Peak Oil: High Tide for an Oil Addicted World/Energy Options

After oil, what next?
That’s what we all would like to know! We can't predict the future but we can make some educated guesses. One of which is to say that whatever the future has in store for us it may well be very different to the world we live in today. We can get some clues form what is happening today. We have alternative energy sources such as wind and solar but they are intermittent and will not meet our current needs but perhaps they could be combined with energy farms. There is nuclear but that leaves a lot of nasty waste to handle and is in itself just another finite resource and will also peak exactly as oil will. There are bio fuels but they, like, wind and solar, will not be able to meet our current needs. So, what ever next maybe it will probably be a world with a mixture of energy sources combined with ways to reduce our energy needs. Maybe that will mean more reliance on local communities maybe it will be more like a “Mad Max” world. We don’t know but its up to us how we shape the future. We are now going to look at a whole range of potential energy sources for the future, but a couple of things will remain clear. The first is that finding a direct replacement for oil is not easy and that most of our options only produce electricity. The second is that the laws of thermodynamics are very important to consider.

What are the laws of thermodynamics?
Law 1. You don’t get something for nothing. Or more technically, the energy you put into a system is equal to the energy you get out plus the energy you lose in the system. This means that energy is conserved, that there is no energy magical appearing out of nowhere.

Law 2. If you want to keep something running you got to put energy into it. That is, a closed system will run down and come to a halt unless you keep adding energy to it (then it won’t be closed!). Another way of saying this is to say that the entropy of the system increases. The result of this law is all around us when you see things degrading and needing maintenance.

Law 3. The colder things are the less energy they lose. So, if you could freeze a system down to the coldest you can get then the entropy of that system would be constant.

What about non-conventional oil?
Fossil fuels come in a range of forms from coal to natural gas. 'Conventional Oil' generally refers to easily flowing oils - and some definitions restrict the term to on-shore or shallow-water oil. Conventional oil is the easiest to extract and the easiest to use. Non-conventional oils range from heavy oil (thick and more difficult to both extract and refine) to tar sands. Another form of non-conventional 'oil' is 'oil shale' - in fact not a form of oil at all but nearer to the form that organic materials take before heat and pressure creates oil from them.

There are very large amounts of both tar sands and oil shales in the USA and Russia. However extraction of these and conversion into usable oil is not easy. Using current methods (in development for over 25 years) both require a large input of energy - and in the case oil sands - large quantities of water. Whilst there is an overall gain in energy - it is neither quick nor easy to produce oil from either of these sources. Furthermore, especially in the case of oil-sands, there is a substantial environmental impact.

Whilst production from heavy oils and oil-sands is increasing current projections are that these will not make up the shortfall as conventional oil production starts to fall. Oil shale has yet to be produced on commercial scale.

What about renewables such as solar and wind?
The current forms of solar and wind energy produce electricity. This, of course, could be used either to produce hydrogen (or some other form of energy carrier) or to charge batteries in electric cars.

The current focus on these renewables is to try to replace conventional (fossil fueled) generation to reduce CO2 emissions. At present, however, demand for electricity is increasing - and the rapidly increasing implementation of new solar and wind generation systems isn't even covering new demand, let alone replacing conventional generation. The point is that irrespective of peak oil we also have an issue on conventional power generation. So to tackle both this issue and peak oil would require immensely larger programmes. By way of example roughly 4% of the UK's land area and 50,000 3MW wind turbines would be require to replace current electricity generation (Energy Beyond Oil, Paul Mobbs). To replace oil energy requires roughly the same amount [compare to current govt targets].

If electricity is used to generate hydrogen, and that hydrogen is then used to propel a vehicle, roughly 75% of the energy is wasted through conversion losses. The same applies to oil as cars are only 25% efficient - the rest of the energy ends up as heat. Use of the electricity to charge electric cars is more efficient, and also avoids the complexities of producing, transporting and storing hydrogen (although other chemical forms of energy storage are being developed).

Technology has been developed that will produce hydrogen directly from sunlight and attempts are being made to increase the efficiency of this. At present it isn't commercially viable.

So renewables could help - but would require a massive increase in implementation, for which there may simply not be enough sites. It would also require changes in vehicles and infrastructure to move the energy around.

What about renewables such as tidal or wave?
These are potentially major sources of energy in some parts of the world. The UK is fortunate in having both in large quantities on tap. However these are not easy to convert into electricity and many of the arguments that apply to wind also apply to tidal and wave energy.

Water is not a forgiving medium and equipment that is designed to operate in rough seas has to be very robust and is also difficult and expensive to maintain. There are, however, a number of methods being developed to extract energy from both tide and wave. The tidal barrage is well established approach but has substantial environmental consequences. Tidal lagoons have also been mooted. Tidal stream devices (a propeller connected to a generator) are in development. Wave solutions also are being developed and there are now implementations going ahead.

