Low Carbon and Economic Growth: Are Both Compatible in Developing Economies?
Posted by nate hagens on August 24, 2011 - 10:15am
At the intersection of global energy depletion and concerns about human impact on the environment lie some serious and oft overlooked issues. Largely gone from our public discourse is the idea that oil is infinite. It is now accepted, even to previous staunch cornucopians, that increasing, or even maintaining oil production will come only at higher costs. The new response to the energy/environmental crisis is to transition to a green economy, replacing our declining stocks of fossil sunlight with new technologies able to harness our current sunlight in its various forms. That these renewable technologies are available, viable and becoming more popular is not in question - however, whether these low carbon strategies can combine with now more expensive fossil fuels to maintain a growth trajectory for both the developed and developing worlds is another question entirely.
I am on the Board and work closely with the Institute for Integrated Economic Research (IIER) - an institution concerned with the transition of human societies following a likely end to global growth. Recently, IIER was commissioned to produce a report sponsored by the British Department for International Development (DFID), addressing the question as to whether it will be possible for emerging economies to simultaneously go green and still grow economically. The answer, which also applies to advanced societies, is that the traditional path of urbanizing and industrializing nations is most likely incompatible with the reduction of carbon emissions, as long as economies don't find someone else to do the "dirty" part of the work.
This "dirty" work is currently to a large extent conducted by China, a country which consumes about 40% of all natural resources and produces about 40% of all industrial outputs, while its own GDP share only amounts to a little more than 10% of the world total. Shifting all the "heavy lifting" away from advanced economies has made it possible for them to become less energy-intensive over time, thus reducing their carbon emissions - while carbon dioxide output has skyrocketed in other places. Unfortunately, this model isn’t scalable globally, as in the end, when China tries to copy that Western success story, there won’t be another place to go where cheap energy and labor is available.
The report looks at the context of past productivity gains and at the reasons why it won’t be possible to extrapolate them into the future, because traditional economics look at past successes by omitting the role of (cheap) energy. It concludes that while it is possible for emerging economies to improve the well-being of their populations without growing greenhouse gas emissions, it won’t be feasible to industrialize them in the “green” way everybody hopes for.
Below the fold is a 2-page executive summary and links to the full 66 page report - "Low Carbon and Economic Growth - Key Challenges"(Pdf warning)
Economic growth is highly correlated with the availability of low-cost, high-quality energy Advanced economies may accomplish some decoupling based on the outsourcing of heavy industrial activity Given the superior characteristics of fossil fuels in terms of cost, density and manageability, renewables will offer only limited potential to replace them as key drivers of industrial output While this limits the chances for middle-income economies to reduce emissions, low-income countries have opportunities to grow wealth and well-being without adding large amounts of CO2
In December 2009, the 15th Annual UN Climate Change Conference ended without a globally binding agreement to reduce greenhouse gas emissions. The outcomes from the 2010 talks in Cancun were equally non-committing. Among the reasons for these failures were concerns of emerging nations such as India and China that limits on carbon-dioxide emissions would impair their ability to further grow their economies. Given the evidence we outline below, they probably have a valid point.
1. The crucial role of energy in growth: On a global scale, economic growth has always been highly correlated with higher energy consumption. Between 1980 and 2008, to produce one additional unit of GDP, 0.55 additional units of primary (raw) energy inputs were required[i]. When looking at energy that can be directly applied to societies, correlations are even stronger: during the same period, for one unit of GDP, electricity use grew by 0.95 units globally.[ii]
This strong connection between economic growth and energy consumption is often overlooked. It is based on the key paradigm of the industrial age: a significant portion of the productivity gains of the 19th and 20th century were achieved as greater mechanical energy use released human labour capacity. In industrial societies, one unit of human labour, measured in food intake, was often replaced by 100-1000 units of mechanical energy, mostly delivered from fossil fuels.[iii] This mechanism produced benefits during periods of low energy cost in the form of lower prices for goods, higher wages and profits. When energy prices rise, this same model begins to work against us. IIER research shows that rising manufacturing-related energy prices quickly reverses benefits for wages and profits. Efficiency increases are rarely able to offset those productivity losses, as they – for most process chains – are typically only in the 10-30% range.
2. How advanced economies became more energy-efficient: Whilst apparently advanced economies have been able to post economic growth without growing their energy footprint, a significant portion of ‘energy efficiency’ gains are related to the outsourcing of heavy industrial activities to emerging economies. For example, in 2007, China produced 41% of all iron and steel and 37.5% of all aluminium globally, while representing only 10.8% of global GDP, leading to significant embedded energy transfers to advanced economies. This reflects overall trends in globalisation as supply chains have been repeatedly reconfigured to exploit the benefits of low-cost labour and energy. When netting out these benefits, a majority of energy and carbon footprint reductions in advanced economies have been due to “energy used elsewhere” from global shifts of energy-intensive processes, and not related to real efficiency improvements[iv].
3. Fossil fuels are key drivers: In order to grow, economies not only require more energy, but the properties of the energy sources used, such as density, cost and manageability, matter a great deal. Today, almost unchanged from 1990, coal, crude oil and natural gas provide approximately 85%[v] of global primary energy.
Low-income countries may grow despite carbon reductions
Fossil fuels are – despite recent price increases – the cheapest and most useful fuels, as long as externalities such as pollution and environmental issues are not factored into their pricing.
The key challenge in replacing coal, oil and gas is that they are formed from historic solar inputs. A barrel of oil contains past solar energy from growing plant biomass, from biotic or abiotic fermentation, and added pressure and heat from geological, solar and geothermal mechanisms applied over millions of years. This process has yielded high density energy sources that are easy to extract, transport, and handle. To accomplish the same, for example with biomass, the required “upgrade” from plant material to a combustible fuel needs additional energetic effort, which adds cost and reduces net benefits. This need for “upgrading” directly translates into higher energy cost for the future[vi].
Furthermore, alternative sources, like nuclear, solar, wind and biomass, are based on significant fossil fuels inputs. If solar panels were produced with energy from solar panels, their price would be prohibitive, compared to today, where 50% of all panels are manufactured in China using coal-based inputs. This makes a true replacement of fossil fuels extremely challenging, unless currently unknown new technologies come into play. Given the “historic energy” embedded in fossil fuels, this is maybe an unrealistic expectation.
4. What low carbon translates to: To establish a low-carbon economy will require us to work against the key trend that has driven wealth creation during the 19th and 20th century – the replacement of small amounts of expensive human labour by large quantities of low-cost fossil fuels. Renewable energy sources do provide energy, but very likely only with reduced benefits, given their higher extraction and conversion effort and thus higher cost. The same is true for cleaner fossil fuel uses. For example, carbon sequestration might reduce generation efficiency by approximately 24% and lead to cost increases of up to 82% over regular coal based electricity[vii].
5. The challenge - growing economies: Our research indicates that mid-level income countries (like China and India) have only limited opportunity to continue a growth trajectory without significantly adding to their carbon footprint, unless they too find other places to outsource their industrial production – which seems unlikely and would not yield a net reduction in global emissions. This reality is likely to be the main driving force behind the reluctance of China and India to accept clear carbon limits, as this – almost certainly – would impose almost impenetrable ceilings on their growth expectations[viii].
A closer look at China corroborates this view. China procures more than 90% of its energy from oil, natural gas and coal. It operates with a much lower energy cost vis-à-vis OECD countries (3-4 cents/kWh of industrial electricity in China vs. 6-11ct/kWh in most OECD countries)[ix]. This advantage is driven by a number of factors, but the most important is the predominance of coal in China’s electricity mix, which can be exploited at low cost. This advantage is further enhanced by lower labour cost and different environmental standards in mining and power generation. Without the use of coal-based electricity, China’s significant competitive advantage would shrink, removing an important driver of its recent growth.
6. The opportunity – low-income economies: In poorer countries, we see a much higher potential to combine low carbon and welfare-improving efforts. In many cases, the benefits of industrialisation are not widespread and the transition from human to mechanical labour hasn’t fully taken place yet. At the same time, many low-income countries are dependent on patchily available crude oil, currently the most costly fossil fuel per unit of delivered energy. In 2009, Africa (excluding Egypt, Algeria and South Africa) consumed 60.3% of its primary energy from oil, compared to a 35.5% share of oil globally[x].
This opens a window of opportunity for quality-of-life improvement from relatively low-yielding sustainable technology solutions. These are not likely to be high-tech, but instead simpler approaches based on enhancing locally available resources to transform solar flows into usable energy and other benefits. Examples might be simple solar power systems, water purification solutions, the growing and processing of oil seeds from marginal, non-arable land for biofuels[xi], and improvements in agricultural technology that secure higher yields[xii].
[i] World Bank (GDP PPP), EIA (primary energy)
[ii] U.S. Energy Information Agency (EIA)
[iii] Cleveland, Kaufmann, Stern. 2000. Aggregation and the role of energy in the economy, Ecological Economics, 32(2): 301-317. Cleveland, Costanza, Hall, Kaufmann (31 August 1984) Science 225 (4665), 890., IIER research
[iv] Guan, Peters, Weber, Hubacek (2009). “Journey to world top emitter – an analysis of the driving forces of China’s recent CO2 emissions surge.” Geophysical Research Letters. 36, L04709, IIER analysis (unpublished)
[v] U.S. Energy Information Agency (EIA)
[vi] Pimentel, David. 2008. Biofuels, solar and wind as renewable energy systems: benefits and risks. [Dordrecht, Netherlands]: Springer.
[vii] Hamilton, Herzog, Parsons, Cost and U.S. public policy for new coal power plants with carbon capture and sequestration, Energy Procedia, Volume 1, Issue 1, Greenhouse Gas Control Technologies 9, Proceedings of the 9th International Conference on Greenhouse Gas Control Technologies (GHGT-9), 16-20 November 2008, Washington DC, USA, February 2009, Pages 4487-4494, ISSN 1876-6102, DOI: 10.1016/j.egypro. 2009.02.266. Cost and U.S. public policy for new coal power plants with carbon capture and sequestration
[viii] Climate Change—the Chinese Challenge
[ix] Industrial Countries’ Power Cost Comparison
[x] BP Statistical Review of World Energy 2010
[xi] Biofuels from Marginal lands: Some insights for India; Achten, Maes, Aerts, Verchot, Trabucco, Mathijs, Singh, Muys, Jatropha: From global hype to local opportunity, Journal of Arid Environments, Volume 74, Issue 1, January 2010, Pages 164-165, ISSN 0140-1963, DOI: 10.1016/ j.jaridenv.2009.08.010
[xii] Rockstrom, Kaumbutho, Mwalley, Nzabi, Temesgen, Mawenya, Barron, Mutua, Damgaard-Larsen, Conservation farming strategies in East and Southern Africa: Yields and rain water productivity from on-farm action research, Soil and Tillage Research, Volume 103, Issue 1, April 2009, Pages 23-32, ISSN 0167-1987, DOI: 10.1016/j.still.2008.09.013.
The link to the full report is here.
Low Carbon and Economic Growth: Are Both Compatible in Developing Economies?
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Low Carbon and Economic Growth: Are Both Compatible in Developing Economies?
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159 comments
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Industrialize the developing countries? Is that what this author is suggesting?
I am surprised this person would post this here after all the Peak Oil and Limits to Growth talk.
The world does not have the resources to do that. It is not just energy but everything else.
The reality is, the developed nations are going to end up taking resources from the developing nations in an attempt to keep the game running. Those with the biggest and most guns will get the booty.
The world must get to a population level that it can sustain without cheap fossil fuels. Those numbers come closer to 1 billion than the 7 billion we currently have.
Solar panels and wind turbines are not going to change the situation much, and I love renewable energy.
Um....no. I encourage you to read the full report - "Low Carbon and Economic Growth - Key Challenges"(Pdf warning)
Fair enough, Nate. I just read:
"It concludes that while it is possible for emerging economies to improve the well-being of their populations without growing greenhouse gas emissions, it won’t be feasible to industrialize them in the “green” way everybody hopes for."
I just assumed you meant not full green industrialization but perhaps industrialization lite.
My hypothesis is that ANY form of industrialization requires complexity, complexity requires large energy gaps, planning, control, etc.
No, most of the world will go back to the self sustaining forms that came before fossil fuels and unsustainable drawing down of non-renewables (whales anyone?).
Now, those with the resources to defend and spend on the complexity, will still enjoy the good life and there will always be those groups that figure out how to get a greater proportion of the resources.
The competition is going to be fierce.
@Tankingthinker
Page 3 - Introduction
"In a future where fossil fuels are no longer available at low cost, either due to extraction limits or because they include the cost of externalities (such as a carbon tax or sequestration efforts), we cannot envisage how the current growth model of advanced economies can continue, let alone support economies to reach a comparable level."
Please read at least the executive summary before commenting, otherwise it's a waste of your effort.
Regarding opportunities for low-income economies, the thing that struck me as strange was the inclusion of desalination solutions in the list of possibilities for solutions. I looked at the report itself, and wasn't able to see any such kind of options provided (but I may have missed something). The list of solutions given seems to be things that are fairly simple:
rainwater harvesting, humanure composting, donkey plough, drip irrigation methods, no tillage planting methods, etc. (This is a link to the report.)
I wonder if the summary report wasn't written with a bit of exaggeration, relative to what the report itself actually suggests. Or did I miss something?
@Gail
The report discusses whether economic growth for developing economies is feasible in a low carbon manner, in the context of increasing costs of energy. It shows that there is an increasing difficulty to continue replacing physical labour with more fossil energy or non-fossil energy (labour productivity) to support economic growth (more production = more energy consumption).
I think you misread the report in regarding the solutions as being able to provide economic growth since you think the summary is an exaggeration, since the summary falls exactly in line with the perspective following from the conclusions. I.E. developing economies will (in general) NOT be able to go on an industrial growth path and it is better for these economies to go with local very low tech sustainable technologies (which add little to economic growth, but can contribute to more happiness for people in mainly rural areas).
Finally, the goal was not to provide for a detailed overview of low tech local solutions but to show that this is the most plausible (and hence likely best) approach for developing economies, and to give a number of examples to make clear what this would entail. Specifically related to deaslination, you are ignoring or unaware that desalination in also possible at a small scale low tech level. The only reason why this is not done at a large scale is that the process uses sunlight and hence operates far too slowly. For a graph on how that would work see:
http://vicinsea.blogspot.com/2008/11/cheap-low-tech-desalination-using.html
Can you show me where in the report it talks about desalination solutions. I missed these, even when I searched specifically for them.
@Gail
The report doesn't go in detail about desalination solutions. Again this is not about technical details of low-tech sustainable solutions, but about the perspective that low carbon industrialization is not feasible. If you want to know more about desalination I suggest to order:
Solar Distillation Practice for Water Desalination Systems
http://www.amazon.co.uk/Solar-Distillation-Practice-Desalination-Systems...
Okay, I've ordered the book for my professional enlightenment, but are there extensive examples of this actually working in low-tech non-industrial states? I know this has worked
extensively in geography and time for creating salt, but I am not aware this is true for water. In my modest work in Africa were there are water problems I see almost no caching below
a certain poverty level even off roofs. Terracing, swaling, cachments or even hugelkultur for irrigation replacement seem to have a much more probable return in these areas.
Even geo-engineering the euphrates or the mekong with dam/dams at their lower extremities would have a more dramatic impact on desalinization of those lands on a dollar return
basis, and these are meta-industrial states.
@Gail
Thank you very much for catching that glitch. As Rembrandt already pointed out, desalination was never meant as a high-tech solution, but rather in a way of using direct insolation to evaporate water. For a number of reasons - particularly due to the lack of well-tested and documented low-tech solutions - it didn't make it into the final report, but wasn't removed from the summary. Nevertheless, for coastal regions, low-tech desalination still is a way of obtaining potable or irrigation water we consider relevant.
