Why $100bn invested in wind or solar will produce more energy than oil | RenewEconomy

Why $100bn invested in wind or solar will produce more energy than oil

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$100 billion invested in wind, or solar PV, will result is significantly more energy yield as the same amount invested in oil, according to a new analysis. This is particularly true when wind and solar is used to charge electric vehicles. By 2035, wind could produce 6-times more energy per dollar invested than oil.

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French investment bank Kepler Chevreux has produced a fascinating analysis that has dramatic implications for the global oil industry.

It estimates that $100 billion invested in either wind energy or solar energy – and deployed as energy for light and commercial vehicles – will produce significantly more energy than that same $100 billion invested in oil.

The implications, needless to say, are dramatic. It would signal the end of Big Oil, and the demise of an industry that has dominated the global economy and geo-politics, for the last few decades. And the need for it to reshape its business model around renewables, as we discuss here.

“If we are right, the implications would be momentous,” writes Kepler Chevreux analyst Mark Lewis.

“It would mean that the oil industry faces the risk of stranded assets not only under a scenario of falling oil prices brought about by the structurally lower demand entailed by a future tightening of climate policy, but also under a scenario of rising oil prices brought about by increasingly constrained supply. “

The main argument from Lewis is that oil prices could stay so low that it is no longer economic to bring in high cost new oil fields. But even if the oil price does rise, it will not be able to compete with renewables such as solar and wind.

The most striking conclusion is that by using wind or solar to charge electric vehicles, more energy is produced per dollar invested than with oil  – in the case of onshore wind, it is four times as much energy for the same amount of money.

So how does Lewis produce his numbers?

He has developed a new concept of the energy return on capital invested (EROCI) for a potential outlay today of $US100bn. He asks how much energy would $US100bn purchase if invested in oil on the one hand, or in solar PV and wind energy on the other?

kepler oil 1

Table 1 above shows our calculations for the amount of gross and net energy that can be obtained from investing $US100bn in 2014 (i.e. based on current economics). In all cases, the calculations are based on a one-off investment with no reinvestment taken into account.

He defines gross energy as the amount of primary energy available before it is converted into useful energy in final consumption. Net energy, however, is the amount of energy available for final consumption after taking into account energy conversion and energy transmission losses. This includes the energy available for powering oil-fired cars and electric vehicles.

For oil, he has assumed investment opportunities in new projects with full breakeven costs (all- in capital costs, operating costs, and any royalties payable) of $US75/bbl and $US100/bbl, as these cover breakeven cost levels in the upper quartile of the industry cost curve and will account for a very significant share of the new investment opportunities. He assumes two different potential lifetimes for new oil projects (ten and 20 years), as some projects (e.g. deep-water) have shorter lifetimes than others (e.g. conventional onshore and oil sands).

For renewables, he assumes capital costs of $US3bn/GW for solar PV (Ed: seems high), $US1.5bn for offshore wind, and $US4.5bn/GW for offshore wind. He assumes annual load factors of 13% for solar, 25% for onshore wind, and 40% for offshore wind. All renewables investments are assumed to have project lifetimes of 20 years. (ED: In Australia, solar has a load factor of 18 per cent, wind is more than 35 per cent).

As table 1 shows, the gross energy of oil is higher than all the renewable sources over a 10 year period. But over 20 years, the relative economics of renewables improve, and onshore wind actually yields slightly more gross energy annually over 20 years than oil at a price of $US75/bbl and nearly 40 per cent more than oil at $US100/bbl (117TWh versus 85TWh).

However, if the analysis takes into account net energy yield, and the growing take-up of electric vehicles, then the picture is markedly different.

Internal combustion engines lose 75-80 per cent of the energy value of the oil input, while for EVs, converting electrical energy into battery-stored chemical energy and then back into electrical energy loses 25- 30 per cent of the original power input.

Lewis has therefore assumed a net energy yield from oil of 25%, and a net energy yield from renewable electricity for use in EVs of 70%. He has also adjusted for transmission losses – 2.5% transmission losses for solar PV, 5% for onshore wind, and 7.5% for offshore wind.

This means that the net energy yield for EVs powered by solar PV is here assumed to be 67.5%, for EVs powered by onshore wind 65%, and for EVs powered by offshore wind 62.5%. He assumes 10% capital-cost reduction in real terms by 2035 versus 2020 for wind, and for solar PV and offshore wind cost reductions of 15% to 2020 and a further 15% to 2035.

The picture of net energy yield is remarkably different, as can be seen on table 2 (below).

kepler oil 2

By 2020 all renewable technologies have a significantly superior net EROCI to that of oil at both $US100/bbl and $US125/bbl. “It is almost impolite to compare the net EROCI of oil with that of renewables by 2035,” Lewis notes.

Indeed, by that date, solar will be producing double the energy yield of oil for the same amount of money. For onshore wind, the amount of net energy produced will outstrip oil by a factor of nearly 6:1.