However the total amount of energy we can extract in this way using currently perceived developments is still small compared to the energy we get from oil. By way of example The Royal Commission on Environmental Pollution estimated that 4GW of power could be delivered by tidal stream in the UK (which is well endowed with potential sites). This is only about 10% of current electricity use in the UK...and a much smaller proportion of our oil usage (let alone gas).

What about bio-fuels?
Biofuels are going to be an important source of fuel for the future. Until the onset of fossil fuels bio-mass in the shape of wood, dung, straw and much more was, along with the sun and

"In 2003, the biologist Jeffrey Dukes calculated that the fossil fuels we burn in one year were made from organic matter “containing 44×10 to the 18 grams of carbon, which is more than 400 times the net primary productivity of the planet’s current biota.”(1) In plain English, this means that every year we use four centuries’ worth of plants and animals."

One calculation suggests we would need to use all of Britain’s current agricultural land to meet its current energy needs by using biomass.

A report from the E.U simply stated “You can feed either cars or people, but not both.” [source?]

What about gas and Liquid Natural Gas?
Gas is expected to peak 10 years after oil, so it is not any long term solution. It is also prone to sharper decline rates and is much more difficult to transport, hence the push for Liquefied Natural Gas as the choice for countries around the world with an increasing appetite for gas from far away countries. Transporting LNG by tanker is arguably cheaper than building pipe lines but there are many infrastructure problems such as building LNG ships and terminals. Gas is an incredibly important feedstock for fertiliser and many believe it is the decline of gas that we have to worry more about.

What about the hydrogen economy?
Stories in the media will often crop up about cars running on water. There is no car that runs on water, but what these stories are referring to is ‘The Hydrogen Economy’ – a future where the world is powered by emission-free Hydrogen. The key thing though is that unlike fossil fuels, Hydrogen isn’t an energy source – it is an energy carrier. It is a battery. You have to use energy both to getting it, and getting power into it. Despite Hydrogen being the most abundant element in the universe, it is incredibly hard to get in any usable form.

The laws of physics mean the hydrogen economy will always be an energy sink. Hydrogen’s properties require you to spend more energy to do the following than you get out of it later: overcome waters’ hydrogen-oxygen bond, to move heavy cars, to prevent leaks and brittle metals, to transport hydrogen to the destination. It doesn’t matter if all of the problems are solved, or how much money is spent. You will use more energy to create, store, and transport hydrogen than you will ever get out of it.

Any diversion of declining fossil fuels to a hydrogen economy subtracts that energy from other possible uses, such as planting, harvesting, delivering, and cooking food, heating homes, and other essential activities. According to Joseph Romm “The energy and environmental problems facing the nation and the world, especially global warming, are far too serious to risk making major policy mistakes that misallocate scarce resources.

Optimistic studies on the use of hydrogen as a fuel usually fail, for example, to take into account the storage costs associated with a highly compressed gaseous fuel. Hydrogen has such a low fuel value per unit volume that it is difficult to ship or pump meaningful quantities of energy from point to point.

There is a joke about Hydrogen. "Hydrogen is the fuel of the future, and it always will be."

What about nuclear fission?
Nuclear fission is a highly emotive energy source. Statistically it is one of the safest forms of energy in terms of deaths per energy unit produced. However we are facing an immense backlog of nuclear waste to deal with, huge decommissioning costs for old power stations and leaving a radioactive legacy that spans 1000s of years into the future. There are also risks of nuclear proliferation.

There are also concerns over the availability of Uranium as current high-density reserves will run out in the next 30 years.

New designs and approaches massively reduce waste and decommissioning costs, however these are not eliminated. There are also ways of re-processing uranium, or using Thorium, or implementing breeder-reactors that massively increase the amount of energy (50 times or more) that can be derived from the same amount of input fuel. These would all require considerable development and come with new waste and safety issues.

In principle, if these issues could be overcome, nuclear power could produce a large amount of energy. Even so the scale the need should not be under-estimated. To replace, say, 25% of the UK's current oil consumption would require electricity from about 20 nuclear power stations.

What about fusion?
Whereas current Nuclear Power is based on Nuclear Fission – splitting the atom – Nuclear Fusion is based on fusing atoms together. More specifically, two light atomic nuclei fuse together to form a heavier nucleus and release energy.