Thank you for pointing out this small error.
It seems like the question is how scalable and expensive desalination solutions are. Clearly, there have been ways campers could purify water for years. But are there ways that water can be desalinated on sufficient scale that it is feasible for more than a little drinking water and watering a handful of plants? Ideally, the solution needs to be made with local materials as well, without high-tech equipment.
@Gail
There are some larger scale possibilities that are fairly low tech. One of these is the water pyramid which is a village scale water still. The water pyramid can deliver 600 cubic metres of fresh water per annum (including rainfall) or more than 1000+ litres per day), the water costs are approx 2 eurocents per liter.
http://waterpyramid.nl/index.php/products
http://www.awwa.org/files/Publications/Journal/2010/May/PDFs/JAW201005cu...
The biggest problem with this design is the plastic materials used for the cone shaped structure, which has to be sourced from outside the area and is fairly high tech (although cheap) to build.
There are many different low income countries. Even their urban areas - often the centre of government and the corporate elite who make decisions - are as vulnerable to oil supply shocks as our cities and face similar challenges to de-carbonize e.g. transport. The difference is the scale of the task.
Example Malawi:
26/7/2011
A glimpse into the era of fuel shortages
http://crudeoilpeak.info/a-glimpse-into-the-era-of-fuel-shortages
However, subsistance farmers already live on a low carbon level. The immediate problem there is that kerosine is replaced by char-coal, for example, which requires large quantities of firewood, depending on population density
Example Nigeria:
http://www.nrc.nl/inbeeld/2011/08/11/kerosine-schaarste-in-nigeria/
Based on reading just the summary - a flawed report.
It conflates what happens with low priced fossil fuels and, in most cases, minimal policy signals, with what can happen.
For example, which nation (of 23 studied) has the highest long term price elasticity of demand for oil ?
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=416815
France.
They had, and have, a national policy to reduce oil consumption. The results exceed what a statistical review of the other 22 nations would say is possible.
The basic approach of IIER is fundamentally flawed - they think correlation is causation.
Alan
Hypothesis -
Grand Inga is built (<$15 billion, 44 GW of steady renewable power for 50 weeks/year) in Zaire and most of the power is distributed @ Africa via HV DC. Energy intensive manufacturing is concentrated nearby (aluminum, electric arc steel making).
Plus additional renewables, mainly geothermal in Rift Valley, more hydroelectric and solar PV as it becomes cheaper. A few more nukes in North & South Africa.
Birth rates are reduced significantly with an emphasis on female education and birth control availability.
Steel is made with electric arc furnaces melting a mixture of scrap and very rich iron ore. A high % recycling is supported.
An emphasis on energy efficiency (taxes on incandescent bulbs, efficient refrigeration, electrified rail and coastal shipping as the main means of intercity transportation, urban rail in the mega-cities, infrastructure prefers bicycling).
Given the above (all reasonable and possible policy options) is low carbon growth not possible in Africa ?
Such options would answer the question of the the study sponsor, but ignored by IIER.
Alan
@AlanfromBigEasy
1) 44 GW is NOT equal to the energy needed for industrial development, it helps, but you would need vast amounts of other source of energy. just stating that some "additional renewable" etc. can give these countries a pathway to tenfold their income (still far below industrialized countries today) is a ridiculous oversimplification. For industrialization to take place very low cost prices are required and a stable electricity grid. Beyond a few renewable sweet spots of hydro and geothermal there is little that can be constructed at such low cost (in general as there are a few countries out of the many developing which do have sufficient renewable resources). I.E. even if the dam was constructed (which I doubt is feasible as outline under point 2) it would NOT lead to low carbon growth, as the activities resulting (aluminum, steel, copper etc.) require large transport movements, supplementary fossil fuel inputs for electricity and will spin off growth of more fossil fuel consuming industries. This as the outside companies locating there will NOT go for the higher cost (renewable) inputs but the lower cost fossil inputs. Again in general, there are exceptions and at a smaller scale that may work, but in the context of industrial development (look at China) the scale of energy necessary is a different beast than only a 44 GW dam and some supplementary renewables. We are talking about 1000s of GWs and millions of tons of oil equivalent.
2) If your hydropower dam was reasonable, possible, and feasible it would have happened already. The stability is a problem, the amount of investment is a problem, the cost most people cannot bear to pay for that electricity is a problem, the lack of an electricity grid capable of such distribution is a problem, the maintenance of that grid is a problem. It all requires outside influence in terms of investment, maintenance, consumption etc.
"44 GW is NOT equal to the energy needed for industrial development"
I'm not so sure I agree - according to http://www.ucsusa.org/clean_energy/technology_and_impacts/energy_technol... total global capacity for hydro is only 776 GW.
In the US the output of the Grand Coulee, for example, was a big part of the industrial capacity we applied to war time production of aluminum and airplanes, allowing us to far outproduce the rest of the world (USSR excepted) during WWII. The Grand Coulee is 6.5 GW. So 44 GW is a pretty big deal, assuming its feasible.
But I do think you point out what would be the largest problem with it - the lack of a grid and infrastructure to plug it into. Energy-intensive to build, and difficult to undertake in the current environment.
@daxr
Please look into total electricity production figures and it will become clear that 44 GW can only provide a portion for Africa of the wealth that OECD countries enjoy . Yes it is an important share, but no it is NOT equal to the energy needed for industrial development.
To make a quick and dirty calculation:
The thermal power plant capacity in EU-25 (including Norway and Switserland) was 522 GW early 2007 and there was 665 GW total capacity. To raise the GDP of the population of Central Africa, where the Dam would be built (121 million people) to half the level of EU-25 you would in theory therefore need about 90 GW of electricity capacity operating at 85% capacity factor (assuming that the cost is not an issue and this can be built which is difficult). If we further assume a capacity factor of hydropower around 50%, the grand inga dam could fill in about 26 GW (equivalent to 85% capacity) or 29% of the "half EU-25" electricity capacity level.
The conclusion that I reach is not that in theory this cannot be done, but that the cost are plausibly problematic (too much risk), and the practical execution even more problematic. It can only be borne by outside investors At this point details are not available, however, as the feasibility study of the project is not yet finished:
http://www.renewableenergyfocus.com/view/15662/aecom-and-edf-look-at-hyd...
A more interesting project is the 2.5 GW hydropower plant (Inga 3) to be completed by 2017 by BHP Billiton to feed electricity to an aluminum smelter in DRC.
http://www.power-technology.com/projects/bhpbillitoninga3/
Grand Inga is expected to have a capacity factor around 90%. The design minimizes capital and does not maximize energy production.
About half of the watershed is above the equator and half below, so the dry seasons offset - except for two weeks of low water each year when the Northern watershed (closer to the dam) drys up and there is a delay in getting water from the Southern Hemisphere downriver to the dam.
Still some water flow, but reduced for those two weeks.
BTW, Inga I & II have been built and the issue is whether to build Inga 3 or Grand Inga.
Alan
A hydro project in one of the most unstable regions of the world —where nothing is ever maintained (or even repainted since colonial days)— is going to feed into a non-existent grid and this will allow Africa to industrialise?
And pigs will fly, my friend.
A few years after BHP leaves, anything they built will have an "out of order" sign at the front door.
Rgds
Ex-African.
The world's longest HV DC line (1,700 km) has been operating from Inga I since 1982 with no major problems until about 2005 - despite the instability in the area.
Most of the line is still operational.
As I mentioned earlier, significant development in Africa is not possible without dealing with a non-energy constraint - corruption. An issue not mentioned by IIER.
Best Hopes for Africa,
Alan
Your comment only underlines and reinforces what I told you, Alan.
According to wikipedia, the Inga–Shaba HVDC line is only operational nowadays as far as Bandundu, to the West of Kikwit on the map below.
Note how most of the line no longer works, thanks to a dearth of Europeans or Asians to make it work. That's why I left Africa, Alan. Your comments about Africa show a profound naivete and a Panglossian idealism ill-suited to the reality of the region.
A very advanced technology did operate completely for about 23 years, during a period of maximum corruption and then political turmoil. It may be worth noting that a longer HV DC line was built in Siberia but never used - and no one has accused the Russians of being incapable of handling technology.
Hardly the couple of years you predicted.
Perhaps because it was built for non-economic reasons (to control the copper mining area @ Kolwezi), it was allowed to shrink to economically sustainable length. It should be noted that the area that was abandoned has no road network and maintenance has to be done by helicopter.
After 29 years it is still operable.
I see corruption as the #1 factor in limiting development in Africa. Absent that, education and social norms will adjust over time.
Panglossian ?
Alan
Much of the personal knowledge of African issues comes from African students and Han R. Herren (Google him).
Go visit Africa, Al. It'll be an education.
Are Mauritius and Botswana the same as Zimbabwe and Somalia? Are those the same as Egypt or Tunisia? Are they the same as SA or Congo?
Africans are no different from any other human - just raised in a number of different settings, many of which is not that nurturing. They can find (and some have found) positive spirals of better institutions and improved economies, just like everybody else.
welcome back Alan...I would advise you to read the whole report, but doubt it would alter your opinion.
Incidentally, what if the report is correct - and all nations pursue the idea that both green and growth are compatible, but then suddenly find out that this isn't true/possible. What do we do then? I don't expect you to change your stripes after all these years, but I have become convinced, that for many reasons: source, sink, and financial overshoot, that growth is no longer the default trajectory - and there are virtually zero efforts among serious policy circles for this path. How do you account for shortfall risk?
@AlanfromBigEasy
>I believe that a high investment (in appropriate areas of energy and resource efficiency and energy production) and lower consumption path is possible.
Lower income coupled with greater wealth and an improved quality of life. Quality over quantity as well.<
That I agree with for the developed world, but this would diminish GDP = economic growth as the quantity of produced goods diminishes. Less for more people which may be good for OECD countries as we can well do with less and lead a happy life. As to developing countries this is a different issue. I.E. if you today can't afford a bicycle the saying lower income becomes a bitter outlook)
Just 44 GW, with lower population growth, would be enough energy to supply a decent quality bicycle to a majority of Africans in a decade or two with substantial power left over.
China, pre-Economic Liberalism, and with roughly comparable economic activity and energy consumption, managed to produce 100s of millions of bicycles.
Alan
Add perhaps locally made mosquito bed-nets; ditto low-cost generic vaccines; a cell-phone network; simple crop-insurance underpinning rural semi-subsistence; (e.g. a very little fertilizer goes a very long way in a 'subsistence / small-surplus' food economy); subsidy from the world to cope with 'our' climate change imposed on them; rural education & public health including animal and crop health (defence against ingress of epidemics); low-tech biogas or solar for cooking; water purification & storage; soil stabilisation with locally adapted crops and tree-growing (locally adapted modular small-scale multi-replication giving rise to upward spiral & increasing food productivity - has been done.)
I agree that this stuff must become 'self-stoking' and 'self-maintaining', minimising use of non-local resources.
Perhaps get the extractive export-led model off their backs, and reduce rural impoverishment that has made urbanization such a nightmare over the industrial period (it certainly was for many in Britain)? Despite some nice problem-solving and knowledge gain, we have not exactly made a success story of our model at home let alone abroad, with regard to many fundamentals of health and social structure, let alone sustainability, in my view.
For whats ahead next couple decades, India, and similar developing countries are a better model for us than we are for them...
Agreed.
But see major caveat by WiseIndian lower down.
And double coal use?
[small edit] Although the USA is important for the future, the future mostly will happen outside the USA.
best hopes as Alan would say
Spot on! China, pre-economic liberalism -- which fed everyone and provided a decent living standard to almost all, on a tiny fraction of what is thought to be "necessary" oil and energy. There's plenty for everyone to own a bicycle; there's not plenty for everyone to own a hummer.
@AlanfromBigEasy
You are constructing your own arguments and imposing them on the study, concluding a-priori that the analysis must be flawed based on what you assume is in the report, and misreading the text by stating things that aren't in there. The argumentation is based on a physical analysis of the world combining proven assertions from thermodynamics with knowledge about economics. There is no contention that energy is a necessary ingredient for economic growth to occur as moving a force along a body is possible without energy inputs (irrespective of their source). We can discuss about the degree to which energy inputs are necessary which varies depending on the type of process, and your assumptions about efficiency in combination with jevon's paradox. Simple stated without growth in energy consumption in the long run there is no economic growth. That does not mean that there is a clear causal pattern from economic growth to energy or otherwise (which you misread), but it does imply a correlation, and this is apparent from the data as presented.
Your cited study is not related to this overall conclusion at all as it only looks at oil, and not at energy. Furthermore the analysis finds that "The estimates so obtained confirm that the demand for crude oil internationally is highly insensitive to changes in price." which is a confirmation of the issue that it is difficult to substitute oil in a meaninfull manner. Taking an outlier (France) which is hardly better than any other countries, looking at elasticities between 1979 and 2000 at the aggregate economic level, and not analysing the reasons as of which their elasticity is somewhat better (-0.568 for the long run) doesn't tell you anything about policies which work or not, as there are many factors involved (sector shifts, outsourcing, shifts from heating oil to other energy sources). To know whether France their policies have had a meaningful effect you'd have to come up with some more in-depth analysis.
Simple stated without growth in energy consumption in the long run there is no economic growth
I disagree on two points with the above. A shift to quality, efficiency and lower resource goods (iPads, education, health care) will allow conventionally defined economic growth (GDP) to grow with fewer resoruces.
As a recent example in my own life, $75 kitchen knives (perhaps 15 grams of steel) are worth every penny, and some future user will use them after I am dead.
The other point is that GDP is the best measurement of economic growth. I prefer Quality of Life.
And I have looked at the French example in some detail. For example, the promotion of bicycles for urban trips did not meet it's goal (10% of urban trips) but did increase bicycling from 1% to 6% (per reports).
And I have taken the time to compare the list of new trams with the populations of French cities and found that every town of 110,000 is getting a new tram line(s). I have studied Mulhouse in some detail. Add urban growth boundaries.
As well as a number of other French policies, such as adding 5 GW of wind to reduce coal & NG use during the winter (enough pump storage to time shift).
Best Hopes,
Alan
@AlanfromBigEasy,
I think we are running in circles, you are referring to developed economies (in most developing economies nobody has an iPad and only access to halfway decent healthcare and education). The point here is whether for instance Uganda (1226 dollars PPP per capita) can grow to say 20.000 dollars PPP per capita in a low carbon manner.
Since you seem to like sidenotes, an iPaD is not a low resource good, the thing itself may not weigh much, but the transport, waste material, and thereby energy required to put that together is substantial. More importantly this comes on top of appliances we already used (a tablet such as an iPaD does not replace any goods at the aggregate, it increases consumption of electronic appliances. More resources not less).
Your tram and bicycle examples are interesting but are not related to the production of goods.
Prior studies suggest that happiness and GDP lose correlation at about $8,000 to $10,000/capita/year. So that, rather than $20,000 is a goal if happiness is the metric.
Cell phones are fairly common in Africa. The value to resource ratio of cell phones is quite high I believe.
IT WILL NOT BE EASY to raise incomes in Africa. And doing so without dramatically increasing carbon emissions adds an additional complexity. But it is doable.
I also suggest a shift towards higher quality, longer lasting goods and a greater emphasis on services vs. goods in Africa would lower that $8K to $10K threshold.
PS: As an aside, corruption is one of the great barriers to development in Africa. Significantly reducing corruption should have minimal direct carbon impact.
Alan
Well built bicycles and tram systems add little to GDP after being built - but they continue to contribute to well being for many decades. I see that as a fault of using GDP as a metric.
PPPS: Uganda used their first oil lease revenues to pay for a hydroelectric dam. A long term, low carbon energy source. A strategy I applaud as wise.
