making panels for $0.85/W, has their commercial partner, that actually does the installs, offering apartment owners turnkey systems for $3.3/W for house load and $4/W for tenant load, a nice multiple of 4x their manufacturing cost. Just because they claim that as their cash cost of production doesn't mean you can buy it for that, just means they (should) be very profitable at the prevailing market price. The Saudis can produce vast amounts of oil for $10/barrel or less, but that doesn't mean anyone gets to buy it for that.
I'll grant you that their cost of production is, and has been low for several years, but that hasn't translated to what they charge their customers, so I'm thinking either their costs aren't really that low, or they are making obscene money - I suspect the former is the case.
offering apartment owners turnkey systems for $3.3/W for house load
Besides that I don't own an apartment and that it's doubtful that one household who orders 0.001 MW gets the same price as one who wants to purchase over 10 MW: You forget that the local turnkey guy, the inverter-guy and the electrician also need to make a buck.
And First Solar does indeed need to make a healthy profit margin to expand this rapidly:
http://www.toledoblade.com/apps/pbcs.dll/article?AID=/20091122/BUSINESS0...
http://www.azcentral.com/business/articles/2009/07/23/20090723biz-solar0...
http://online.wsj.com/article/BT-CO-20091216-714621.html
And this company wouldn't expand if it couldn't compete against Chinese manufacturers.
Keep in mind: You can order more efficient mono-crystalline PV modules in China for as low as $1.5 per Watt :
http://www.alibaba.com/product-gs/201488111/photovoltaic_module.html
And producing PV modules from mono crystalline wafers is not only more expensive than poly-crystalline silicon, their manufacturing-process is undoubtedly more energy and more labor intensive and has much higher raw material costs compared to thinfilm PV - even in China.
One thing is certain: If you were to offer First Solar $24 billion:
http://www.npr.org/templates/story/story.php?storyId=89169837
You won't have to pay much more than those $0.85 /W, but you would still need to hire people all around the US to install these modules in different states. But with an unemployment rate of 10% this is easy and will even reduce the deficit.
Paul, Thanks for the reply and explanations...
What about an arc furnace? Same efficiency?
My emphasis. I know I'm harping on this now, but there is no point it using theoretical exergy calculations if humans aren't capable of building or maintaining technology that reaches those percentages. The basis of useful EROEI calculations has to be entirely empirical observations of the behaviors of technologies that have been built in the real world.
So as far as using exergy in place of energy...
One problem with using 'exergy' is that in some cases of energy use, namely heating, we don't care about it. (I had a whole discussion along a similar theme in another recent thread.) You've really got to know what purpose an EROEI calc is trying to serve. That will tell you whether you need to consider exergy or not.
"What about an arc furnace? Same efficiency?"
If you look at my original explanation, exergy is defined as the useful amount of (mechanical) work(not heat) that can be gotten from the energy source.
With an arc furnace, we are not wanting mechanical work, and, it is not even a thermodynamic process, it's a thermoelectric one. There will, of course, still be a process efficiency attached to it
"but there is no point it using theoretical exergy calculations if humans aren't capable of building or maintaining technology that reaches those percentages. The basis of useful EROEI calculations has to be entirely empirical observations of the behaviors of technologies that have been built in the real world."
That is exactly my point, the definition of exergy IS the amount of useful work that can be captured. Those numbers I quote are based on real life systems, with electricity, a motor can convert it at 95% efficiency, state of the art in combined cycle natural gas turbines is 60%, for large marine diesels it is 51%, and 30-40% for diesels in car, trucks, locomotives etc. As technolgy improves, we can get higher exergy from the same fuels. A direct carbon fuel cell, if it ever reaches production promises 80% efficency - that would turn coal from a medium exergy fuel into the highest, and be a real game changer. Until then, the exergy of coal is around 30%
When considering ethanol, it's exergy is about the same as for gasoline, although in an ethanol specific engine (higher compression, etc) it can, and does exceed exergy for gasoline
For any of these fuel scenarios to be evaluated by EROEI, do a parallel exergy return calculation, and I'll bet that you would base your decision on the exergy return, not the energy return - it is what sorts the useful energy from the useless.
That is why I have a problem with government subsidies for ethanol, if natural gas or even coal is used. The net exergy return is likely negative. If they re-wrote the subsidy to specify that fossil fuels can't be used in the process (ferment/distill, not growing and harvesting), so you had to use waste heat, or burn the stover, etc, the process would be exergy positive, and then we would actually be getting something for our subsidy dollar.