“Of course, there remain huge infrastructure challenges to be overcome – and paid for – if EVs are to realise their potential over the next two decades,” Lewis adds. “But our analysis of the net EROCI of oil versus renewables suggests that the balance of competitive advantage will shift decisively in favour of EVs over oil-powered cars over the next two decades.

“In turn, this would suggest that by the late 2020s or early 2030s renewables could be competing much more aggressively with the oil market’s marginal barrels for a share of Asia’s fast-growing road-transportation market (and especially China’s) than either the IEA or the oil industry itself is currently assuming.”

 

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158 Comments
  1. Richard Hayes 6 years ago

    The announces amount of capital the fossil fuel companies are planning to spend ‘looking’ for reserves in in excess of USD 600 Billion. That is just the exploration costs. To get the various project into production would be many times that figure.

    http://www.worldoil.com/February-2012-EP-spending-to-reach-record-600-billion.html

  2. Andy Nyce 6 years ago

    Can we get a link to the full report please?

  3. suthnsun 6 years ago

    For absolutely everyone’s sake we should be banning fossil fuel exploration globally. Good money essential for a fast transition to renewables is going to be wasted and compound our problems at every step if we don’t (ban). Analysis like this adds to the conviction that even financially we have nothing to lose.

    • Miles Harding 6 years ago

      The “good” news is that ramping exploration costs are dong this already.
      They are increasing at a similar same rate to the decline in renewable costs.

    • Daniel LaLiberte 6 years ago

      This is how the transition to 100% renewable energy will happen, as fossil fuels inevitably become more expensive until they can no longer compete.

      Some argue that we can’t produce wind and solar energy without fossil fuels, and while that may be true in many places today because our addiction runs so deep, this is all the more reason to replace our entire production process with renewable energy powered vehicles and factories as soon as possible.

      • sbean 6 years ago

        That would be a far, far lower-energy economy than we have today, at least for decades. And that’s the optimistic scenario. Maybe you realize that, but I’m not getting the sense that anyone here (or more than a few anywhere, for that matter) understands that. Maybe they just don’t care. I suspect there are several billion people who aren’t ready for it. In any case, we don’t have other better options.

        • Bob_Wallace 6 years ago

          I’m getting the sense that you haven’t understood what our future grid is likely to look like.

          With a renewable grid we can produce far more electricity than we now find economically possible. The cost of electricity is be less than it now is. (Don’t forget to do full cost accounting.)

          • sbean 6 years ago

            Thermodynamics and the current state of debt overloaded global finance stand in the way of that future grid at the scale that you seem to imagine. (Not to mention the pace of global warming that we’re racing against.)

          • Mike Shurtleff 6 years ago

            Uh oh, I’m forgot where I put my “The World Is Ending Tomorrow” sign. 😉

          • sbean 6 years ago

            Mock all you like, Mike. You’ll soon (like, starting next week) see what I’m talking about with regard to finance. The energy situation will take a little longer to play out.

          • Mike Shurtleff 6 years ago

            OK, you’re on. We’ll see what happens next week.

          • sbean 6 years ago

            How are the markets looking so far? The largest market correction in history began the day after you mocked the market gods. Well done.

          • Mike Shurtleff 6 years ago

            I usually just check the DJIA when curious and not all that often. Not my gig normally. Right now DJIA is 17,210. Still over 17,000, still very high, so far I don’t see a big collapse.
            Jump’in the gun a little aren’t you?

          • Mike Shurtleff 6 years ago

            OK, it’s Friday night and the market is closed. The DJIA is still over 17,000, so you have a failed prediction. You were wrong.

            I’d love to know what made you predict this a market collapse this past week, but you seem to be a secret squirrel about that.

          • sbean 6 years ago

            No such prediction of a collapse, just the clear beginning of deflation in the US. If you’d love to know you could ask rather than be argumentative and obtuse. See ya.

          • Mike Shurtleff 6 years ago

            OK, what made you predict the beginning of deflation in the US this week?

          • sbean 6 years ago

            Evidence. Bonds topped over a year ago, similar to how they did prior to the 1929 top in stocks. The small-cap indices topped months ago. Commodities, including gold and silver, topped over a year ago. The large cap stocks were the last holdouts. Meanwhile, treasury rates bottomed over a year ago as did the dollar. Deflation actually probably started back in 2000, it’s just that prices (which technically don’t define deflation, they just usually reflect it) have gone down and back up a couple times over that period. It’ll be down from here for the next few years. Housing will come along with the rest.

          • wideEyedPupil 6 years ago

            It’s sixteen days on, what was I supposed to have seen exactly?

          • sbean 6 years ago

            A clear downtrend with increasingly larger drops. Today’s (I doubt that it will hold off until tomorrow) will be the largest in perhaps two years. Larger ones to follow. If, like Mike, you don’t follow the markets, the downtrend may not be obvious yet, and the mainstream media will continue to talk about each drop as a buying opportunity for a while longer.