I think a bit of what everyone is saying will be true...everyone has valid points, to me it’s just a matter of time.
You will see a stagnation of global GDP growth as the limits are reached….renewables won’t allow for growth and BAU to continue as THIS article states very well. This is happening now and GDP growth will continue to slow and flatline before finaly dropping…..(next 10 years)
But, then as TankingThinker points out “The reality is, the developed nations are going to end up taking resources from the developing nations in an attempt to keep the game running. Those with the biggest and most guns will get the booty.” (year 10 to year 20 from now) This will be messy and bloody, maybe wars and people starving in the developing world with no aid to save them now, the transition won’t be fun.
However, then I think there will be a gradual change to what Alan talks about, people will adjust to less, adjust to smaller houses and better quality of life over consumption. This will gradual, as people are born into and grow up in this new world they will have vastly different outlooks than we do today. Less people, GDP in quality of life, sustainable and simpler. (30 years from now)
That contention is based on old, flawed and obsolete research. Happiness research is now robustly in the other camp. And I think I have shown you this at least two times before, but you never seem to take notice. Why do you stick to the old, flawed results? Do they suit you so much better that truth doesn't matter?
J,
I can't see the chart above about $18k, but I don't see a correlation above about $8k.
Lets try this:
Or you can just use the URL: http://nonicoclolasos.files.wordpress.com/2010/07/inkomst_lycka1.png
(A tip: I can copy the URL by right-clicking my mouse over it, and then I can paste it into a new tab. Probably browser-dependent, though - I use Chrome.)
To mention French insignificant wind efforts as an example of hope in carbon mitigation is a bit surreal to me, as French nuclear power is the one and only demonstration of how a significant industrial nation can do virtually carbon free electricity without extreme hydro resources.
Simple stated without growth in energy consumption in the long run there is no economic growth
I disagree on two points with the above. A shift to quality, efficiency and lower resource goods (iPads, education, health care) will allow conventionally defined economic growth (GDP) to grow with fewer resoruces.
As a recent example in my own life, $75 kitchen knives (perhaps 15 grams of steel) are worth every penny, and some future user will use them after I am dead.
The other point is that GDP is the best measurement of economic growth. I prefer Quality of Life.
And I have looked at the French example in some detail. For example, the promotion of bicycles for urban trips did not meet it's goal (10% of urban trips) but did increase bicycling form 1% to 6%.
And I have taken the time to compare the list of new trams with the populations of French cities and found that every town of 110,000 is getting a new tram line(s). I have studied Mulhouse in some detail. Add urban growth boundaries.
Best Hopes,
Alan
The other, other point here -- you made it above, Alan -- is that GWP is increasingly composed of services: education, healthcare, banking, entertainment, and so on. These help to improve the quality of life but are not tightly correlated to energy consumption.
And another point: "in the long run there is no economic growth". Big deal. We only need to (approximately) double global energy consumption.
With that, and modest energy efficiency improvements, nine billion people can live as well as the French do today. Economic growth is a proxy measure for our progress towards this state. In the long run, we won't need or want economic growth.
@Gregvp
>The other, other point here -- you made it above, Alan -- is that GWP is increasingly composed of services: education, healthcare, banking, entertainment, and so on. These help to improve the quality of life but are not tightly correlated to energy consumption.<
This is developed countries thinking ignoring those who do not have the material welfare that we have (which is the majority still of the world's population), and it is based on the idea that producing a hollywood movie, having internet, and a banking system doesn't require energy at the scale/quality we have today. You can't have the cake and eat it too as the quality of those products will have to decline substantially to be considered a low energy service.
Boy, do you people offend me. You presume that quality of life is dependent on typical Chinese conspicuous consumption. It doesn't. The comment about $8000 as a reasonable quality of life is correct.
Banking doesn't add as much value as the banker/economists cabal would like you to believe. We don't need social complexity, but a lot of people are busy selling it to us. Think about that reflexively, as I do, every time you go "shopping" for things you want but don't need.
And yes, I practice what I preach, and this oldish Mac Mini substitutes for a hell of a lot of running around taking my body to places that actually look better on the TV.
I've got FaceTime for contact with relatives, and shop local with a small high mpg car, For all the whining and handwringing, the kids nowadays know what's gonna happen and they're adapting.
We'll get by if the greed head consumers don't derail us. Please don't feed their lies with this kind of document. Africa doesn't need SUVs, it needs smartphones and freedom from exploiters. I read the executive summary. I might read the main document, but there are two possibilities: the executive summary is happy talk, or the main document doesn't match it. I don't like teases.
@ormondotvos
Your comment strikes me as odd given that the main gist of our report points out to simple improvements in the lives of people. We are not talking about SUV's, smartphones, exploiters but local technologies that can be supported by the local environment and people.
"This opens a window of opportunity for quality-of-life improvement from relatively low-yielding sustainable technology solutions. These are not likely to be high-tech, but instead simpler approaches based on enhancing locally available resources to transform solar flows into usable energy and other benefits. Examples might be simple solar power systems, water purification solutions, the growing and processing of oil seeds from marginal, non-arable land for biofuels[xi], and improvements in agricultural technology that secure higher yields[xii]."
Add some mosquito netting, a few solar panels, some LED lights, a solar cooker or two, a a cargo bicycle with a trailer and maybe you have the beginnings of a very comfortable and happy life. No, I wasn't talking about Africa, I meant the US...
Simple stated without growth in energy consumption in the long run there is no economic growth. That does not mean that there is a clear causal pattern from economic growth to energy or otherwise (which you misread), but it does imply a correlation,
I think that's reversing things. If you believe that growth in energy is **necessary** to economic growth, then that's a causal relationship.
it is difficult to substitute oil in a meaninfull manner.
I'm baffled. Isn't it obvious that oil can be replaced in the long-term? Electric rail can replace trucks; EREV/EVs can replace ICEs; recycled plastic from biomass feedstocks can replace petrochemical plastic feedstocks;, etc, etc.
Please, tell me what you believe can't be replaced in the long-term, and I'll give you relevant info.
Please, tell me what you believe can't be replaced in the long-term, and I'll give you relevant info.
I would certainly like more info, as this is a subject that I am interested in.
Electric rail can replace trucks; EREV/EVs can replace ICEs; recycled plastic from biomass feedstocks can replace petrochemical plastic feedstocks;, etc, etc.
For these items the replacement can certainly be made, but it seems that the replacement is more costly the fossil fueled equivalent.
More difficult is farm, mining and construction equipment.
Heavy industry, particularly primary steel and cement is also a challenge.
The argument of this paper is that the increased costs associated replacing fossil fuels in all of these area spirals through the economy causing a contraction. I tend to agree with the main thrust of this argument, although I would like to see good evidence that the effect may not be so large as the authors believe.
Think about the extra cost of alternatives. Let's go with $100/barrel, times 30 billion barrels per year. That's $3 billion, or 4-5% of global GDP. That's not little, but not that much either. And it will likely be much less extra costs than that.
I presume you meant trillion. Still one would not think that 4-5% of GDP would be critical. But there are those on this blog who believe that $100/barrel oil already causes recession. We will see very soon.
Yeah, trillion. When $100/barrel oil stops Chindian growth, I'll be impressed. So far, it has not - not even close.
Well, that covers a lot of topics.
Here's a beginning:
http://energyfaq.blogspot.com/2008/09/can-everything-be-electrified.html
I agree with Alan here. The correlation between between economic growth and energy consumption is real enough, but there's less to it than meets the eye. Growth in energy use is a natural consequence economic growth in a cheap energy environment, but it doesn't follow that cheap energy is either necessary or sufficient for economic growth.
There is almost always a tradeoff between cost and efficiency in capital facilities and equipment. If less efficient systems allow a higher overall ROI than more efficient counterparts, it's the less efficient systems that will get built. Guaranteed. That doesn't mean that if energy costs were higher, that capital investment would come to a halt. It just means that it would get invested in more efficient systems.
There's a huge potential for improving the economic efficiency of energy. It simply requires that energy be taxed enough to make efficency economically attractive. The policy would have to include import tarriffs for goods produced in countries where energy remained cheap and manufacturers not burdened with external costs. Politically impossible as things stand today, but it would work.
@Roger Arnold,
The fundamental point is that growth in energy use will always occur in an economically growing environment. You can try to do with less (more efficiency) but
- Energy consumption itself will not decline unless you can mitigate rebound effects
- There is a limit to how efficient a process can become, many industrial processes are already operating near their optimum (low hanging fruit has been picked). I.E. if energy costs are higher and you already have some of the most efficient systems around, it's not possible to invest in more efficient systems. Most gains can be gained from smart systems thinking, such as using waste heat and substitution from a high to low energy costing way of doing things (possible for personal transport, but not possible for melting steel).
Your point about taxes is well taken, should be stressed more.
The problem with developing economies quite simply put is that of Human Psychology. In India and China (at least I can speak of India) the Govt and the people have this unwritten contract which states that the Govt will provide them with economic opportunities and in return people will put up with all the nonsense that is the hallmark of an oppressive government.
In fact everything is justified here as necessary for growth. Forced land acquisition..growth. Uprooting aboriginals...growth. Pollution...growth. No Liberties...growth. There is literally no end to this list. So if suddenly someone comes and tells the masses that they can't have a nice suburban house, a car, an AC and a big frigging TV people will suddenly have no reason to put up with all this. You will see chaos on the streets.
I already know of many model villages where people live happily from dawn to dusk on a low energy footprint with homes powered by bio-gas and a combination of Solar + Wind. Food is produced through permaculture and decisions made through the local council. In short every Luddite's dream. But they are just that, model villages. This model requires power to be devolved and the perceived notions of growth to change. This will never happen in the age of big government and the idiot box, which is why this dream will always remain a dream.
How did the model villages come to exist?
There are several activists who are doing good work, many of them have turned things around by themselves. There's one village called Ralegan Siddhi in India. It recently became famous on account of it's association with India's high profile anti-corruption crusader, Anna Hazare, but his achievements are really old, it's only recently that media has started taking notice of this.
You can just Google the name.
But as I had mentioned before it takes immense efforts to achieve this, the state and central governments are really loathe to give up power, a self sufficient village provides lesser and lesser incentive for the poor to vote for freebies that are regularly dished out during election time.
http://edugreen.teri.res.in/explore/renew/rallegan.htm
http://www.chronicpoverty.org/uploads/publication_files/CPRC-IIPA_38.pdf
http://www.rainwaterharvesting.org/People/RuralJY.htm
http://en.wikipedia.org/wiki/Ralegan_Siddhi
Nate
Interesting compilation of trends.
It appears a foundational issue is the EROI and cost of solar energy.
What happens if the EROI goes above and costs drop below fossil energy?
David -this isn't an argument about which is 'better' solar or fossil energy - its about whether we have enough flow rate, at cheap enough cost to continue industrialization trajectory. (I.e. the answer to your question would be quite different if solar EROI is higher than fossil fuel EROI at 25:1 vs 24:1 or at 5:1 vs 4:1. Under the former and obviously growth would still be possible (after some sort of financial reset), with the latter, growth wouldn't be possible - at least from where we are now though I suppose from a very low base, economies could 'grow' using 4:1 net energy gain)
I don't think we know with any degree of certainty that a 4 for 1 energy gain could not sustain a growing economy;it certainly appears to me, from what I have read here, that it would not sustain growth in any current developed world economy.
But we simply don't know how much we can accomplish over an extended period of time by dint of reorganing our life styles around quaility of life as opposed to gross comsumption.
Alan has pointed out that a railroad tunnel is worth as much or more after a hundred years as it was the day it was opened.
We have done things around our farm that will be enhancing the quality of life of generations of folks not yet born-such as building a partially sunken masonry barn-it is cool in summer and warm in the winter and with reasonable care will last for hundreds of years. We have built terraces and roads that will last indefinitely if maintained.
If I had kids to leave this place to, rather than nieces and nephews who will probably sell it and spend the money on fast living , I would gradually convert it into a zero net energy house and almost entirely self sustaining farm.
Now as to whether we can transition to a sustainable economy-I believe that it COULD , TECHNICALLY SPEAKING, be accomplished.
There is enough coal still accessible to provide us with the liquid fuel NEEDED to run the economy, if we were to break our bad habits- long enough for the renewables technologies to mature and scale up.
The chance of this actually happening,however, given our hypertrophied ape brains and personalities, is somewhere between very slim and zero.
Malthus is going to have the last laugh.
The Horsemen are just about ready to do some serious riding.
One reason I bought a big backhoe is that owning it will go a long , long way towards moving under ground and or forting up if it begins to look as if the missiles are going to fly or civil authority collapses.
I can dig a pretty big hole in a hillside , cover it over with steel on hand, lay a couple of feet of dirt over it, and stock it with food and water in a week or two at the most, with only a little help.It would be crude, but it would do for a few weeks or months.
Hopefully it will only be used to lay waterlines and build raised bed gardens and so forth, but only an idiot or a person unacquainted with history would dismiss the very real possibility of WWIII being fought within the next twenty years.
Nate,
Are we discussing E-ROI here? I thought there was general consensus on 18:1? That was based on old data and small wind turbines, so I'd argue that it's around 50:1, but isn't 18 enough??
I have this criticism: The IIER claims to be interested in contributing new understandings and policy proposals that can help us make a decent future on this planet.
In light of this mission, I'm wondering why the report does not address the origins of economic and energy-use inequality in the past and present. Indeed, neither the word "inequality" nor "redistribution" appear even once in this document.
This conveys the impression that the present distribution of wealth and energy-use is somehow just and does not need serious redressing. Cf. the works of Ha-Joon Chang.
It also elides the question of whether, regardless of whether or not one acknowledges the illegitimate basis for past stratification within and between societies, redistribution in the future might be required to maintain peace under conditions of global crisis. Will the OECD countries act liked gated communities and hoard what remains of energy-using infrastructures? If so, what would IIER's experts say about that strategy?
As it stands, we don't know, because they are silent on this crucial topic.
My E-Mail link to contact the editors is dead (I'm having E-Mail problems) so this is why I am asking this here.
I posted a response to the above comment, and someone in turn later commented on my statement.
Now, these seem to have been deleted. I'm wondering what I might have said that was offensive, or if there is some technical problem.
Thanx, Antoinetta III
I removed the subthread because it was becoming somewhat off-topic and contentious.
Per Nate Hagens, the reason why this report didn't include 'equitable distribution' is that every report can't include every salient aspect of our situation.
I probably should have made note of that before I axed the subthread.
All the best,
K.
The parlous situation with Australia's steel industry illustrates the ambivalent attitude towards outsourcing dirty jobs to Asia. Local steel mills say they can't compete with imports, yet the imports may be based on iron ore from Australia's west coast and coking coal from Australia's east coast. Asia supplies the labour and lack of CO2 constraints. Perhaps due to the size of Asia's mills they are more efficient but there is also the extra shipping costs. Question; why not make all the steel in Australia since we supply the main ingredients?
I suggest there may be a couple of subconscious factors at work
1) the CO2 emissions are out of mind and out of sight
2) it's a form of income sharing with less developed countries.
On the first point were are eventually supposed to move to global CO2 caps. Thus steel mills in India or China must come under the global cap. On the second point if the market for steel levels out then someone's gain is somebody else's loss. Already unions in Australia are claiming unfair competition and that some trade protection is needed. That can only get worse if the global economy shrinks.
Eventually the reality must sink in that some developing countries have populations which are too large for their resource base. I don't see how this can end happily other than by mutual agreement on what is in effect income sharing. In the case of steel the deal could be that Australia's 22m stay relatively wealthy but China and India's 2,500m stay relatively poor.