If exergy is a thermodynamic process, then the term should only be used where thermodynamic processes are involved. However, there are occasions where we are interested in an EROEI calculation, but there are no thermodynamic processes involved (or there needn't be).
The paramount example in my mind is solar PV. The necessary inputs to the manufacturing process consist pretty much entirely of electricity, plus some thermal (but not thermodynamic!) inputs for things like cover glass. If we're making PV, don't we want to know that the electrical inputs to build a PV module are less than the module can put out before it deteriorates? That's an EROEI calculation, but it doesn't involve exergy anywhere along the way, as far as I can tell. You can pretty much just measure the inputs and outputs in kwh.
There are lots of EROEI calculations or comparisons where exergy has to be considered, probably most of them. But exergy can't replace energy in all of them. The concept of EROEI has broader applications than that.
(I totally agree about ethanol subsidies, btw.)
"If exergy is a thermodynamic process, then the term should only be used where thermodynamic processes are involved."
Not quite, Exergy is not thermodynamic process, it is the measure of mechanical work derived. We should use exergy whenever we are looking for mechanical work. An electric car is not a thermodynamic process, but we know that the useful work we get out out charging, then discharging lead-acid batteries, and running the car's motor is about 50%, so that is the exergy of this (non thermodynamic) process.
Now, to make the PV's, the end product is an altered material(s), not mechanical work, so the exergy is is zero. We have given up the ability to do useful work, in return for a useful material. So, yes, exergy is not relevant to the manufacture of PV,s, as long as the PV's create more electricity than the electrical equivalent of the energy used to make them. Then they are a net exergy producer (turning near zero exergy solar radiation into high exergy electricity. They are a great thing, it's just that they are expensive, so we can get positive energy return, positive exergy return, but the $ return will depend on what the electricity is displacing - I would not install PV's to replace a micro hydro system - in fact, I have built exactly the opposite
I'd agree that some of the time energy return is more important, but if it's ever to do with work or transport, its exergy. It really annoys me when people make the blanket statements about corn ethanol, it just because the fossil fuel energy return is poor, it doesn't mean there aren't other energy sources that can minimise fossil input. Of course while it subsidised to the hilt, the producers have no need to look for other energy sources, and therein lies the real problem. If people discussed ethanol in this broader context, maybe the futility of the subsidies would be more obvious.
Ultimately, even if I am right, we won't be hearing everyone talking exergy soon, so I use the term "useful energy" in layman conversation.
I consider this a bad name for a book. It dilutes the definition of peak from a hard quantitative meaning to a wishy-washy term.
Also, capitalism is nowhere close to being a finite resource. It is the same reason why Peak Water only applies to water from aquifers. All the rest of the water is effectively renewable.
Unfortunately, not much anyone can do about this since that happens to language everyday. Seethe term "-gate" added as a suffix to any controversial topic.
Um, no, it doesn't. While physics and math are fundamental to an understanding of reality, the vast majority of humans also communicate by using words that have multiple, nuanced and sometimes even contradictory meanings if taken out of context.
"Peak" can also mean to top out: to reach the highest point; attain maximum intensity, activity;
I think most people would understand "Peak Capitalism" to mean its apogee (as in a final climatic stage) I'm obviously not referring to a point in capitalism's orbit where it is at the greatest distance from the earth...
OK, by your reasoning I can call petroleum and coal "solar energy" since most everyone realizes that solar is an overloaded term and in this context it refers to the fact that these fossil fuels were created as a result of solar input millions of years ago :) :) words matter :) :) emoticons don't :) :)
While that wouldn't necessarily be my choice of words, I have indeed heard of fossil fuels referred to as concentrated solar energy. Even by scientists, so I don't think this example supports your intended point.
Though I still feel that in the case of "Peak Capitalism" the context clearly matters as to what the term is intended to mean. I at least understand it to mean a historical moment, a point in time at which Capitalism, has reached its maximum utility as a paradigm. Or in other words its glory days will now be behind it.
I can't see this particular usage in any way taking away from the meaning of "Peak" as a measurable physical quantity of something that is at its maximum possible level of extraction.
These are simply two different meanings of the word. One usage does not in any way take away from the other in terms of its usefulness or descriptive quality.
Would you argue that saying that a certain civilization was at its peak during a particular time in history would have any qualitative bearing whatsoever on say, an electrician's measuring a peak voltage in a circuit?
I have a quantitative theory that essentially proves that a peak in crude oil exists. It really has a specific meaning, not like a peak transient voltage. On the other hand the peak in capitalism is subjective conjecture and can't be proved. I guess I want to try to convince people that peak oil analysis is a real science and would rather not see the term watered down.