          • sbean 6 years ago

            I meant to say that today’s would be the largest *single-day* drop in about two years (August 8 & 9, 2011, I think it was, about 40 and 50 points in the S&P, respectively.) It’s on its way this morning, even after the opening up gap but might not cover that much ground. Wednesday or Thursday might be the biggest steps of this phase after a possible countertrend bounce tomorrow.

          • Bob_Wallace 6 years ago

            October 30, 2014. Dow closes at record high of 1,7195. Up 127 points about previous record set on July 3, 2014.

          • alan2102 6 years ago

            Dateline 30 January 2015:
            DJIA at 17,164.
            Deflation has clearly taken hold.

          • Bob_Wallace 6 years ago

            I’m afraid our friend Bean isn’t much of a market prognosticator.

          • Bob_Wallace 6 years ago

            Please explain how thermodynamics stand in the way of our transition to renewable energy.

    • Mike Shurtleff 6 years ago

      You might want to allow some time for build up of Solar PV, Wind, and EVs/PHEVs, before you just close down everything else. The transition is going to take some time. I’m wild guessing at 20 years.

      • suthnsun 6 years ago

        The time lag from exploration to production is very long, so I’m not suggesting shutting down even new field development at this stage. Closing down exploration will save a lot of capital and also send a powerful signal to markets. In a few years we should also be closing off new(already discovered) field development imho.

        • Mike Shurtleff 6 years ago

          Oh, sounds fairly reasonable to me then.

    • Michael Fry 6 years ago

      yep lets stop using it immediately today don’t wait for tomorrow stop using it right now the moment I press enter.

      • suthnsun 6 years ago

        Nearly done Michael. Et tu?

  4. GregX 6 years ago

    That would be fantastic. How about we start by removing all the FF subsidies. As an example, the tiny Northern Territory Govt is subsidising shale gas exploration to the tune of $80M according to this years NT budget. At the same time in the same budget paper, they admit to having to continue to subsidise electricity costs for their state owned electricity company. Surely Darwin would be the perfect place for solar power.

  5. sbean 6 years ago

    Fossil fuels are currently necessary for the production of wind and solar infrastructure and will be for a considerable time. We can’t end oil production without foregoing all that renewables production. The analysis is flawed in that it looks at EROCI without also considering EROEI.

    • jeffhre 6 years ago

      No it does not assume the end of oil production. It assumes that as demand falls, low priced oil production will push out high priced production.

      • sbean 6 years ago

        What low-priced production?

        • jeffhre 6 years ago

          Each industry has a continuum of production costs borne by incumbent producers. The costs vary from low to high. An example would be light sweet crude from Saudi Arabia as low, with Alberta mined tar sands bitumen as high.

          “…low priced oil production will push out high priced production.” This can occur as part of what is known as an “industry shakeout.”

          • JonathanMaddox 6 years ago

            Saudi Arabia may have relatively low oil production costs for the majority of its output from the old giant Ghawar field, but it too has been investing heavily in more costly production at the margins, including enhanced recovery techniques in Ghawar itself as well as developing formerly neglected fields such as Manifa which yield lower-grade crude oil.

            http://www.bloomberg.com/news/2011-12-06/saudi-manifa-oil-project-to-cost-17-billion-aramco-says-2-.html

            Moreover, as an entirely oil-dependent economy with a lot of committed expenditures that aren’t supported by domestic taxation but only by royalties on exported oil, KSA can’t just drop their prices and undercut more expensive production elsewhere. The cost of running the kingdom is *part* of the cost of Arabian oil, as far as the rest of the world is concerned.

            In fact much the same circumstances apply in most other oil-exporting countries including Russia. If the bottom falls out of the oil price, those regimes suffer financial collapse and a potential security disaster.

            http://www.oil-price.net/en/articles/lower-bound-of-oil-prices.php

            The Saudi royals have every reason to increase domestic boondoggles and defence spending …

            http://www.huffingtonpost.com/alastair-crooke/isis-aim-saudi-arabia_b_5748744.html

            All these countries would much rather export a much reduced quantity of oil at a high price than suffer financial disaster and potential regime collapse from a low price. They’ll cut output — possibly drastically — before seeing oil prices collapse below around the $US70/barrel mark.

          • Mike Shurtleff 6 years ago

            “If the bottom falls out of the oil price, those regimes suffer financial collapse and a potential security disaster.”
            So maybe a revolt and then production resumes at lower price.

          • JonathanMaddox 6 years ago

            No, because the existing regimes can and do maximise revenue by cutting production. Serious turmoil invariably results in extended periods of reduced production in any case, but after the smoke clears, all the same considerations still apply to whoever has control once things settle down.

          • Mike Shurtleff 6 years ago

            “No, because the existing regimes can and do maximise revenue by cutting production.”
            That game is changing. There are alternative sources of oil now and there are alternative sources of energy.

            “Serious turmoil invariably results in extended periods of reduced production in any case”
            Yes, if by extended you mean a few years. Iraq being the example here.