@boof
>Local steel mills say they can't compete with imports, yet the imports may be based on iron ore from Australia's west coast and coking coal from Australia's east coast. <
Iron ore yes, coking coal no. The combination of cheap labour and cheap coal make it difficult for Australia to do what you propose. I think it would make sense for Australia to incur the higher costs and produce more steel on their own shore, given that the labour benefits would accrue in the country itself.
Yair...there were a couple of blokes I remember who had a vision of building a cheap as chips east/west railtrack across Australia (no mountains) and freighting iron ore one way and coal t'other with steelmills at both ends...the numbers might have stacked up now?
I agree with Alan. Based on the summary, the report is biased and flawed. This passage struck me in particular:
(Emphasis added.)
This is bipolar thinking. China does not need to stop using coal-based electricity any more quickly than any other nation. If China moves to mitigate the environmental effects of its coal-fired power production, as it is doing, then its internal cost of electricity will rise. Sure.
But the cost will not rise to the same level as in OECD Annex I nations, because China has a lower cost of labour and a greater marginal productivity of capital. China will maintain some advantage, and at the same time move towards greater efficiency of use.
The treatment of renewables, and solar panels in particular, annoyed me. The summary continually juxtaposes solar panels with fossil fuels, which nudges the reader in the wrong direction.
A fair treatment would discuss solar panels together with fossil power plants, not fossil fuels. Solar panels are capital assets, not a feedstock. Again, the cost of capital goods is lower in China than in the OECD, so the problem is not as great as it is made to seem. China and most other developing countries also do not suffer from sunk cost effects or the existence of obstructive elites who profit from fossil fuel consumption. Again, the problem is smaller than the reader is made to feel.
gregvp, Alan,Nate,
I think it is worth questioning the assumptions that China's competitive advantage is due to low cost energy( or other raw materials). As Boof noted China imports some coal and iron ore from Australia and still produced steel cheaper than local Australian steel mills located just 5km from some of the export coal terminals or iron ore export terminals.
Is it true that OEDC countries have outsources major energy use to China? Most energy use in US is for generating electricity, and using NG for domestic and commercial heating and cooling, not manufacturing. Most oil is used for transport within the country. Manufacturing major energy intensive use is aluminium refining, steel, cement, bricks and oil refining, but not very much energy used in actual manufactured products. US energy use is about 7MJ(2kWh)/$GDP. Most of the cost of a manufactured item is not the energy content but the labor. In the US its the use of energy by the workers not the energy content of the steel or use of electricity and NG in the manufacturing.
Take aluminium, the US produces less new aluminium now than 30 years ago, but recycles a significant proportion so actually uses more aluminium( but uses less energy). Less steel is produced now in US than 30 years ago, but a lot of steel is recycled(saving energy use) even if steel is only a small part of the cost of a manufactured item for example a $20,000 vehicle will contain <$1000 worth of steel.
China on the other hand is building lots of new infrastructure, I think thats where 40% of the worlds steel is going NOT to exports to US.
For example looking at US energy use(1,000BTU/$ value)
We have for transport equipment( including vehicles) 0.7, while petroleum refining is 16.1 aluminum 12, pulp&paper 15, cement 56, iron/steel 27.Fabrication of metal products just 1.7.
http://www.epa.gov/sectors/pdf/energy/report.pdf
@Neil1947
Your statement that China imports some coal from Australia is ridiculous as this is <1% of the coal produced and consumed in China and therefore doesn't alter the average cost of coal in China one bit. In terms of manufacturing competitiveness this depends on the type of product (raw, intermediary, final) and sector and energy is an important part of raw and intermediary products, just as labour is. Ignoring energy and assuming that therefore we can easily produce steel rods, aluminum sheets, copper ingots etc. with energy costing four or more times, and have the same growth as today is foolish.
as this is <1% of the coal produced and consumed in China and therefore doesn't alter the average cost of coal in China one bit.
The highest cost (including transportation) marginal supplier sets the market price.
At least in coastal China close to off-loading ports, Australian coal + shipping sets the market price of coal. And coastal China near major ports is the most intensive area for Chinese manufacturing.
It is noteworthy that even with transportation of raw materials to China and steel back to Australia, that Chinese steel is cheaper than Australian steel.
Alan
Marxist economic analysis focused on just one Factor of Production - labor. It is true that all production requires labor, in one form or another, but that is not the totality of the analysis.
The IIER analysis has a similar myopic perspective, focusing on just one Factor of Production - energy.
As a result of an inadequate perspective by both schools of economic analysis, faulty analysis naturally follows.
Alan
@AlanfromBigEasy
The marginal price is irrelevant for China as it is not a competitive economy based on free markets. Your argument about port cities paying marginal costs is irrelevant as Chinese manufacturers pay electricity based on set tariffs. Manufacturing companies do NOT pay the marginal cost of electricity resulting from the marginal cost of coal, they pay a set electricity tariff.
Is the cost of coal sold to coastal generators negotiated by contract (long term, short term or spot) or imposed by Central Planning ?
My impression is that these prices are negotiated from comments about rail transportation of coal from inland production to coastal areas in China.
Inland Chinese coal consumption is 100% domestic (although there are talks about imports from Mongolia and Russia). The coastal port areas have a dynamic between coal imports by sea and shipments from the interior to meet growing demand.
A comparable is that oil product prices are "set" by the gov't, but adjusted periodically to account for world oil prices. All the gov't price controls do is impose some friction and time delay into the market mechanism.
I suspect the same is true for coal.
Alan
http://www.chinadaily.com.cn/china/2011-05/31/content_12608791.htm
said raising electricity prices will help ease power shortages because many coal-fired power plants are losing money due to the high cost of coal.
Ignoring energy and assuming that therefore we can easily produce steel rods, aluminum sheets, copper ingots etc. with energy costing four or more times, and have the same growth as today is foolish.
IIER's report only claims possible cost increases of 2-3x. And...I don't see any real evidence for that ratio.
Increasing the proportion of recycled metal would offset the price increase in energy.
Steel is routinely recycled with electric arc furnaces - a batch process that is ideally used when renewable energy is in surplus. Other metals could be likewise recycled with batch processes when electricity is dirt cheap.
This approach could well lower the energy costs of metal.
Best Hopes for Understanding,
Alan
The steel mill near us only runs at night, when power is cheap. I'm sure that will continue when night time power is dominated by wind and nuclear.
Likewise most energy intensive processes at mines can be scheduled for when electricity is cheap. Giant motors that grind and crush ore for example can be organized for intermittent use with stockpiles of ore before and after crushing.
The economic value of this scheduled power use is large enough to reduce power costs below those of FF. Of course, peak power users will pay more.
Alan
@gregvp
I think you need to read into China's 12th five year plan and look in the country to get up to speed with what is and what is not happening in China. There is no such thing as mitigating the environmental effects of coal-fired power production in China, as they are still expanding their coal fired capacity (and natural gas), only the relative share of renewable is increasing as it is coming from a fairly low level. The main part of this expansion is hydropower which after the 12th five year plan will be nearly fully utilized, the other part is wind power. China is NOT investing substantially in solar power for electricity generation relative to production of other power sources. The three reasons are cost (of solar panels), cost (of electricity generation, cost (of storage at higher penetration levels).
Your view seems to be that China could do without expanding their fossil electricity capacity actually decrease it and still grow substantially (at 9%-10% per year), by expanding only renewables and working on efficiency. That is not based on any realistic view of differences in energy costs. Since we are talking about an economy expanding at a rate unseen in history adding efficiency can only do little (cut down a bit on the increase relatively). For example, in absolute energy consumption building a million ton copper smelter with an efficiency of 14 GJ per kilogram or 12 GJ per ton results in an increase of 12 million GJ versus 14 million GJ, despite a 15% efficiency improvement. Similar examples hold for any economy which is growing in activity, these will always grow their energy consumption (regardless of the efficiency of processes) unless you can magically turn everyone into ascetic monks who base their activity on breathing, eating and sleeping only and low consumption of materials, which in practice is not possible.
The only way for China therefore to low carbon is to base all their energy consumption growth on low-carbon energy sources, which from a cost perspective is impossible. This would severely dampen their economic growth far below present levels. The assumption that costs will not rise to the same level as in OECD Annex I nations is incorrect for these reasons:
- You assume that all production is equal and that the shrinking of competitive advantage is not substantial relative to the production of these goods in OECD countries. This would be the case if all manufacturing would be labour intensive (versus capital intensive) which it is not. There are labour intensive, and capital intensive processes, both are influenced by increases in energy costs and it varies per type of industry. There will be several branches of industry where a substantial cost increase of energy for instance would make them uncompetitive versus doing the same process in OECD Annex I nations. Typical energy intensive processes nowadays have a 20% share of their cost being due to direct energy consumption (not counting indirect in the production of machinery itself and maintaining labourers etc.). If you would suddenly go from cheap coal (3-4 cents/kWh) cost price to a 15-20 cents/kWh cost for renewables (very conservative given additional storage costs and electricity grid)) this would render energy intensive manufacturing and mining uncompetitive, it would be relocated to other countries (India, Malaysia, Indonesia, Brazil) and growth will slow down. There will be few activities that can be exploited economically remaining, and China's economy would decline as present activities based on cheap coal are relocated to other places.
- You assume that low cost of labour will remain the same with more expensive energy which it will not (if you increase the price of electricity, all costs will go up as nearly everything is related to electricity). I.E. if China would switch to solar power electricity the costs of living will increase and hence also the cost of labour. This is only a small effect but it needs to be included for a fair comparison.
I can recommend to look into the report for a treatment of fossil fuel power plants vs solar panels.
But what they ARE investing in heavily -- and this is of great significance, long term -- is solar PV production capacity:
.... most of those panels are currently being exported, but that can change, and will, as the Western economies collapse.
PV production, by country:
http://en.wikipedia.org/wiki/List_of_countries_by_photovoltaics_production
China is run by strategists who think multiple decades, or even a century, in advance. What is important is not that most panels are currently exported, but that productive capacity exists to transform China's energy picture in a very short time, when the time comes.
Meanwhile, solar PV is getting so cheap that it is actually challenging solar thermal:
@alan2102
>China is run by strategists who think multiple decades, or even a century, in advance. What is important is not that most panels are currently exported, but that productive capacity exists to transform China's energy picture in a very short time, when the time comes.<
Dreams given the cost price of solar which even at this implausible dramatic cost reduction to $1 per watt will still be a factor 4 too expensive in most regions, and based on a flawed comparison between one expensive technology (solar PV) versus another (CSP). There is no way that in the next 20 years China's energy picture will change drastically due to solar energy. Dreams also based on not realizing the scale of electricity production increase (not talking even about heat and transport) versus the low amount of production capacity (5000 MW of production capacity annually equates to less than 1% of total new installed electricity capacity annually in China at present).
$1 per watt will still be a factor 4 too expensive in most regions
I'd be curious how you calculate that. If we assume 20% capacity factor (achievable in many areas), 7% interest, and 30 year life, $1/Wp gives us about $.05/kWh. A total installed cost of $2/Wp gives us $.10.
$.10 per kWh is very affordable, especially for end-user peak power!!
any economy which is growing in activity, these will always grow their energy consumption
This depends enormously on the growth rate. It's not that hard to increase energy efficiency by 3% per year. 9%...pretty hard.
a 15-20 cents/kWh cost for renewables (very conservative given additional storage costs and electricity grid))
That's not really based on any evidence. Studies in the US have shown that market penetration of 35% for renewables is possible, without any significant changes, just changes in operating policy. No storage, no DSM, nothing at all dramatic.
IIER really hasn't tried to simulate a grid with a variety of intermittency mitigation strategies. It only tested using an enormous centralized battery, which is just about the worst approach one could imagine.
[IIER] only tested using an enormous centralized battery, which is just about the worst approach one could imagine.
Yes, IIER has to prove that renewables are "The False Fire Brigade" - the title of one of their TOD articles.
That article, and the logic behind it, is one reason I discount IIER and all of their findings, just as I do Climate Deniers.
They assume that mining and recycling metals has to be a continuous process, working off battery power - when the truth is the opposite. Even continuous processes (such as aluminum smelting) can be slowed down dramatically when electricity prices spike and maxed out when power is cheap.
Alan
Indeed an article linked from a recent Drumbeat likened molten-salt sodium-sulfur battery technology to a bidirectional aluminium smelter. In principle a smelter might even be designed in such a way that it can be reversed : a molten-salt aluminium-alumina battery, if you will.
http://cleantechnica.com/2009/11/19/arpa-e-37-top-funding-goes-to-renewa...
this would render energy intensive manufacturing and mining uncompetitive
That's a short term competitiveness analysis, not a long-term viability analysis.
@Nick
1) I don't dispute that for a lot of areas 2$ per watt of total installed price can be viable in developed countries if you don't need a lot of bells and whistles (so for consumer prices), but for most developing countries and especially industrialization use a solar price of 2% per watt installed is too high. I.E. your discount rate of 7% is too low. For this report we looked at discount rates in 20 developing countries and all of these countries provide general loans at 10% or higher per annum, most 25%, also micro-credit loans are in that area, and government 5 year loans are 10% or higher as well. If you assume a realistic 25% discount rate for these countries then your cost will be more than a factor of 4 too high even at $1 for the panels and $2 for the total system cost. Also you can't get loans normally for 30 years for these type of projects which also alters your pay-off position (20 years is max and in developing countries its likely to be much shorter than that).
2) You are stating that it is not that hard to increase energy efficiency by 3% per year. I beg to differ, given that 15-30% of that efficiency will be counteracted by the direct rebound effect, and approximately 50% to 100%+ by the macro-economic rebound effect (in a developing economy). Say for instance that we introduce more efficient forms of light (solar electricity) which replaces kerosine fuel to a rural family in Pakistan. Then the rural family will not stop using the kerosine fuel, but use it for a different purpose (travel, heating), in the end energy use will be the initial liter of kerosine fuel per week + the use of solar electricity. I.E. in the end your energy consumption is higher than you started with, despite having more efficient lighting. The efficiency has increases vastly, but that doesn't mean you end up using less energy. The best way to counter the rebound effect is taxing, but you won't do that in a developing economy (more difficult than in a developed where it is already difficult).
As a sidenote, for the Netherlands we are unable to achieve an energy efficiency (not including the rebound effect) at more than 1.5% per year despite large policy investments. Of this 1.5% about 1% is autonomous. The problem here is the lack of strict policies that ban the use of inefficient ways of doing things, without strict measures little happens in the end.
3) I am not a grid expert, but I do know that the intermittency mitigation strategies you are talking about don't come for free (I.E. the cost of electricity in Germany has increased by 3 cents per kWh because of additional grid infrastructure/maintenance according to the German Federal Ministry for Environment (BMU). If you can show me a study that shows that 35% penetration is possible at zero cost then please forward the name/link.
4) I don't get your point on long term viability, it's not specific enough.
If you assume a realistic 25% discount rate
Realistic ? For macroeconomic evaluations ?
About as realistic an example as I can find of IIER realism.
Alan
New Zealand has determined that they can increase wind to 45% of the grid without major issues or costs, provided that the wind is geographically distributed (with particular concentration on North vs. South Island). I downloaded the pdf years ago, but do not know the link.
for most developing countries and especially industrialization use a solar price of 2% per watt installed is too high.
I think you're confusing residential micro-credit with industrial/commercial credit. You have to compare apples with apples. Industrial companies will be able to get credit for less than 10%.
You are stating that it is not that hard to increase energy efficiency by 3% per year....The efficiency has increases vastly, but that doesn't mean you end up using less energy.
I never said you end up using less energy. Of course, you're talking about a very, very conventional BAU kind of environment, not one where energy prices are rising because of scarcity or carbon taxes. If prices are rising, efficiency increases will allow declining consumption without sacrifice.
Netherlands ...without strict measures little happens in the end.