Ok I see where you are coming from and agree that Peak Oil should be considered a genuine scientific theory and in that case the terminology should be considered to have a very specific meaning.
I agree that while it can't be proved at this moment that Capitalism is now at its peak it may still be possible at some future point to look at the historical record and see that after this period societies based on capitalist systems all went into decline and new systems evolved and took their place. At that future date it would become quite clear that there was a historical peak for this system.
All I'm saying is that in for example the fields of archaeology and anthropology we already use "Peak" in this sense:
I don't see this usage having any impact on what you intend it to mean with regards "Peak Oil".
If you do then we shall have to agree to disagree but you'll also be disagreeing with historians, archaeologist, and anthropologist who I doubt would be willing to stop using peak in this way to accommodate Peak Oil theory proponents.
It is not uncommon for the same word to have different valid and rigorous meanings in different disciplines.
Cheers!
In relation to the form of the eventual collapse, we have the problem that mankind is not well set up to dodge the slow-moving spear.
When we look around the world there have been and are lots of examples of Peaks and Economic Collapse from which we should all take note, and arrange our affairs accordingly. But those events are - for most of us - remote events happening to someone else.
We watch places running out of water, yet do we conserve water here? No.
We watch places running out of forests and jungles, yet do we commence massive replanting programmes here? No.
We see climate and weather devastating places, but do we stop emitting climate-poison? No; we do business as usual harder than before.
We watch economies go into deep trouble and our neighbour loosing his job. But do we come together as a community and find a Better Deal? No.
Like an addict; we cannot see the reason of the cold hard facts about our self-harming that are in our faces. We just keep on doing what we did yesterday. Its the only thing we know.
Its either too remote, or just plain too hard for the 'ordinary man' to deal with effectively. He is locked into the economy, as he has to put bread on the table tonight.
The Crash will come one domino at a time, and in the main we will stand and watch (if we care to see at all), and wait for 'them' to do something.
When we hear the clatter of it all falling over just around the corner we will start to yell, but by then (as always)it will be too late for all but the most agile.
But this time it is by no means clear which is the optimum way to jump.
And that in a nutshell is our dilemma. To make it worse, at least in my case, very few of my friends family and community want to know about any of this. Which places me at the side of train tracks watching as the train comes barreling down the tracks while they sit with their backs to the train having a picnic. They have on blinders and headphones and can only hear the loud noises of "BAU is fine", "Everything is OK", "Technology will save the day", "Hail the free market",ETC..., being pumped directly into their consciousness. They can't hear me and when they do they dismiss me as being too negative. Oh well, we shall see sooner or later how it all shakes out.
What's with the Moore's Law bashing? Here's a question for ya: What if 10 years ago someone told you that you'd be able to buy a chip with a billion transistors for less than the cost of a barrel of oil? Think back to 10 years ago, the height of the tech bubble, when it costed around 10-15 barrels of oil to buy a low end cpu with a measely 10 million transistors. But we can buy a billion transistors today for one barrel of oil, and they've been that cheap for quite some time now. The ATI HD4850 gpu contains 1 billion transistors. (Even though the card costs $125, the chip itself is only half that cost.) Of course GPUs are cheaper than cpu's, but that is academic. A barrel of oil currently buys you roughly 500 million transistors of cpu.
If we project this out another 10 years, we're talking about a 100 billion transistor gpu (or 50 billion transistor cpu) for one tenth of a barrel of oil in 2020. Is there any reason to believe that wont happen?
Just like we can't keep pumping 3% more petroleum out of the ground every year, at the very least because the volume of the earth is finite, in the same way we can't keep making transistors smaller, at the very least because atoms have a non-zero size. In both cases we can be sure that the steady exponential that held for some time will not hold for all time - at some point it will stop. The only question is, "when?"
"When?" though is not such an easy question! It pushes a person into the tangled details.
The GPU vs. CPU question touches the details. I don't follow the blow-by-blow, but I bet you can pack even more transistors onto a chip if you're making a memory chip. Making tiny transistors is hard enough, but connecting them is even harder, at least if you want the chip to function at high speed.
Probably the biggest indicator that we're getting close to the end of Moore's law is the fact that more and more cores are appearing on chips. I would rather have one cpu twice as fast rather than two cpus. But it's getting so much harder to improve the speed, that these days we're settling for multiple cores.
You might be amazed by the processes now used to get circuitry so tiny - things like Optical Proximity Correction and Phase Shift Masks. They're a bit like the wild 3D seismometry that Rockman tells us about, or the crazy horizontal and J-shaped drilling. Things only get mind-blowing complex when they're reached the end of the road.