            “after the smoke clears, all the same considerations still apply to whoever has control once things settle down”
            Think out side of the box of what has been going on before. No, the same considerations do not apply. The Saudi Arabian Kingdom does not need to be run so inefficiently. I think it is Abu Dhabi that has invested their oil revenues more wisely and now get more financial income from their investments than from their oil. Saudi Arabia could do this for their country instead of just for the royals. They don’t need generate all their electricity from oil. It’s a financial waste to do that. They could use Solar and Storage at half the cost and save the oil for export. The Saudi Kingdom does not need to be run so inefficiently.

          • sbean 6 years ago

            And what are the broader implications of such a shakeout, in particular on prices?

          • Bob_Wallace 6 years ago

            Demand drops. Countries which have lower production costs will drop their price enough to force high cost producers out of the market.

            Saudi Arabia cuts their prices a bit in order to keep selling product.

            Alberta mined tar sands bitumen can’t produce at that price level and closes.

            Since demand is down we, by definition, don’t miss the Alberta sludge.

          • JonathanMaddox 6 years ago

            Cost of production in Alberta has been reduced by technical development and economies of scale to the point where the thermal methods (SAGD = steam assisted gravity drainage) cost a mere $40/bbl or so to produce. Alberta isn’t the marginal barrel anymore, not by a long way.

            http://oilprice.com/Energy/Energy-General/New-Report-Finds-Oil-Sands-Production-Costs-Below-U.S.-Tight-Oil.html

          • Bob_Wallace 6 years ago

            Your link states – “, Canadian oil production was found to have an average full cycle breakeven cost of between $63 and $65 per barrel….” The lowest cost producer has a “breakeven cost of $44.30 per barrel”.

            Furthermore, “… the full-cycle breakeven cost of in-situ, steam-assisted gravity drainage (SAGD) bitumen is $63.50….”

            And “…new projects, however, were found to require $100 per barrel to break even ….”

            None of that supports ” a mere $40/bbl or so to produce”.

            Now back to my point. As demand drops the most expensive producers will be forced out of the market.

            ” Saudi Arabian crude is the cheapest in the world to extract because of its location near the surface of the desert and the size of the fields, which allow economies of scale.

            The operating cost (stripping out capital expenditure) of
            extracting a barrel in Saudi Arabia has been estimated to be
            around $1-$2, and the total cost (including capital expenditure) $4-$6 a barrel.

            Extraction of Iraqi oil is in theory also very cheap, although there are political and security challenges. Industry analysts estimated total costs at between $4-6, although they said some fields could be more expensive.

            In the United Arab Emirates, operating and capital costs
            combined were estimated to be around $7 a barrel.

            Oil extraction from mature and deep water offshore fields is
            much more expensive than from the accessible hydrocarbon territory of the Gulf.

            In Nigeria, production in ultra-deep water fields can reach
            $30 a barrel compared with onshore costs of around $15,
            according to analysts.”

            http://www.reuters.com/article/2009/07/28/oil-cost-factbox-idUSLS12407420090728

            There are more <$60 production cost countries in the article.

          • JonathanMaddox 6 years ago

            New oil sands *mining* projects were found to require $100/bbl to break even. SAGD is much cheaper.

          • Bob_Wallace 6 years ago

            I’m not sure what point you are trying to make.

            As demand for oil drops then the most expensive producers will drop out. That, based on what you’ve posted, will be new SAGD ($100/b). Then regular SAGD at $63/b will go away. The last supplier will be Saudi Arabia (if they still have supply) because they are the least expensive producer.

    • Mike Shurtleff 6 years ago

      EROEI is getting better and better for Solar PV and Wind. The opposite is happening for fossil fuels. Yes, it will take time to transition our energy infrastructure. I think the EROEI case is already good for doing it.

      • sbean 6 years ago

        I didn’t raise the question in terms of a reason to do it but rather in terms of how challenging (possibly an understatement) it’s going to be to do it. We can’t keep a global economy going _and_ transition to renewables with what relatively low-energy fossil fuels are left. The good stuff’s gone.

        Ah, now that I’ve read your first comment, I see that you agree.

        • Bob_Wallace 6 years ago

          We’re making the transition right now. And if petroleum supplies tightened we could, and would, accelerate our transition.

          Let’s look at where we get our oil. There’s the secretive Saudi Arabia. Perhaps they announce this afternoon that they are running out of oil and their 11 million barrels per day will disappear from the world market

          Would the world come to an end? No. There would be some economic disruption as we invoked emergency measures to cut consumption to match the now smaller supply. In the US, for example, we’d do the sorts of things we did during the 1970s when the oil supply was artificially cut.

          Then we could simply pass legislation requiring 90% of all new vehicles sold to be either EVs or PHEVs within three/five years of signing. That would cut US personal transportation oil use by about 75%.

          We’re moving slowly off oil simply because the economics don’t drive a faster transition.