Exactly. If prices don't rise (or efficiency isn't required by regulatory mandate), then consumption won't fall.
the cost of electricity in Germany has increased by 3 cents per kWh because of additional grid infrastructure/maintenance according to the German Federal Ministry for Environment (BMU)
That's a big increase, especially in euro cents. In the US, the **total** cost of the grid is only about 5-6 cents. Are you sure that's correct?
a study that shows that 35% penetration is possible at zero cost
"The electricity grid in the western United States could support up to 35% of wind and solar power by 2017, without extensive additional infrastructure, according to the National Renewable Energy Laboratory (NREL).
The US Department of Energy’s research agency issued a study that said the target was “technically feasible” – but would require key changes in how the electricity network is operated in the mountain and southwest states.
Up to 30% wind energy and 5% solar energy penetration could be achieved on the grid with a better coordination of utilities’ distribution activities across a much wider geographic area, the research suggested.
It also recommends operating a schedule of generation or sales more frequent that the current hourly system.
This would allow the system to react to the changes in transmission level from wind or solar projects.
Dr. Debra Lew, NREL project manager for the study, explained: “If key changes can be made to standard operating procedures, our research shows that large amounts of wind and solar can be incorporated onto the grid without a lot of backup generation.”
“When you coordinate the operations between utilities across a large geographic area, you decrease the effect of the variability of wind and solar energy sources, mitigating the unpredictability of Mother Nature,” added Dr Lew.
Western US
The Western Wind and Solar Integration Study offered a first look at how a significant amount of renewable energy could be integrated into the grid in the western US.
It followed a study published in January on the impact of wind farms on the grid east of the Rockies (see this BrighterEnergy.org story).
The Western study looks at the power system operated by the WestConnect group of utilities in the mountain and southwest states.
This group includes Arizona Public Service, El Paso Electric Co., NV Energy, Public Service of New Mexico, Salt River Project, Tri-State Generation and Transmission Cooperative, Tucson Electric Power, Western Area Power Administration, and Xcel Energy.
The research stated that were these utilities to generate 27% of their electricity from wind and solar sources across the Western Interconnection grid, it would cut carbon emissions by 25% to 45%.
It could also decrease fuel and emissions costs by 40%, depending on the future prices of natural gas, the study claimed.
The study called for better use of wind and solar forecasts by utilities, and pointed out that more efficient use of the current grid infrastructure would mean less new transmission systems need to be built."
http://www.nrel.gov/wwsis
This is what could be done easily with the current grid. No DSM, no storage, very little additional transmission, etc, etc. They're looking at the planning needed for the medium-term. A grid of more than 35% renewables is so far off that analyzing it is just a waste of time for a utility working group (people who actually do this for a living).
I don't get your point on long term viability
I'm not sure how to rephrase it. You were talking about the impact on China of higher prices, and how they'd lose business to other countries. But, if costs rise for everyone, that's not a concern.
@Nick
1) >I think you're confusing residential micro-credit with industrial/commercial credit. You have to compare apples with apples. Industrial companies will be able to get credit for less than 10%.<
Do you have data for this? We looked at the average 5 to 10 year government bond rate which should be a good indicator for that. The average 2009-2011 rate was above 10% for most developing countries. For instance, Vietnam (12%), Malawi (38%), Nigeria (11%), South Africa (8.4%) Zambia (12.6%), Pakistan (14.3%), Uganda (12%).
That still makes solar substantially higher in cost then a fossil alternative which can deliver constant power. For industrial users the costs don't weigh up for the benefits (less CO2) unless they can get that cost bridged. I.E. if you build a factory somewhere then you want to have a constant power input. The grids in developing countries are in most cases not comparable to that in Europe or the US, and far less is possible in terms of grid management.
2) >I never said you end up using less energy. Of course, you're talking about a very, very conventional BAU kind of environment, not one where energy prices are rising because of scarcity or carbon taxes. If prices are rising, efficiency increases will allow declining consumption without sacrifice.<
Ok so if I understand your statement well you are saying that as long as price rise efficiency will allow us to grow/keep the economy stable with using the same amount of energy?
As to your assumption that prices will allow declining consumption without sacrifice, this is only true for some processes/operations and for economies which have a lot of inefficient resilience built in them. For energy intensive processes which already operate at high efficiencies there will be sacrifice involved (they can't go to 3%), for most developing economies there is no possibility to invest that easily in efficiency and your sacrifice means abandoning an inefficient process.
3) "That's a big increase, especially in euro cents. In the US, the **total** cost of the grid is only about 5-6 cents. Are you sure that's correct?"
I have not verified the study, but assume based on the amount of additional investment in the Germany grid in the last five years, and the source (German Ministry of Environment) it should be halfway correct.
4) ""The electricity grid in the western United States could support up to 35% of wind and solar power by 2017, without extensive additional infrastructure, according to the National Renewable Energy Laboratory (NREL)."
This doesn't show that the 35% would be reached at 0 additional cost which was my question, only that it is according to NREL technically feasible. Nice in itself, but it leaves my question unanswered (except that there is an indication that the additional costs could be low if the NREL study is halfway correct).
5) "I'm not sure how to rephrase it. You were talking about the impact on China of higher prices, and how they'd lose business to other countries. But, if costs rise for everyone, that's not a concern."
I agree if you assume that costs will rise equally for everyone, but based on developments already happening I very much doubt that assumption. I.E. China doesn't operate on the basis of equal costs, there is no common international agreement to work on costs of CO2, costs of extraction vary substantially between countries etc.
We looked at the average 5 to 10 year government bond rate which should be a good indicator for that. The average 2009-2011 rate was above 10% for most developing countries.
I think that if you were to look at all developing countries, including Brazil, China and India, and weight them by their population, you'd get a weighted average below 10% for sovereign debt. More importantly, if you were to look at major industrial firms in those countries, such as Tata, you'd certainly find that they can issue commercial paper for less than 10%.
That still makes solar substantially higher in cost then a fossil alternative which can deliver constant power.
Even 10% interest makes $2/Wp solar power only cost about $.12/kWh. That's far cheaper than electricity from diesel generators, which is what these companies use when the local grid can't be trusted. Diesel electricity costs about $.30/kWh with $.80/liter diesel fuel.
you are saying that as long as price rise efficiency will allow us to grow/keep the economy stable with using the same amount of energy?
Not exactly. I'm saying that efficiency will allow more GDP per unit of energy. If energy supplies are limited, then price will rise to ration supply. This will stimulate energy efficiency, and energy efficiency will grow to allow GDP to grow. Of course, energy efficiency improvement takes time and money, and this will delay and slow down GDP growth somewhat.
In the long run, this energy bottleneck will be eliminated by a switch to renewables and nuclear.
As to your assumption that prices will allow declining consumption without sacrifice
Oh, I don't think declining consumption comes at no cost. I think it's cheaper than this article appears to suggest, but it's not free.
for most developing economies there is no possibility to invest that easily in efficiency and your sacrifice means abandoning an inefficient process.
Could be. The costs and benefits of a transition from FF to renewables will be unequally distributed...just as Fossil Fuels are now.
I have not verified the study
hmmm. You might want to look again, as that's a very high cost. You might also want to verify the implicit assumption that these are related to renewables. Do you happen to have a link?
This doesn't show that the 35% would be reached at 0 additional cost
Sure. I think very, very low cost is good enough.
I agree if you assume that costs will rise equally for everyone
Oh, I'm not worried about equality. Costs and benefits will vary. The point: the world economy overall will still be able to maintain industry. Industry will be viable with higher energy costs.
You all talk about renewables and China's five-year plans without mentioning the enormous ramping of nuclear power plants. It should be obvious to all that this is their main focus regarding coal alternatives. Fortunately.
Another significant issue is that the 3 - 4 cents/kWh figure cited is dated and absolutely irrelevant today. Take for example even this somewhat dated but much more recent report. Even the cheapest, dingiest grade of coal is ~490 yuan/ton for 6000Kcal/kg coal (equivalent to ~$77 for 7200 BTU coal), which in raw energy cost alone is ~$5.35/MMBTU. At even the most efficient coal plants in the world this translates into a fuel cost of approximately $0.05/kWh. Add in variable O&M, fixed overhead, capital costs, etc. and your all in LCOE of Chinese coal is significantly more. I would estimate that the LCOE of coal in China today is at least 7 cents per kWh, double the 3 - 4 cents stated. Costs will only continue to increase as China builds more coal generating capacity and coal production struggles to keep up.
I'm surprised to see population growth not factored out of the analysis, as per capita numbers should give a clearer picture of any trends:
1980:
- 4.45B people
- 288 quads of energy produced
- $17.7T GDP (constant dollars)
Thus:
* 65 quads per billion people
* 16 quads per $trillion GDP
2007:
- 6.64B people
- 475 quads of energy produced
- $39T GDP (constant dollars)
Thus:
* 72 quads per billion people
* 12 quads per $trillion GDP
Hence:
* Energy per capita increased by 0.37% per year
* GDP per capita increased by 1.45% per year
Sources:
- Energy: EIA
- GDP: earthtrends (their source is the World Bank)
@Pitt The Elder
At the global aggregate level introducing population doesn't alter the picture (not clearer or less clear) as both values are divided by population at the same time, hence that division doesn't change the relative ratios of Energy and GDP. It can be clearer when comparing different economies depending on your goal.
Pitt's numbers are striking. Rembrandt, I don't understand your reply, or rather I don't see how it relates to the (stunning) reality reflected in Pitt's numbers, assuming them to be correct.
@alan2102
I wasn't commenting to Pitt's numbers which are in constant dollars instead of real therefore exaggerating the change in GDP growth (much smaller than his numbers suggest).
Unfortunately, you appear to have misunderstood what "constant dollars" means.
It means "inflation-adjusted dollars", and it's what "real GDP" is denominated in. "GDP in constant dollars" and "real GDP" are just two names for the same thing - GDP adjusted for inflation.
Work dispassionately through the numbers - you'll get exactly the same results I did. The math suggests a substantial disconnect between growth in energy consumption and growth in GDP (or manufacturing) over the last 30 years; it would be interesting to see that addressed squarely.
That's simply not true, in a concrete, mathematical sense. Looking at the growth of something between time 1 and time 2 involves subtraction, and subtraction can't be re-ordered in the way multiplication or division can.
For example:
Time 1:
- Population = 1
- GDP = 1
- Energy = 1
Hence:
* GDP per capita = 1
* Energy per GDP = 1
Time 2:
- Population = 2
- GDP = 4
- Energy = 2
Hence:
* GDP per capita = 2
* Energy per GDP = 0.5
Growth:
* Energy: 100%
* Energy per GDP: -50%
Mixing together population growth with energy requirements gives a completely different picture from looking at energy requirements per unit of output.
Given that we know past population levels and have good estimates of future expected population growth, and that those estimates indicate population in the next 30 years is virtually certain to grow more slowly (in both relative and absolute terms) than in the last 30 years, any estimate of energy requirements which does not take advantage of that is needlessly throwing away information and reducing its likely accuracy.
FWIW, you could replace "GDP" with "manufacturing output" in the above and you'd get about the same results - both have become less energy-intensive (on a world-wide basis), at a rate of about 1% per year over the last 30 years.
@Pitt the Elder
>That's simply not true, in a concrete, mathematical sense.<
I think you are looking at a different thing. The relative ratio between energy and gdp will be the same in period 2 regardless of dividing both numbers by population or not. The relative ratios between periods can change as population changes, but what does that tell you? In terms of energy demand it tells you something, but it doesn't change how much energy is required to produce something by including population, as No. of people doesn't alter that this is the efficiency of a process.
>FWIW, you could replace "GDP" with "manufacturing output" in the above and you'd get about the same results - both have become less energy-intensive (on a world-wide basis), at a rate of about 1% per year over the last 30 years.<
yes, but where does that come in the discussion? I do note that a 1% continuous increase per year each year is a smaller and smaller increase as time goes on (I.E. efficiency gains are getting smaller)
Not true.
You first have to divide by the DGI.
As is well known,
GDP= DGI * actual production,
where DGI is the Domestic Gullibility Index and is generally in the range of 10 to 10^10
1% continuous increase per year each year is a smaller and smaller increase as time goes on (I.E. efficiency gains are getting smaller)
uhmmm....isn't a continuous 1% increase an equal increase as time goes by?? And aren't the returns getting larger in absolute terms?
For example: a vehicle which goes from 20 kms per liter to 20.2 gets a larger increase in kms available per liter than a vehicle which goes from 10 k/m to 10.1.
@Nick,
If you measure things as output per unit of input returns will get larger in absolute terms yes, but this is not a proper way of physically measuring a process as your 1% increase becomes exponential (instead of logarithmic) which isn't what is observed in efficiency changes.
A better (although still too approximate/general approach) way is to look at your 1% increase in input per unit of output (so litres per km). This gives that a 1% increase will lead to diminishing returns in absolute quantities. In your example an efficiency of 20 kms per litre translates into 5 litres per 100 km, and an increase of 1% yields 4.95 litres per 100 km, 4.9005 litres per 100 km, 4.851 litres per 100 km and so on.
In a more realistic approach you would look at the historic change in efficiency over time and see what curvature can be best applied, and combine this with the optimal possible efficiency of a process. In this way you can see both where you are in terms of reaching the optimum and to what extent fast improvements are still possible.
your 1% increase becomes exponential (instead of logarithmic) which isn't what is observed in efficiency changes.
Sure it is. You're just thinking about it backwards.
A better (although still too approximate/general approach) way is to look at your 1% increase in input per unit of output (so litres per km).
That's backwards. You're worrying about inputs, when you should be worrying about outputs. The output here is travel, and it continues to grow exponentially with a constant input.
In a more realistic approach you would look at the historic change in efficiency over time and see what curvature can be best applied
That just gives you history, not what could be done if desired. No one's serious about CO2 now, but they might get there someday.
Furthermore, that's history of an low oil price era. It doesn't tell us much about long-term elasticity in a high price era.
combine this with the optimal possible efficiency of a process.
This is important: the optimal possible efficiency of transportation is almost infinite. In other words, transportation can almost not use any power at all.
Envision a skater at the edge of a lake. He or she places a tightly coiled spring behind their back, and pulls a release which uncoils the spring. The spring pushes the skater to 25 km/hr, and the skater slides across the lake. At the other end, the skater gracefully spins 180 degrees and lands on the coil, compressing it again. The only energy expended is the frictional losses on the ice, which are very low.
Similarly, an electric vehicle can recapture the energy of acceleration when braking. The only losses are internal and aerodynamic friction: they can continue to be gradually reduced for a very long time, and to a very great degree.
Not, at some point they will be reduced to the point where they are trivial. That asymptotic curve approaching zero will cross a point where the energy required is so low that it is no longer important: it can be supplied by ambient or user energy. For instance, racing versions of solar cars are already at the point where no onboard fuel is needed: they can maintain 120 km/hr using only ambient sunlight.
@Nick,
No point in continuing this discussion unless you want to discuss things from a realistic perspective. The theoretical optimal efficiency has a limit, that limit is difficult to reach due to many losses. In your example you are ignoring the losses due to air friction, and assuming that ice friction is low which it is not if you have natural ice (yes if you have theoretically optimal ice it has low friction). Racing versions of solar cars are so efficient because of very low weight, not because of their very optimal efficiency. They are not applicable in practice to day to day use. Please take a course in thermodynamics and do some system calculations.
No point in continuing this discussion unless you want to discuss things from a realistic perspective.
We've had a lot of articles recently on TOD about theoretical perspectives. The Nations Sized Battery was one. Theoretical perspectives are useful to frame one's perspective.
Besides, you didn't answer the first part of my comment.
In your example you are ignoring...
Sure - it was just an illustration - a real world familiar example where fricitional losses are low compared to the total energies involved.