        • Mike Shurtleff 6 years ago

          No, I don’t agree. I understand the potential problem, but we are not in a death spiral. On the contrary, every year that goes by without a global collapse, we get more of the renewables (Solar PV, Wind, Storage, and EVs/PHEVs) technology development and infrastructure development accomplished. Each year we have more of a base from which to spark a very rapid transition, if this should become necessary. As Bob put it “we could, and would, accelerate our transition”. I am a techno-optimist. The cup is more than half full. The transition has already begun to take place. Here is part of it:
          http://cleantechnica.com/2014/07/22/exponential-growth-global-solar-pv-production-installation/ – July 2014
          “The Continuing Exponential Growth Of Global Solar PV Production & Installation”
          That is my view. Renewables are already winning. It just has not become visible to most people. Abbott and his cronies are dang fools. They might as well be fighting against people using air to breath.

          • jeffhre 6 years ago

            “Abbott and his cronies are dang fools.”

            They are getting what they can, as fast as they can. It appears that time is of the essence.

    • Mike Shurtleff 6 years ago

      Here is an EROEI based perspective from somebody in the Middle East studying the problem:
      http://cleantechnica.com/2014/09/14/energy-trap-world-uae-can-avoid/

      Time is running shorter and shorter. We should be working harder at transitioning before we get stuck with such low EROEIs for fossil fuels that we can no longer afford to switch ..and end up going down with the ship

      …like a submarine death spiral if you are familiar with that …the sub goes down too deep and too fast …the more it tries to speed up and blow ballast to come up the deeper it gets …it gets more dense as the water continues to crush it …they can’t get the bow up enough, so they keep driving deeper trying to push up with their steering planes …they can’t blow enough air out of their tanks because the pressure is going up too fast …deeper and deeper and then “POW” an implosion …they’re dead.

      I dunno. I think we might want to push for a sooner transition and avoid the economic implosion coming to fossil fuels.

      • sbean 6 years ago

        Thanks for that link, Mike. He seems to get it to a point. I think your analogy is a better representation of the difficulty of the challenge. His criteria for a sustainable transition are simply unrealistic without an understanding that our future will be of a much, much lower energy use. While the tides, waves, winds, and sunshine will be available, we won’t be capturing nearly enough of them to function as we currently do. Localization of the vast majority of food and other production will be the only option.

        • Mike Shurtleff 6 years ago

          “His criteria for a sustainable transition are simply unrealistic without
          an understanding that our future will be of a much, much lower energy
          use.”
          Do you have any idea how much energy is available from the sun? …from the wind? Way more is available each year then is available from fossil fuels in total. The use of renewables in our future does not require lower energy use. That is simply not true. I’ve worked the numbers. I’ve followed the technology development. You are very wrong. Ever driven a Tesla vehicle? They’re powerful!
          How about this for a bus:
          http://cleantechnica.com/2014/09/16/toshiba-provide-fast-charging-batteries-proterra/
          How about this for a garbage truck:
          http://cleantechnica.com/2014/09/16/first-electric-garbage-truck-in-us-hauls-9-tons-of-chicago-trash/

          If our future is lower power it will be because EV transport is more efficient, it doesn’t require as much energy to travel the same distance, …it will be because our homes are better insulated and we don’t need as much energy for heat or cooling, …it will because our LED lighting requires less power …it will most certainly NOT be because there is insufficient power available from renewables …that is just ignorant nonsense.

          • sbean 6 years ago

            What’s available from the sun and what we are able to capture are two vastly different numbers. That aside, I don’t disagree that someday we might be able to capture as much as we like (if the planet’s climate remains habitable that long). I’m talking about the near term future of the next several decades wherein finance and fossil fuel-derived energy restraints will put a big damper on that transition. We’re about to go over the net-energy cliff and head into a deep economic depression (at least Europe and North America, probably more widespread than that) simultaneously. I don’t think the renewable transition is far enough along to pull us out of that quickly. So I believe our next decades will be much lower in energy availability than today. And, actually, that’s a good thing.

          • Mike Shurtleff 6 years ago

            “What’s available from the sun and what we are able to capture are two vastly different numbers.”
            I’ve done the calculation. I can post if you like. Even at 10% efficiency the amount we can collect is still huge. Solar PV panels are closing in to 20% efficiency now. They’ll pretty much have to produce 20% panels at less than 50c/Wp to compete successfully in the market in the next few years. …so no you are completely wrong there.

            “We’re about to go over the net-energy cliff and head into a deep economic
            depression (at least Europe and North America, probably more widespread
            than that) simultaneously.”
            I don’t agree. The USA is becoming a large net exporter of oil again. …and we will be exporting NG again. Our gasoline prices have just dropped some this fall. It’s still expensive, but your claim is false there. We still import close to 40% of oil, but this has dropped and continues to do so. Also, we still have a ton of coal and we’re exporting that. Canada is clearly a large exporter of oil. Unfortunately their tar sands are not really all that expensive to produce oil from.
            Europe is another problem, but there is still plenty of places they can import fossil fuels from while they are transitioning to a larger percentage of renewables. If Germany can do this, with their poor solar resources, then certainly the EU can in general.
            I think you are 180 degrees out on this. The truth is we have enough fossil fuels to cook ourselves before we transition to renewables. Since the renewables transition is occurring so rapidly, what will actually happen is we will end up with a lot of stranded fossil fuel resources. We will transition before we run out of fossil fuels, not after. This transition will be mostly complete another 30 years is up, before 2050. Even the Great Depression in the US only lasted a few years …and it did not stop the transition to Horseless Carriages.
            In the Developed World we are already seeing reductions in fossil fuel use and in CO2 output …and the transition has only just started to be self-sustainingly economic. China is accelerating their use of Wind, Solar PV, and EVs in a big way …and now India is seeing the light.
            Nope, I’m not as pessimistic as you. We could certainly do better. I can’t believe we continue to subsidize fossil fuels at the level we do. I can’t believe more stimulus and research funds are not going to Solar PV, Wind, Storage, and EVs/PHEVs. We continue to spend on our past and not on our future. Crazy stuff.

          • JonathanMaddox 6 years ago

            The USA is *not* becoming a net exporter of oil, not by a long shot. It is a major refining centre and is exporting ever-larger quantities of oil *products*, which is of course where those export numbers come from, but domestic crude oil production even at the height of the shale boom still only meets half domestic demand (the 60% you imply is too high) and because so much of it now comes from the very volatile, very high-cost, very credit-dependent tight oil, that can only realistically be expected to grow with a very high oil price. Right now, the price is falling.

            http://oilprice.com/Energy/Energy-General/New-Report-Finds-Oil-Sands-Production-Costs-Below-U.S.-Tight-Oil.html

          • Mike Shurtleff 6 years ago

            You have me on this one. Even as I was writing it I was thinking that doesn’t add up. I should have corrected it. You’ve explained to me where I went of track with that one. We’re “exporting ever-larger quantities of oil *products*, not crude. Thanks!

            I have read that we are now only importing 40%. I can’t remember where. I could be wrong on that one too. My over all point still stands. There are still plenty of fossil fuel resources out there. I do not believe we are about to go over the net-energy cliff. I was just reading about new shale oil and gas finds in Argentina a short while ago. There’s tons of oil sands in Canada and were costing only $35/barrel to recovery. Maybe with loss of value for the US dollar it now costs more like $45/barrel, I’m not sure, but we’re talking about a very big source at a very low cost of recovery compared to $100/barrel that oil has been selling at.

            Yeh, right now the price of oil is falling. It’s getting close to $90/barrel, whoopie. I don’t expect it to go down very far …not yet. Do you?
            Do you disagree with my position that we are not at the net-energy cliff, or agree with it?

          • JonathanMaddox 6 years ago

            I agree with your position. The world is awash with energy. Liquid fuel production may or may not be on the brink of terminal decline, but if it does, there are plenty of ways to substitute other energy sources and to cut demand. I consider pollution and climate change to be the real challenges facing the energy industry.

            Liquid fuel supply is an “interesting” problem but I think 2008 proved that there is a lot more flexibility in the consumption side of the energy economy than the old-school peak-oil doomers ever allowed for. Until 2008 there was enough flexibility on the supply side that consumers were never forced to make painful choices en masse; until then energy poverty was always a problem for a minority. But so much oil consumption was, and indeed still is, discretionary and wasteful, that it’s very easy in the case of an oil price spike for demand to plummet — sure, it’s a major recession in a number of relatively wealthy countries, but that’s hardly the same thing as the world as a whole falling off an energy supply cliff. And in the recovery we see technological evolution — nothing really radical, just sanity at work — making oil more, not less, discretionary. USA domestic oil consumption has fallen just as far as domestic production has risen. Consumption is on the rise again thanks to a recovery largely driven by the production industry. I”m not sure if this is really an irony or not, but it’s a recovery at risk because it’s US shale oil production which is now the “marginal barrel” on the production side.

            As for *net* energy questions, I think the question of EROEI on a particular energy source is completely separate from the notion of a “societal” net energy, and *neither* is a reasonable basis for philosophical energy analysis. In the case of individual energy sources in the industrial sense, investment decisions are made on the basis of a monetary rate of return, not net energy. Petroleum still sees enormous investment even at the marginal barrel because a modest but *quick* return is more attractive to your average capitalist than a large but slow one. Hence the relative unattractiveness of nuclear power investment to risk capital.

            In the case of society-as-a-whole, surely society has always been zero net energy and always will be? Humanity as a whole isn’t in the energy business; it doesn’t sell energy products to anyone else. Net energy questions on a societal level are about the portion of our economic activity devoted to the energy industry, nothing else. If the energy industry were to grow so big that it ate everything else, we’d have a problem, but I don’t see that as a realistic scenario.