Racing versions of solar cars are so efficient because of very low weight
Not really. Weight is far from the most important factor for EVs, due to regenerative braking. Actually, it's their aerodynamic efficiency that's most important. EV manufacturers will tell you that.
Please take a course in thermodynamics
I've already done that, and quite a bit more.
and do some system calculations.
I was helping PhD candidates do that decades ago, and I've been doing it professionally ever since: deterministic models, simulations, stochastic queuing models, etc, etc, etc.
Don't make assumptions just because someone disagrees with you...
Yes, but that's not what the article is about. The article is looking at growth, which by definition involves subtraction:
* Growth = (value at time 2) - (value at time 1)
Ratios and growth work differently; let's use the numbers above, and work through an example in detail:
Ratios:
* Energy at time 1: 1
* Energy at time 2: 2
* Population at time 1: 1
* Population at time 2: 2
* Energy per capita at time 1: Energy1/Population1 = 1 / 1 = 1.0
* Energy per capita at time 2: Energy2/Population2 = 2 / 2 = 1.0
As you correctly say, dividing through by population makes no difference for ratios. Look at what happens to growth calculations, though:
Growth:
* Growth in Energy: Energy2 - Energy1 = 2 - 1 = 100%
* Growth in Population: Population2 - Population1 = 2 - 1 = 100%
* Growth in Energy per capita: (Energy2/Population2) - (Energy1/Population1) = (2/2) - (1/1) = 1 - 1 = 0%
Dividing through by population completely changes the result when we're talking about growth. You're dividing each term by a different number; it's a mathematical error to say that doesn't change the result.
Again, you're looking at something different from what this article is considering: growth. Economic growth is a relative measure, meaning 1% is 1%, no matter whether it represents 10 units or 1 unit. A 1% annual efficiency increase means that 1% (real) economic/manufacturing growth is possible with zero increase in resource consumption.
For interest's sake, here's what a straight-forward extrapolation of the trends of the last 30 years suggests:
Assumption #1: Real GDP = Energy * Efficiency
Trend #1: Energy per capita grows by 0.37%/yr
Trend #2: Real GDP per capita grows by 1.45% per year
Thus: Efficiency grows by 101.45%/100.37% - 100% = 1.1% per year
Estimate #1: Population grows by 30% in the next 40 years (IMF estimate) = 0.66% per year
Thus, projecting these into the future:
1) Energy use grows by 100.66% * 100.37% - 100% = 1.0% per year.
2) Real GDP grows by 101.0% * 101.1% - 100% = 2.1% per year.
If we expect that there will be energy constraints, a simplistic estimate based on changing only the energy trend would give us:
No energy per capita growth:
* Real GDP grows by 1.7% per year
* Real GDP per capita grows by 1.1% per year
No energy growth:
* Real GDP grows by 1.1% per year
* Real GDP per capita grows by 0.4% per year
-1%/yr energy availability:
* Real GDP grows by 0.1% per year.
* This is slightly better than the level of growth seen by the USA in 2008 (-0.3%)[1]
* Real GDP per capita grows by -0.6% per year (i.e., shrinks)
-2%/yr energy availability:
* Real GDP grows by -0.9% per year.
* Real GDP per capita grows by -1.6% per year (i.e., shrinks quickly)
-3.6%/yr energy availability:
* Real GDP grows by -2.5% per year.
* This is the level of growth seen by the USA in 2009[1]
* Real GDP per capita grows by -3.2% per year (i.e., shrinks quickly)
That's not to say the future will work out like this, of course, but it's potentially informative to see how current trends might be expected to play out.
Pitt,
I think you have latched onto something interesting here.
Our modern high standard of living (in the 1st or OECD world) is based on delivering certain goods and services to well-off individuals on a per capita basis.
As others have noted elsewhere on TOD, these goods and services come with so-called Embedded-Energies or emergies inside of them. For example, when you fill up your automobile with gasoline at a fuel retail outlet, the "emergy" of that added fuel is not just the BTU's of energy that combustion will provide to your internal combustion engine (ICE) but also the energies it took to extract crude from the earth, to refine it, to ship it ti the gas station and to pump it from the underground station tank to your above ground car tank.
As another example, your recharged iPhone (smartphone) has a its accumulating "emergies" not only the kWhrs of energy it took to recharge its batteries, but also all the embedded energies it took to fabricate the micro-circuits inside that device.
Therefore, on a per-capita basis, a high-end all-tech'ed up individual requires vast amounts of "emergies" to keep his or her non-negotiable life style going.
It would be interesting to see how per capita emergies stack up as we move up the standard of living curve.
_________________________
see also: System dynamics used to model GDP and other dimensions of economic well-being
Having one nation do the "dirty" work for another is a terrible waste of energy. The global economy seems predicated on leveraging transportation energy for cheap labor. We ship materials to China. China applies cheap labor and ships finished goods right back. Wouldn't it be more sensible to transport the laborers to the consumer nations and have them make things locally?
"Free trade" can only be sustainable where there is free movement of labor across national borders. Even China must import cheap labor from poorer Asian countries to work for a pittance in their factories.
How much energy get wasted just trying to exploit cheap labor somewhere else where the poor can be induced to work at starvation wages?
BTW,in the US we have a housing glut. There are about 3 million more homes than there are families to live in them, and the construction industry is idling. We could clear the housing market in half a year if we would simply open up immigration to anyone who wants to live and work here. The fact that this may be politically distasteful to many only reveals our preference to exploit labor out of sight and out of mind and keep the advantages for ourselves.
@JH-M
So what you are suggesting is to allow labourers in developing countries, to work in developed countries under low-wage conditions with very low benefits similar to that in the developing countries? I.E. you want to introduce a class society bordering where we have the relative rich of country A and the quite poor workers of country B working in country A, just solely for the benefit of country A. Besides this being not feasible (politically and culturally) it is quite an egocentric thought as it assumes that the developing world is there to serve the developed world.
Rembrandt, that is defacto what has already occurred in this country in a number of industries. Not to mention in the homes of the wealthy who depend on the services of illegal immigrants to work as nannies, yard workers, handy men, etc, etc...
Despite the political posturing and rhetoric the US is already very much a class society and becoming ever more so. This situation is made much worse because of current US immigration policy.
http://www.fairus.org/site/PageServer?pagename=iic_immigrationissuecente...
Rembrandt, the point JH-M is making is that you exploit them here or there, no matter, but the closer you can exploit people to the point of use, the less energy is wasted for transit.
However, there might be some finer detail to this, maybe you can ONLY exploit people if they are "over there". Out of sight out of mind for the consumer, as well as the "over there" conditions are bad enough to have people volunteer to be exploited. Here they would work a few days before lawyers, unions and well minded consumers would make a fuss about how horrible it all is, but when its done over there its "ok".
@tigre1983
I understood the point, but I think it is entirely wrong to make such a suggestion. Do we do the things we do just to save energy, or to help people? Exploitation is a bad thing no matter what the conditions are.
Sometime on TOD there needs to be a discussion on carbon tariffs, already mentioned in the US context by Steven Chu. See the section on border adjustments in http://en.wikipedia.org/wiki/Carbon_tax
The idea is that if Europe, Australia and perhaps one day the US all practice some comparable kind of CO2 limitation. To prevent carbon leakage whereby greenhouse rogue nations China and India burn most of the coal then finished goods imported from those countries are slapped with an import tariff based on implicit CO2. For example it takes about 1.7 tCO2 to produce 1t of steel. If the CO2 penalty was $20/t then the steel would be slapped with $34 carbon tariff on importation. That's on top of say $800-$900/t basic price.
Of course the carbon tariff would be harder to work out for services like tourist travel so maybe approximations would be used. I like this concept because it shares the pain; the greenhouse bad guys sell less and the good guys pay more or make their own. It's also preparing for the day an international traded CO2 cap is declared. Emissions were 30.6 Gt in 2010 if recall. That could get artificially forced down to say 5 Gt in 2050. What the future CO2 penalties would be is anyone's guess, in the range $1 to $100 most likely. The world then has to work out who gets the dirty jobs like making cement and steel. I think this is coming sooner or later.
I am not a AGW denier at all, but regarding carbon emissions and taxes, the top priority should be to adress the tremendous deficit in communication around these between climate aspects and "dealing with PO" aspects.
Indeed the rationale for CO2 taxes (or let's say fossile fuels energy taxes), can be put as :
1) reducing CO2 emissions
or
2) pushing the technical infrastructure in general towards less use of fossile fuels for about the same functionality
It is outrageous to base the communication only on 1) when the urgency is really on 2) (ok debatable, but anyway if taxes and not stupid cap and trades schemas we are talking about the same policies).
Take the volume based taxes on gasoline or diesel for instance in Europe, they were set up after first oil shock without refering to CO2 in anyway, the result is clearly a much more efficient car fleet in Europe than in the US, and less per capita CO2 emmissions as well as per capita fossile fuel use.
All cap and trade schemas avoid the raw materials getting rarer aspect and are prone to plenty of cheating, besides creating yet another market with its traders and the like.
Taxing raw materials is really the way to go to accelerate the change, with maybe putting a big part of these "taxes" revenus in direct redistribution equal share per citizen as suggested by James Hansen for instance in (2) below :
http://www.guardian.co.uk/world/2009/jan/01/letter-to-barack-obama
But it is rather obvious that nothing like that will happen, especially in the US, way too commited towards total economic collapse I guess ...
Boof,
At least with cement of the 2500 million tonnes produced only 6.8% was traded in total in 2005. I think its a similar situation with steel, in other words China produces about half of world steel and cement but uses nearly all locally building infrastructure. A CO2 penalty on exports is going to have almost no effect on China's CO2 emissions. On the other hand China agreeing to CO2 emissions cap would be very significant as would the US agreeing to the same.
What about steel in exported goods, a great wall truck costing $AUD 22,000 would have about 1tonne steel; $34 extra tariff for CO2 is <0.15% of retail price.
http://www.osclimited.com/releases/cementto2020.pdf
The developed world may be exporting jobs to China but I dont buy the argument that they are also exporting significant CO2 emissions, considering the low energy used in manufacturing and the low proportion of exports of metals, petrochemicals and cement from China. You could argue that manufactured exports from China lower world CO2 emissions because a Chinese employee earns less and uses a lot less CO2 in bicycling to work than say a US Auto worker spending a higher salary on driving a SUV to and from work. The actual embodied CO2 in the manufactured goods in developed economies is trivial compared to the CO2 generated by the employees when not working.
@Neil1947
1) China's direct steel exports in 2008 were 11% of total production, on top of this comes a large chunk of manufacturing which you are ignoring in your analysis.
"The share of the domestic supply of metal products used in total manufacturing was almost three times higher than
construction in 2007, though the construction sector consumed a higher proportion of metal products than manufacturing exports.The high share for total manufacturing is influenced by the use of non-ferrous metal products: the construction and manufacturing industries directly consumed roughly equal shares of the domestic steel supply in 2007. Our estimate of the share of metal products supply embodied in manufacturing exports rose strongly over the period 1997–2005, before easing in 2007 to around 10% of metal product output."
"In conclusion, this paper provides evidence that China's manufacturing exports have been a significant driver of its demand for resource commodities. Data on Chinese investment indicate that manufacturing was the strongest driver of growth in Chinese investment prior to the recent global financial crisis. Analysis of input–output tables shows that, over the past decade or so, the manufacturing sector (which accounts for most of China's exports) has been more important than construction as a direct consumer of resources and intermediate metal products. Accounting for indirect linkages between industries, it is found that manufacturing has been at least as important as construction as a source of demand for metal products."
Roberts and Rush, 2011. Understanding China's demand for resource imports. China Economic Review (In Press).
2) The pick-up truck example is flawed as it only looks at the steel content of the truck itself, not at all the other range of processes in manufacturing that generate CO2 from the extraction of the materials until the truck is exported. The CO2 price tag will therefore be substantially higher than what you present it to be. I strongly suggest to do a full life cycle CO2 estimate before making wild claims that the embodied CO2 in manufactured goods in China is trivial compared to CO2 generated by employees when not working.
3) Various studies have shown that global CO2 resulting from exports is substantial. Approximately 15% of global energy produced is consumed in production for goods which are consumed in a different country than of their origin. Case studies of for instance the UK show that CO2 emissions there would have been 15%-20% higher without the imports of Goods from China alone (if the goods from China were produced on UK soil).
4) The argument that producing things in China has lowered world CO2 emissions is flawed because without China there would have been less production (as production would have been more costly) in the first place. Yes it is true that producing the same goods in the UK would have led to higher CO2 emissions per unit of product, but that would also have led to less units of products on overall produced.
Rembrandt
The high share for total manufacturing is influenced by the use of non-ferrous metal products: the construction and manufacturing industries directly consumed roughly equal shares of the domestic steel supply in 2007. Our estimate of the share of metal products supply embodied in manufacturing exports rose strongly over the period 1997–2005, before easing in 2007 to around 10% of metal product output.
In conclusion, this paper provides evidence that China's manufacturing exports have been a significant driver of its demand for resource commodities.
As far as I can determine China produced 20% of the worlds manufacturing( similar to US but using 100million workers rather than 11Million) which is 46% of their economy. China exports approx 2,000 Billion in value of out >5,700 Billion total manufacturing, or about one third of 46% or 15% of economy.
High CO2 emitting activities are generating electricity(77% from coal), refining and using petroleum and refining metals (especially steel and aluminum) and producing cement.
Not much cement would be exported or petroleum, but petroleum would be used for transporting so if exports use the same proportion of transportation fuel, and electricity as rest of economy ( except refining metals.) For metals we have direct export of metals(ferrous is 2% of value, non-ferrous 1.5% of value; thus most energy is embodied in exports of steel. This is 10% of steel production, since total steel production uses <400million of the 3billion tonnes of coal(13%) direct steel exports account for 1.3% of coal use. If we include all metals, say 20% of coal use, so exports of manufactured goods would represent 2% coal use plus 2% for non-processes metal exports. Petroleum and gas only accounts for 20% energy use, so if we allow 15% based on proportion of economy we have another 3% of energy use. If manufacturing fabrication uses the same proportion of electricity as the rest of the economy ( ie excluding metal production) we have about 15% of electricity consumption plus 4% for producing metals or <20% of coal and oil use for exports of manufactured goods. We need to adjust this for the energy used in producing and transporting raw materials imported ( ie iron ore, bauxite,oil). China uses about 25% of the worlds energy, so exports would account for 20% of this or 4% of worlds energy, while exports would account for at best 10% of worlds raw materials.
So where are all the metals and electricity going? If we allow 10% for export of metals and 10% metals contained in manufactured products exported ) we have 50% being used to build commercial offices, apartments, and locally consumed manufactured goods( such as the 12million vehicles) with infrastructure using 30%. Thus China uses about half of the worlds raw materials and about 25% of energy, but exports only account for 4-10% of resources.
Clearly the big driver of commodity use is the rapid build of infrastructure and local consumer consumption in China, not exports.
@Neil1947
>Clearly the big driver of commodity use is the rapid build of infrastructure and local consumer consumption in China, not exports.<
This is a different point then the one you raised before, that Chinese exports have little to no influence on the CO2 emissions occurring in countries which import goods from China. Quotation "The developed world may be exporting jobs to China but I dont buy the argument that they are also exporting significant CO2 emissions," I consider increase in CO2 emissions of 10%+ for a given country, which are not counted in the importing countries statistic but in the exporting countries, a substantial increase. I.E. relative to domestic use it is small, but on its own it is substantial sum. If you are talking about capping CO2 use then trade has to play a part.
Here's some proper calculations from Guo et al. (2009) Impact of inter-sectoral trade on national and global CO2 emissions.