            The only realistic near-term doomsday scenario is that of greenhouse pollution (and other non-energy consumption questions such as deforestation, overfishing and land degradation) triggering ecological collapse. Changing rainfall patterns and rising seas will have us starving by the billion before we actually run out of oil.

            Earth has always received a copious and continuous free gift of energy from the Sun. The biosphere captures as much sunlight as it can usefully consume and lets the rest go. That’s the way forward for industrial humanity as well. Even without the specific fossil fuel problem, I expect we will always be pushing against our constraints, competing with and (at least inadvertently) causing damage to each other and our fellow creatures and to the last remaining wilderness, risking overwhelming the Earth with our sheer capacity to consume. But if we can rise to the challenge of eliminating greenhouse gas pollution from our industrial energy systems (I expect we will, if only at the last possible minute), then it bodes well for our ability to keep the planet alive long-term.

          • Bob_Wallace 6 years ago

            ” We’re about to go over the net-energy cliff and head into a deep economic depression (at least Europe and North America, probably more widespread than that) simultaneously.”

            Highly unlikely.

            We have a surplus of coal. Coal consumption is on the decline so our ‘100 to 200 year supply’ will be stretched to a 200 to 400 year supply and then to a “we just don’t use the stuff” supply.

            We’re rapidly increasing fuel efficiency. Fleet mileage requirements will more than double in the US by 2025. EV/PHEV sales are accelerating and will cause very large demand drops.

            Any energy cliff stuff is unfounded fantasy.

          • sbean 6 years ago

            You’re not ‘listening’. Good luck with that.

          • Bob_Wallace 6 years ago

            No, I’m not listening to crackpot fantasies.

            The world is not running out of fossil fuels.

            The world economies are not about to crash.

    • Bob_Wallace 6 years ago

      Help me out here. I’m trying to think of some part of building and installing wind turbines and solar panels that requires fossil fuels. Can you list those things which cannot be done with renewable energy?

      • sbean 6 years ago

        That’s the ‘wrong’ question, Bob. It’s not a matter of what’s technically possible but of what’s energetically possible. See what Mike wrote below.

        • Bob_Wallace 6 years ago

          That’s not an answer, s. You stated –

          “We can’t end oil production without foregoing all that renewables production.”

          For you to come to that conclusion you would need to have identified specific tasks that can only be completed with oil, that couldn’t be done with another source of energy.

          Do you know of any parts of wind turbines/solar panels/wind and solar farms that absolutely require oil and nothing else?

          • sbean 6 years ago

            Nothing in the world, let alone renewable infrastructure, that I’m aware of absolutely requires oil and nothing else. I could have said fossil fuels instead of oil (but I didn’t). Electricity generation currently relies on fossil fuels, including oil, which is used for essentially all the vehicles involved, including in the mining/extraction process. Electricity (along with oil as noted) is used to make turbines, panels, etc. If you’re only interested in what’s technically possible, that’s fine. I think the overall implications for energy availability and our lifestyles is sufficiently consequential to give more consideration.

          • Bob_Wallace 6 years ago

            I agree. Electricity generation on many grids currently relies heavily on fossil fuels. But that does not mean that it is necessary to rely on fossil fuels, anymore than the fact that lots of people rode horses in 1910 meant that we had to keep riding horses.

            We’re in the very early days of switching from horses to cars, er, fossil fuels to renewables. Early in transitions the rate of change is generally slow but then accelerates.

            And one of the great things we’re starting to understand is that our future renewable energy grids will bring us cheaper energy than what we used last century.

          • sbean 6 years ago

            See those extended dips for the Auto and Clothes Washer? That’s what’s coming next for renewables, only at a larger scale (i.e., it’ll last longer), because the financial environment can’t sustain the transition. Meanwhile, we’ll keep burning through fossil fuels (though more slowly), to the point that the ultimate transition takes decades longer.

          • Bob_Wallace 6 years ago

            I did.

            Did you check the dates?

            If so, do you remember the dates for World War II? Do you remember how we ceased making autos and many consumer goods in order to maximize our war output?

            As far as the world’s financial condition, we are just now crawling out of one of the worst recessions/depression in modern history. The world is doing OK.

            And renewables are going to improve the world’s financial situation. The world is going to enjoy a drop in the price of energy. That will drive economies, increase production.

          • sbean 6 years ago

            The world is not doing OK. You’re not paying attention.

            And are you suggesting we’ll need a war? I don’t think you are, but you’ve brought it up more than once now. I won’t be surprised if we go through wars again, it’s just not something relevant since it was coincidental with the financial recovery after the Great Depression, not the reason for it ending.

            Renewables can’t pay off debt, and that’s the source of most of our financial precariousness today. Defaults, deflation, and depression will be the way forward. That’s the corner we’ve painted ourselves into. That’s not pessimism but rather ong-learned awareness of the current reality.