"Our initial findings reveal that: In 2005, the US reduced 190.13 Mt CO2 emissions through the consumption of imported goods from China, while increasing global CO2 emissions by about 515.25 Mt. Similarly, China reduced 178.62 Mt CO2
emissions through the consumption of US goods, while increasing global CO2 emissions by 129.93 Mt. Sino-US international trade increased global CO2 emissions by 385.32 Mt as a whole, of which the Chemical, Fabricated Metal Products, Non-metallic Mineral Products and Transportation Equipment sectors contributed an 86.71% share."
A study by Shui and Hariss (2005) role of CO2 embodiement in US-China trade
"What are the impacts of US–China trade on global CO2 emissions? Our initial findings reveal that during 1997–2003: (1) US CO2 emissions would have increased from 3% to 6% if the goods imported from China had been produced in the US, (2) About 7%–14% of China’s current CO2 emissions were a result of producing exports for US consumers, and (3) US–China trade has increased global CO2 emissions by an estimated 720 millionmetric tons."
Here's an other study for the UK and CHina from Li et al. (2008) effect of trade between China and UK
" It was found that through trade with China, the UK reduced its CO2 emissions by approximately 11% in 2004, compared with a non-trade scenario in which the same type and volume of goods are produced in the UK. In addition, due to the greater carbon-intensity and relatively less efficient production processes of Chinese industry, China–UK trade resulted in an additional 117Mt of CO2 to global CO2 emissions in the same one year period, compared with a non-trade scenario in which the same type and volume of goods are produced in the UK. This represents an additional 19% to the reported national CO2 emissions of the UK (555Mt/y in 2004) and 0.4% of global emissions. "
Rembrandt,
I was questioning the statement;
This "dirty" work is currently to a large extent conducted by China, a country which consumes about 40% of all natural resources and produces about 40% of all industrial outputs, while its own GDP share only amounts to a little more than 10% of the world total. Shifting all the "heavy lifting" away from advanced economies has made it possible for them to become less energy-intensive over time, thus reducing their carbon emissions - while carbon dioxide output has skyrocketed in other places.
The quotation from Guo etal In 2005, the US reduced 190.13 Mt CO2 emissions through the consumption of imported goods from China, while increasing global CO2 emissions by about 515.25 Mt. Similarly, China reduced 178.62 Mt CO2
emissions through the consumption of US goods, indicates that US-China two way trade almost balanced CO2 emissions savings(ie 190-178 Mt net).
I consider increase in CO2 emissions of 10%+ for a given country, which are not counted in the importing countries statistic but in the exporting countries, a substantial increase. I.E. relative to domestic use it is small, but on its own it is substantial sum. If you are talking about capping CO2 use then trade has to play a part.
The 10% figure is for metals, total energy exports would be <20% of China's energy use( ie <5% of world energy consumption) BUT this is not accounting for energy used to create imports. At least in the case of China_ US trade this seems to involve almost no net transfer of CO2 emissions.
The implication is that OECD countries are off-shoring "dirty" industry to China, giving OEDC countries less energy intensive economies.
What are the impacts of US–China trade on global CO2 emissions? Our initial findings reveal that during 1997–2003: (1) US CO2 emissions would have increased from 3% to 6% if the goods imported from China had been produced in the US, (2) About 7%–14% of China’s current CO2 emissions were a result of producing exports for US consumers, and (3)US–China trade has increased global CO2 emissions by an estimated 720 millionmetric tons.
While it may be true that US-China trade has increased CO2 emissions its because more goods are being consumed by US and Chinese people(ie they have a higher GDP). If the US goods imported from China had been manufactured in US, less would have been exported to China therefore US emissions would also have been lower,balancing the 3-6% increase, you can't just look at one side of the trade picture.
So while it is true that China is using 40% of the worlds commodities(25% of FF's), it doesn't produce 40% of industrial production( just 20%), and the proportion of CO2 emissions contained in exported goods and commodities(<5%) is largely balanced by CO2 emissions contained in industrial and commodity imports.
Neil, I don't understand this
Most of the imports of bulk raw materials including fuel needed for manufacturing / production have had a relatively small amount of carbon emitted to the atmosphere in order to get them there. This is obviously particularly true of fossil fuels. The carbon, the vast majority of it, actually gets emitted to the atmosphere when these bulks are transformed by fossil fuels in to products, be they cement or steel or fully finished goods. Delivery to end-users at home or abroad needs/causes only a relatively smaller amount of additional carbon emission. (Small caveats. Plastic goods still contain a lot of carbon that will not get to the atmosphere for a while, whether ot not they go for export or are used locally. Direct personal consumption of fossil fuel, motoring etc. releases carbon, and energy, where it happens.)
So, where is the carbon actually emitted to the atmosphere and by whom? (At what point is the energy lost as low-level heat, and will need replacing if the processes are to continue? GDP etc represent aggregate 'rates' of ongoing processes, no?)
@Phil
"Most of the imports of bulk raw materials including fuel needed for manufacturing / production have had a relatively small amount of carbon emitted to the atmosphere in order to get them there. "
Andersen et al. 2010, CO2 emissions from the transport of China's exported goods:
The results indicate that emissions associated with transports of goods [in 2008] are considerable. In the case of China, total emissions associated with import and export transports exceed 300 Mt CO2, with net export of emissions, i.e. the emissions associated with goods exported by China minus those imported by China amounting to 110 Mt CO2."
is 300 Mt CO2 a small amount? Its about 5% of Chinese CO2 emissions. Yes the vast majority isn't emitted by transport, but can we therefore discount transport? I don't think so I prefer thinking of the system.
Rembrandt
Thanks for giving this point your attention.
I am pleased to have the numbers.
I agree that CO2 emission due to transport of 'import/export’ materials and goods is not negligible compared with the hypothetical case that China was a 'closed system'.
I think I am picking up the following from both the study and comments, but if it seems worth it, please correct me if I am wrong.
I presume most imports in to China are bulk materials? The 'transport emissions' of incoming materials would be about 3% of China's total CO2 emission? I presume the actual energy value, though, of the fossil fuel component of imports, and the subsequent CO2 emissions from that fuel, would be much higher as a percentage?
China's per capita CO2 emissions are still, I believe, very much lower than ‘per capita’ CO2 in the USA and OECD? Why should this be if they are doing the industry ‘we’ no longer do? Perhaps the answer lies in the lower purchasing power per capita, including personal consumption of fossil fuel in China compared with for example the USA? (Does this lower purchasing power also essentially account for the lower cost of labor and thereby the competitive pricing of export goods from China?)
It was said of the Working Class in Victorian Britain, that by definition they produced stuff they could not afford (not strictly true, but true enough even in my young days mid 20thC). Henry Ford in the USA is said to have turned this on its head by paying his workers so they could afford his cars. I presume workers in China are primarily still mostly in the old British way of things? An industrial worker even with kit spewing CO2 does not emit on average as much as the modern consumer family commuting, shopping and vacationing in their motor car(s) from their constant 23 deg C house?
@Phil,
>I presume workers in China are primarily still mostly in the old British way of things? An industrial worker even with kit spewing CO2 does not emit on average as much as the modern consumer family commuting, shopping and vacationing in their motor car(s) from their constant 23 deg C house?<
Yes, that's the reason for lower per capita CO2 emissions, average per capita income (in purchasing power parity terms) in China is 7519 US dollars, versus 30,000+ US dollars for OECD countries. Chinese workers work much more hours on average, travel less, and consume less materials (many only see their families once a year for instance).
It looks to me like those studies are intended to prove something different from the original argument.
The original argument was that OECD countries outsourced their emissions, and this proved that reducing emissions could only be done by this kind of outsourcing.
Studies that show that international trade caused greater emissions may provide a useful criticism of international trade, but they don't support the argument that emissions outsourcing was large, or that reductions only come about through outsourcing.
Nick
You wrote
[my emphasis]
similarly
If you are correct that the above actually were the original arguments, then you would be also correct to argue for a better sense of proportion. Take out the words 'only' and better define what you mean by 'large', however, and the original points IMHO remain very important in any discussion of both CO2 emissions and economics of reduction of future carbon emissions (and any discussion of industrial development).
I have just looked at a UK National Statistics document covering energy production and consumption and carbon emissions UK 1980 to 2010, and think I have learned some stuff. http://www.decc.gov.uk/assets/decc/statistics/publications/brief/190-uk-...
For example
There has been a significant sudden dip in UK energy consumption since 2007/2008. We see that from 1980, final industrial energy consumption in the UK has gone from about 34% of UK energy consumption to less than 20% by 2007 (roughly the last year of a period of higher level energy consumption). Overall energy consumption rose in the 1990s, but since 2007 has dropped back to not much greater than it was in 1980. The changes relevant to carbon emission seem to be a) a significant reduction in energy use specifically by industry (UK manufacturing has shrunk as a fraction of the total economy; note also the change in energy extraction itself as a proportion of the economy) and b) an approximate halving in energy terms of coal use and a doubling of natural gas use. Thus, were UK to have either kept the same 'absolute' level of industrial energy use or kept the same high level of coal use as a proportion of the total energy, carbon emissions should have increased, rather than decreased?
There is a very useful chart of emissions by sector, where you can see the reduction in industrial carbon emission from the late 1990s, and significantly since 2005. Substitution of coal by NG seems to have contained or reduced emissions somewhat in the other sectors, except of course transport, despite a growth in population particularly since 2000.
UK manufacturing has shrunk as a fraction of the total economy
But how has UK manufacturing output changed on an absolute basis? US manufacturing has declined substantially as a % of the economy, while absolute numbers have risen by 50% from 1979.
People tend to get confused by rising manufacturing labor productivity: US employment in the manufacturing sector has plummeted, while output has risen, all due to fast growing manufacturing labor productivity.
Have a look at the charts.
As I said, I think I learned something.
I wrote:
The absolute numbers are there if you look. In M tonnes of oil equivalent. Industry in 1980 consumed 48.3Mtoe; this was 31Mtoe in 2007,(2009: 26.7Mtoe). Total UK energy consumption did rise somewhat 1980 to 2007, mostly in the transport sector. These data are reflected of course in the sector contributions in the chart of CO2 emissions.
The UK is not OECD, but other people seem to have checked out an overall pattern, with variations.
It would still be helpful to look at the manufacturing output numbers. We can't assume that production output dropped at the same rate as energy consumption. One is an input, one is an output.
In the very short term, the two are closely linked, but over time there is no necessary link at all. This fact seems to be missing in the IIER set of assumptions.
This is getting a bit circular perhaps?
We are back to economic (market) value as the measure of industrial product?
Does a much lower 'industry/manufacturing' share of GDP (true for UK) equate to a better return on energy expended and CO2 emitted?
Well it might, if our dirtier more labour intensive stuff is mostly now done in China etc etc with cheap coal and, importantly, cheap 'low-purchasing-power' labour?
Pity we can not all work for the financial industry, or services, and use only natural gas?
Wasn't this perhaps yesterday's 'model'?
Really though, I do not have the numbers, so could you make your thesis stack-up for me/us?
We are back to economic (market) value as the measure of industrial product?
At least in the US, good statistics are kept for the volume of industrial production. They can be adjusted for inflation or deflation of prices within the industry, if that's desirable. Remember, we're not talking about consumption of industrial products, we're talking about production. So, imports don't factor in.
My point: US manufacturing volumes have risen by 50%, and GDP has risen by 150%, while oil consumption has been flat, and overall primary energy consumption has risen only by 17%.
The fact that manufacturing has risen by 50% says to me that it is inaccurate to say that the US only managed to become more energy efficient by outsourcing industry. Again, production rose much more quickly than primary energy consumption - that means that production became much more energy efficient.
I don't have the numbers for the UK, but the fact that people are so consistently wrong about the US makes me think that one should really check the numbers for any country we want to analyze.
Nick
Yes, US is still a very large industrial manufacturing country.
But, can you account for the 'Rust Belt'?
And can you please define 'volume'?
[EDIT: USA is known for high industrial productivity per input unit labor: and I guess, per unit of 'energy', but how is aggregate 'product' defined?]
Or better, provide a link to an official source that does; that quotes your numbers?
We are not talking Gross National Widgets, I presume.
'Volume' of microchips must have grown, but what does that mean?
Number of cell phones?
Ok, lets have numbers of automobiles, trucks, (and their components) from say year 2000, leaving aside their recent downturn?
Ditto, airplanes?
N-fertilizer manufacture in the US I know has gone down (big 'volumes' involved in that; money value not so much?).
Tons of metal in finished movable products?
Tons of metal in construction?
Tons of cement?
Tons of plastic, as for metal above?
Do we have any other measures or 'proxy' for aggregated industrial output, other than the proxy provided by market dollar value?
GDP rose over what period?
GDP per capita?
Share of energy used by US industrial sector?
Absolute amounts of energy (Mtoe) used by industry over what period?
Can you give a link to a document like the Nat. Stats. one I provided for UK?
phil
can you account for the 'Rust Belt'?
That's 2 things: a shift of manufacturing from the Northeast to the South, and rising manufacturing labor productivity.
People are misled by the fact that US manufacturing employment has dropped substantially in that period. But, that was caused by sharply rising manufacturing labor productivity, rather than by a decline in absolute levels of manufacturing output. See nice charts at http://www.dailymarkets.com/economy/2010/10/03/increases-in-u-s-worker-p... .
Here's production data at http://www.census.gov/manufacturing/m3/index.html, including http://www.census.gov/manufacturing/m3/historical_data/index.html , especially Historic Timeseries - SIC (1958-2001), "Shipments" .
OK Nick
All those industrial outputs are measured in dollars.
So that is your 'volume'.
Now we need to study the link between CO2 and restructured industry (including outsourced industry):
Share of US total energy used by US industrial sector:
Absolute amounts of energy (Mtoe) used by industry over relevant period.
I suggest say 1995 to 2007 to account for period when outsourcing to China etc really kicked in.
Employment in US manufacturing (your ref 'daily markets' Mark Perry) fell off a cliff starting about 2000.
Talk about 'sudden productivity'!!!!
(Lots of references out there to build-up of huge trade imbalances in dollars between US and China: reckoned to be a fundamental reason for the upheaval that the world economy has been in since 2008/2009 - try Larry Elliott in UK Guardian for very recent review of 'economic crisis'.)
All those industrial outputs are measured in dollars. So that is your 'volume'.
Well, do you feel that's inaccurate? I think we need to agree on measures of US manufacturing output. The evidence seems to be that US manufacturing output has not dropped in the last 15 years. Some of the marginal increase in consumption has gone to imports, but that's different.
Employment in US manufacturing (your ref 'daily markets' Mark Perry) fell off a cliff starting about 2000. Talk about 'sudden productivity'!!!!
Did you read the article? Manufacturing labor productivity has been growing since...forever. When US manufacturing output stopped growing, then employment started falling.
Lots of references out there to build-up of huge trade imbalances in dollars between US and China
Yes, this is a large problem. Still, we need to be clear on "huge" - the US-Chinese trade gap is perhaps 2% of US production and consumption. That's much larger than it should be, but it's impact on overall US production and consumption isn't nearly as large as your discussion suggests.
@Neil1947
If you go to the non-food section of your supermarket, the nearest department, home improvement or toy store, you will find the answer to your comment. Those resources don't get delivered to the world in the form of cement, but rather in the form of final goods which combine low cost energy and low cost labor into what we find on our shelves - goods which, if produced locally, would not be affordable to many.
The other parts regarding CO2 transfers were already answered by Rembrandt - or more precisely by the studies he quoted.
go to the non-food section of your supermarket, the nearest department, home improvement or toy store
That's a very misleading way to inform one's intuition. Consider that at the height of OECD manufacturing dominance that a consumer going into a local store still wouldn't find much that was manufactured within 10 miles of their home. As trade grows this effect becomes stronger, regardless of net trade flows.
goods which, if produced locally, would not be affordable to many.
Chinese goods may be able to undercut local manufacturing by a few percentage points, but the difference isn't nearly as large as that would suggest. Remember that there's a cost to low-education labor, that you find in places like China - longer learning curves, greater defect rates, etc. And, labor is only one component: China has to import a large portion of the parts they assemble.
@Boof
The average increase in cost of a carbon tariff on the exports of carbon-intensive nations at $50/ton CO2 is estimated at about 10%, 8% and 12% for China, India and South Africa (Atkinson et al., 2010. Trade in virtual carbon: Empirical results and implications for policy). That's the average which means that for energy intensive products it would be higher (20%+) and non-energy intensive products lower (5%-). In terms of being serious about CO2 it would make a lot of sense to unilaterally impose such a system, would be good to have a post about this.
This is potentially a huge topic which has to be addressed eventually. The problem with unilateral action is whether any country is squeaky clean enough to get away with it ...let he who is without sin cast the first stone. Then there are problems with compliance, measurement, bogus carbon credits and so on.
On the question of the cheap $20k Chinese car if the world CO2 quota is near used up the carbon tariff could conceivably be as high as $5k or $10k. If the quota is totally used up no more carbon intensive goods can be sold. OTOH the CO2 price could actually decline as we've seen with depleting oil.
Hi Nate, Hannes, Rembrandt,
Thank you for a thoughtful report. The references are also outstanding. Best wishes for the success of your institute.
I have one question with respect to the table in your post. I was curious how the comparison with the US and China would have looked if the EU (or EU + Norway + Switzerland) had been used instead of the UK.
Thanks,
Dave
@DaveR
Hello Dave, thanks for the compliment. I don't have figures at hand for the EU-15 (or EU-27), but I think the picture relative to the UK would be 1) somewhat lower GJ per dollar of GDP, 2) slightly higher iron+steel production share, 3) about same share of aluminum production, 4) substantially higher share of fertilizer production, 5) substantially lower self-sufficiency in primary energy as the UK still produces a lot of its natural gas and oil and most other EU nations are 80%+ importers of natural gas/coal and oil except for Netherlands (natural gas), Poland (coal). Not discounting the countries with nuclear or hydro or both (France, Austria etc.).
Hi Rembrandt,
Thanks. The UK is an excellent country to use for historical comparisons because of its outstanding economic performance and high coal production during the 1800's.
However, the EU has the right scale for a modern comparison with China and the US. The BP Statistical Review indicates that EU + Norway + Switzerland is only 57% self sufficient in natural gas and coal (critical for inexpensive electricity generation on a continental scale), and this percentage is declining 1% per year. Presumably this is is a factor in the EU's intense, long-standing interest in alternative sources of electricity.
Dave
The peculiar thing about this study is the assumption that developing economies will sacrifice growth to reduce CO2 emissions. Obviously, no one is willing to at this point, so there's really no point to arguing the impossibility of economic growth without growth in CO2 emissions. It's pretty obvious that a crash course of CO2 emission reduction would be very painful for developing economies.
Construction of this odd strawman makes it possible to imply that a longterm transition away from Fossil Fuels is impossible, without providing any good evidence.
OK, on to details:
On a global scale, economic growth has always been highly correlated with higher energy consumption.
Not true, and misleading. It's easy to find examples of low correlation - Ayres found only a 13% correlation between primary energy and GDP in the US over the 20th century. OTOH, correlation is obviously not causation.
a majority of energy and carbon footprint reductions in advanced economies have been due to “energy used elsewhere” from global shifts of energy-intensive processes, and not related to real efficiency improvements
This is clearly untrue in some areas: the US reduced light vehicle fuel consumption per km by roughly 50% over the last 50 years. US manufacturing overall output grew by 50% from 1979 to now, while oil consumption was flat. If they want to argue that the composition of that manufacturing has shifted they need to provide evidence - the footnote is IIER's own analysis, which is unpublished.
In order to grow, economies not only require more energy, but the properties of the energy sources used, such as density, cost and manageability, matter a great deal.
This argument needs more evidence than an analysis of BAU consumption. In the long term, it's clearly false or misleading: electric rail can replace diesel trucks; EVs can replace ICE light vehicles; etc, etc.
Fossil fuels are – despite recent price increases – the cheapest and most useful fuels, as long as externalities such as pollution and environmental issues are not factored into their pricing.
This is a breathtakingly misleading statement: externalities like $3T oil wars are real and present costs.
alternative sources, like nuclear, solar, wind and biomass, are based on significant fossil fuels inputs.
This is highly unrealistic. Windpower has an E-ROI of around 50 (15 years ago it was 18), and the energy inputs can come from renewable electricity. Focusing on solar is misleading, as wind is the cheaper, bigger player. Review of the extended study doesn't find any quantitative evidence for this assertion, just narrative assertions.
OTOH, solar does have adequately high E-ROI, and the energy inputs can come from renewable electricity.
To establish a low-carbon economy will require us to work against the key trend that has driven wealth creation during the 19th and 20th century – the replacement of small amounts of expensive human labour by large quantities of low-cost fossil fuels.
This is inaccurate: fossil fuel derived electricity was more expensive for most of the 19th and 20th century than windpower derived power is today. EVs and electric rail can cost effectively replace ICE transportation.
It operates with a much lower energy cost vis-à-vis OECD countries (3-4 cents/kWh of industrial electricity in China vs. 6-11ct/kWh in most OECD countries)
Japan is an important counter-example: their source shows costs of 0.136 USD in Japan - Japan was the Asian growth miracle for decades despite substantially higher power costs.
Without the use of coal-based electricity, China’s significant competitive advantage would shrink, removing an important driver of its recent growth.
This requires quantitative evidence.
@Nick
>The peculiar thing about this study is the assumption that developing economies will sacrifice growth to reduce CO2 emissions. Obviously, no one is willing to at this point, so there's really no point to arguing the impossibility of economic growth without growth in CO2 emissions.<
The context of the report is development aid, and our conclusion is that the aid is better spent by supporting low tech practices and technologies that can be produced and consumed in local environments with local materials and little to no outside support.
>It's pretty obvious that a crash course of CO2 emission reduction would be very painful for developing economies.<
This is not obvious to most people in the developing world or in the energy scene. There are hundreds of papers/reports out there on "low-carbon" growth of developing countries.
our conclusion is that the aid is better spent by supporting low tech practices and technologies
Wind and solar, even imported, can be far more cost effective than current fossil fuel-powered energy sources. The best example (off the top of my head) is lighting: Kerosene is far more expensive than simple PV setups - they can be as simple as LED flashlights with built-in PV panels. They're cheap, durable, and cost effective. The next best example that comes to me is wind power replacing diesel generation - many rural locations and developing countries are finding these very cost effective. I don't see such things mentioned in the report - I wonder why not?
a crash course of CO2 emission reduction would be very painful for developing economies. - This is not obvious to most people in the developing world or in the energy scene. There are hundreds of papers/reports...
Do they make a distinction between a short term and long-term transition? IIER doesn't provide any evidence that it's not possible in the long-term (which is a relief, because then I'd have to take the time to look at that evidence and debunk it, as a transition is clearly possible in the long-term).
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Reviewing the study, I find some basic errors. Here's one:
"With doubling or tripling energy costs - a scenario that isn't far away - many industrial processes become unviable"
First, there is no reason to think that wind and solar electricity will cost 3x as much. I would guess that this is based on their deeply flawed assumption that enormous levels of central utility storage are required to deal with wind/solar intermittency.
2nd, they've confused "competitiveness" with "viability". Sure, if German industrial costs are 10% higher than another country's then buyers will go to the competitor. But, if everyone's costs rise by 10% because of more expensive energy, that will have very, very little impact on industrial production in the long-term.
@Nick
A) The general point is that in most cases it is cheaper to do things with local labour then with expensive energy solutions. If the local income is too low (given low labour costs) to afford an energy solution which costs more than can be borne/provided by the labour cost then it won't work.
This is in general the case for wind and solar, as it is too costly for people to afford without borrwing the sum. In developing countries your interest rate will be 25%+. Only in special circumstances like Pakistan where some special micro-credit funds exist and jobs which can provide additional income due to the electricity solution, this can work. There people get the benefit of being able to work longer in the textile industry in their local shed (solar lighting can be utilized there as people can work 6 hours additionally per day making it possible to pay-off micro-credit loans within 2-3 years). The bottom line is, the initial upfront cost is too high, despite the long run cost being cheaper. So these options are not scalable,
Also of importance, what does a local village do if the generator breaks down or maintenance is needed in case of wind-turbines? It doesn't work, too high-tech. In environments were they can afford diesel power, small scale windmills may offer something if they can be maintained, however, the non-constant supply will be a difficulty for business/companies, and they will still be using the diesel generator as a wind-backup which forms a costly option together.
This is in general the case for wind and solar, as it is too costly for people to afford without borrwing the sum. In developing countries your interest rate will be 25%+.
Interest rates that high apply to very small borrowers. Wind power is more important than solar overall, and wind farms will be built by large utilities, not small consumers. The government of Pakistan doesn't pay 25% to borrow. It can make the choice to give the large utilities in Pakistan the benefit of it's low sovereign borrowing costs.
what does a local village do if the generator breaks down or maintenance is needed in case of wind-turbines?
The same thing it does when transmission lines break, or the diesel generator breaks. These things aren't mysterious.
they will still be using the diesel generator as a wind-backup which forms a costly option together.
Actually, it's much cheaper. For instance, Guantanamo saves a lot of money by getting 1/3 of it's power from a wind turbine, and reducing it's diesel fuel consumption by 1/3. The diesel generator is cheap - the fuel is expensive, and the wind turbine saves the fuel.
That's what wind does - saves a third of diesel, NG or hydro. Pity wind isn't a large scale alternative in itself.
With a sink, wind can be.
Such as pumped storage, pumping water, supplying demand in another region, industrial demand such as melting scrap iron in electric arc furnaces or electrolytic refining of copper.
Or some combination of the above.
Best Hopes,
Alan
Hopes it is.
Nate,
Thank you for posting this most interesting of questions.
I would suggest however, that its framing leaves much to be desired because it assumes sustainability of a BAU model where a few, "rich" and "powerful" individuals in a society get to concentrate what will be left of energy and resources purely for themselves and yet we are supposed to believe that a middle class will nonetheless continue to thrive and "grow".
More likely, there will be the rich few people while the rest of the huddled masses will live at subsistence or sub-subsistence levels due to the switch-over to green energy technologies.
This observation does not grow out of a vacuum.
Rather, the subject was indirectly broached on by FMagyar's comment above regarding shifting to a radically classed society of have-all's and have-none's.
In past history, humanity had societies built around the notion of divine appointment of who gets to belong to the have-it-all class and who is relegated to being a have-none (i.e. the caste system in India).
The arrival of dense energy slaves (coal, oil, natural gas) made it possible to reduce the disparity between the have-all's and have-none's.
However, as humanity shifts away from the availability of dense energy slaves (coal, oil, natural gas) and back to less concentrated forms of energy flow (solar at 1Kwatt per meter squared), there is simply not going to be enough energy flow (a.k.a. "power") to fairly go around for all 7 Billion people.
The pressures will mount be to return to the "good 'ole days" of human slavery and a radically classed society of have-all's and have-none's.
That will likely be the "new economy" (same as the old old economy).
Actually, it's already here.
Which is why we have these "revolutions" around the world as the have-not younger generation realizes they are being cut loose to die in the desert by the BAU system while the old guard tries to hang on to the have-it-all life style they have grown so accustomed to.
Yes it is rather funny to hear people still suggesting that we should contrive to help people trembling successfully on the edge of subsistence to 'improve their standard of living'!
If we are able to be successful in that endeavour these 'fortunate' souls will be somewhat bemused as they travel along the Up vector towards nirvana (as we define it) to see in the near future most of us traveling the other way!
The idea that Justice and Equity for 'The Poor' entails elevating them to a front row seat before the Altar of the Western Way is a nonsense. What we should be doing (before it is done for us by the happy combination of the facts of geology and the inevitability of ecology) is seeing Justice and Equity entailing all of us adopting the same skills and lifestyle as The Poor we seek to save!
Therein alone lies our security and salvation. Everywhere else there be Dragons!
The combined problems of Peak Oil and Global Warming are daunting, but what if we had an unexploited and abundant source of carbon-free energy dense material? Current nuclear technology leaves many things to be desired, but often overlooked is a particular development from the 60s that allows unprecedented efficiencies in energy production from the fertile element thorium. The fantastic machine is called the Liquid Fluoride Thorium Reactor (LFTR), and what makes it different is that its fuel is suspended in a liquid, a configuration that removes the danger of meltdown. Furthermore, the system excels in areas of efficiency, flexibility, safety, affordability, and scalability, making this a complete carbon-free solution for our future energy needs. In fact, once the technology is further developed for commercialization, nothing else will come close to competing with it. Its high temperatures of operation allow higher efficiencies for desalination and other chemical endeavors- say carbon-neutral synthesis of liquid fuels and fertilizers. It also can be cooled without the use of water, safeguarding our aquifers, rivers, and shorelines. This technology is not science fiction- it only requires the will to develop it to solve our problems. We've already lost 40 years since the program was shut down in favor of plutonium/uranium. In this moment of great crisis, are we going to continue bickering about what we can't do, or are we going to start on a project that can lead to a new era of cheap and abundant energy for everyone forever? It surely does not reflect well on the intelligence of our species to further delay at this juncture.
It should be clear to anyone contemplating energy issues that neither fossil fuels nor renewables can give us a future that we would want to live in. But a technical solution exists that can give us the time we need to reduce ignorance and stabilize our global population. Molten salt reactors powered by thorium (like LFTR) will make it economical to sequester a century's worth of carbon, avoiding the great risk of climate change with its attendant sea-level rise. We should end up with enough energy to provide a lifestyle in every way superior to what is possible today. We can eliminate want, malnutrition, and corruption. Hell, we can even have flying cars! Our future can be bright and hopeful, if we immediately start upon a more prudent course. The alternative is decline: starvation, crime, war, disease, and despair. Let us demonstrate our genius by promoting the Thorium Race, the international competition for the development of Green Nuclear as the solution to the Energy Crisis.
http://reserveenergy.blogspot.com/ [Under the Rug]
I wholeheartedly agree that we should be aggressively pursuing thorium and have been saying so for a long time. Fortunately, Bill Gates, who has more money that almost anyone and is not subject to the political malfeasance of Washington, is also aggressively pursing thorium technologies. Whether it will be enough is hard to say - either way we should be pumping copious resources on developing this tech before China pulls it out from under us.
Obviously, there is limitless cheap low-carbon energy out there in the form of nuclear and wind. The additional cost of using such energy in place of fossil fuels is not too high, and thus, low-carbon industrialization and growth in developing countries is certainly possible. The barriers are mainly political in nature.
>Fossil fuels are – despite recent price increases – the cheapest and most useful fuels, as long as externalities such as pollution and environmental issues are not factored into their pricing.<
Wouldn't it be better to say "Fossil fuels are the cheapest and most useful fuels only if externalities such as pollution and environmental issues are not factored into their pricing"? As economists, don't we recognize that failing to internalize externalities only leads to market inefficiencies?
>Furthermore, alternative sources, like nuclear, solar, wind and biomass, are based on significant fossil fuels inputs. If solar panels were produced with energy from solar panels, their price would be prohibitive<
I find this argument tired and only applicable in a limited sense. Onshore wind is already significantly cheaper than coal. Fossil fuels do not comprise 100% of primary energy use in any large economy, even China. As cheap renewable sources (which do exist, in contrast with your statement) increase penetration, the carbon intensity of manufacturing renewable power generators will fall quickly.