          • Bob_Wallace 6 years ago

            No, I’m not suggesting we need a war. I brought up WWII for two reasons:

            1) To show you that we could greatly ramp up efforts if necessary. We do that in crisis, we work harder and make things happen faster.

            2) To explain to you why auto and appliance rates dropped in the 1940s.

            I don’t know where you get your financial theory, but it doesn’t match what I know about the state of the world’s economies. There’s no way for me to prove you wrong, we’ll just have to wait and watch the world do that.

          • wideEyedPupil 6 years ago

            Not even about working harder, just shifting the priorities of the market and focusing on decarbonisation at the cost of FF industries. Bye bye FF.

          • Mike Shurtleff 6 years ago

            sbean,
            Read Travis Bradford’s book “The Solar Revolution” copy 2006
            In the 1970s in the USA we had two “oil crises”. As a direct result, the significant percentage of electricity that was being produced using oil (I think it was 20%) was converted over to nuclear. The US uses almost no oil in electricity production now. These changes do take place. They can happen faster.
            In WW2 the production of planes was tripled in a few short years. The production of auto-mobiles was converted almost entirely over to the production war vehicles, in the same few short years. These things can get done if they are needed.
            Doesn’t have to happen that way. Right now, Solar PV and EVs/PHEVs are increasing in their production exponentially. That means they are already changing fast, very fast. In 2020, or 2025, most people will begin to be able to see and understand this. Right now you have to understand the numbers, then growth trends, and know what this means.
            mike

          • sbean 6 years ago

            You’re using examples that weaken your case. Those transitions occurred in times of cheap, abundant, high-net-energy fossil fuel availability. Those days are gone, and there are billions more people living today using those fuels.

            Yes, renewables are growing exponentially right now. In a few years that won’t be the case. If you don’t understand the global financial situation you won’t understand why that’s the case.

          • Mike Shurtleff 6 years ago

            “You’re using examples that weaken your case.”
            What can I say? You see failure at every opportunity. I’ve dealt with you mind set before. I’m an engineer. It is impossible to find solutions when dealing with somebody who thinks nothing will work.

            ” Those transitions occurred in times of cheap, abundant, high-net-energy fossil fuel availability. Those days are gone”
            The days of cheap fossil fuels are gone, but we are doing fine with current costs and that can go on for a while. This is particularly true since our demand is plateauing and beginning to drop …and this is happening because the transition to renewables has already begun. We are generating a lot more electricity from Wind and Solar PV now. We have EVs that can drive at high speed across the nation now. Those things were not there 10 years ago. …and because they are growing exponentially they will look like small potatoes even 5 years from now.

          • sbean 6 years ago

            It can’t go on for a while. There’s the flaw in your logic. I’ve referenced global finance and net energy limitations that you’ve ignored. Yes, in that sense I’m seeing failure.

          • Mike Shurtleff 6 years ago

            It can go on for a while if the use rate is dropping. Those global financial limits and net energy limits are not as low as you imagine. I disagree with your logic and your prognosis.

          • jeffhre 6 years ago

            With the recession easing use is going up, at least in the US. Though there are now over 500,000 plug-ins reducing demand for oil now the planets roads.

          • jeffhre 6 years ago

            Wait, whu? The era of cheap, and abundant, high-net-energy fossil fuels ended – which makes it less likely fossil fuels can be replaced by exponentially growing renewables in a timely way? What the heck am I missing?

          • sbean 6 years ago

            Keyword: “replaced”. They will be replaced by default. They won’t be replaced in the sense that we will have the same amount of concentrated energy available on a daily basis. That is, we will live with 100% renewables (or close to that) at somewhere below 100% of the amount of energy we currently use, probably well below, like less than 50% of that amount by that point.

          • Daniel LaLiberte 6 years ago

            Maybe it is fortunate, then, that burning fossil fuels wastes about half the energy as heat, so when we replace gas powered internal combustion with all electric, we will only need half as much energy.

            At the current growth rates of solar and wind, we will arrive at 100% renewable energy for all our electricity needs in about 15 years, and a half dozen years later we could reach 200%. Replacing all our fossil fuel based vehicles with electric vehicles may take a bit longer, or maybe not.

          • sbean 6 years ago

            Cheers to all of that. My point is that the current rates of growth aren’t going to hold. Finance will rear its ugly head and depress (as in depression) them for a number of years. That 15 years could become 30-50. Fossil fuels will largely fall by the wayside in the meantime due to prohibitively low EROEI. The vehicle fueling will probably take the brunt of that hit to net energy availability, resulting in far fewer cars on the (deteriorating) roads.

          • jeffhre 6 years ago

            If that is true, then the most efficient allocators of financial resources and services will be concentrating on renewable energy investments. As one of the few sectors capable of maintaining reasonable ROI in a falling economy where EROEI of fossil fuels are suffering intractable declines. Displacement and it’s attendant friction could be an overall drag on economic activity though.

            Or technological and financial innovation, could make the transition(s) relatively easy. Don’t know, my crystal ball is acting up again.