This is the same kind of reaction that sustains the Sun. It is also the basis of the Hydrogen Bomb. It could be used to generate tremendous amounts of electricity and little high level radioactive waste. The idea is not new, but unlike Nuclear Fission, the breakthroughs in creating a self-sustaining Nuclear Fusion Power Plant have not happened despite $20billion spent over 40 years on research. Even Nuclear Fusion’s staunchest advocates say it is many decades away at best. There are tremendous technological challenges to overcome. For example, the temperature in the reactors would be about 100-200 million Kelvin, and there is no known material that can withstand that level of heat for a fraction of a second. There has been no nuclear fusion reactor that has produced more energy than it consumes. It will not be until 2016 – possibly later – that the big hope, the ITER (International Thermonuclear Experimental Reactor;) experimental fusion reactor will be operational. It will then be many years until we will even get close to anything commercially viable. And even then it only produces electricity, not oil, so we will have to have transport in place that can run on an electric grid. Assuming that all the breakthroughs necessary do happen, it will not be until mid-21st century that Nuclear Fusion could be in place, and by then the world will be a very different place. We would hope that we would be well on our way to creating a truly sustainable world by then. Some also that if Nuclear Fusion, or some other miracle power comes along, all it will do is enable humanity to carry on exploiting the world’s resources.

What about coal, especially ‘clean coal’?
Coal will undoubtedly become a major part of the energy mix, regardless of the decline of oil. For example, in China they are building a new coal power station every week. Coal is cheap and for many countries such as China and America is in large abundance. However, there is no doubt that this threatens our intentions to mitigate climate change. Coal itself is subject to peaks - for example, coal is expected to peak in the U.S.A by 2032.

What about geothermal energy?
Geothermal energy is a useful source of heat and energy for the countries that possess it. It has been used commercially for many years is several countries, including Iceland, Italy, New Zealand, Phillipenes and the USA. However, it has been limited to locations close to volcanic activity and so has not been a major source of energy. The future lies with hot dry rock or enhanced geothermal systems (EGS). Deep holes are drilled, water pumped down and then extracted after heating by the hot rocks below. The energy theoretically available is enormous.

What about free energy?
There are people who claim that there are ways of creating power that bypasses the first law of thermodynamics - that energy cannot magically appear out of nowhere, or even from background ambient energy. The simple fact is there is no demonstrable, scientifically proven example of such a device working that produces more energy than it consumes. Free energy makes up precisely 0% of the world’s energy contribution. Some say that free energy devices have been hushed up and hidden by the U.S government. This doesn’t make sense. Economies grow based on energy growth. The more energy there is, the more economies can grow. If there was a way of producing free energy, there is no rational reason for with-holding such a breakthrough. If economic problems are one of the main reasons for governments to lose elections, then it would make sense to make use of every energy source possible. It also assumes that free-energy inventions can only occur in America! There are many energy-poor countries in the world that would not hesitate to make use of free energy inventions. Cheap, clean, free energy is the holy grail for energy research and it hasn't been found.

What about methane hydrates?
Methane Hydrates, otherwise known as Methane Ice or Methane Clathrate is ice that contains a lot of methane within its structure. There are very large deposits of methane hydrates on the ocean floor. Methane is a natural gas so exploiting this resource is very attractive to the oil and gas industry. However, there is no commercially operating methane hydrate extraction process. Methane, of course, is a greenhouse gas, ten times more effective than carbon dioxide. It is thought that changes in sea-level during previous ice-ages ld to methane being released from the hydrates causing global warming. Drilling for methane hydrates is a hazardous process with "many floating drilling platforms having been lost in shallow waters when a gas pocket was penetrated before the blow out preventer was installed… Being a solid, methane in oceanic hydrates cannot migrate and accumulate in deposits sufficiently large to be commercially exploited. The published estimates of the size of the resource are highly unreliable and give flawed comparisons with conventional fossil fuels. There are other non-conventional sources of gas which are infinitely more reliably known and accessible than hydrates, yet remain uneconomic for the time being. The prospects for the commercial production of oceanic hydrates in foreseeable future are negligible. In short, they are a chimera."

What about turning waste into oil?
There is a process called Thermal Depolymerization which mimics the natural geological processes that produces fossil fuels. By using biomass waste and putting it under intense pressure and heat, the process creates light crude oil. After a long period of development the process now produces more energy than it consumes. A working plant in Missouri is thought to turn 200 tons of turkey waste each day into 500 barrels of oil. The USA creates 12 billion tonnes of waste each year. Obviously the amounts of oil produced by different types of waste varies, but assume that it was 12 billion tonnes of turkey waste, it would still only produce 30 million barrels of oil a year. America consumes more than that amount of oil in 2 days at the moment. Triple it and you still only get a week’s worth of oil for the most wasteful country in the world. And that is the point – it depends entirely on a society that produces waste. If we assume the world of the future will be in a harsher economic climate, then we can assume it will produce less waste. It may be that turkey guts are better served as a feedstock to other animals such as dogs and cats! Equally it relies on energy inputs, and the cost of gas involved in the heating process is going to go up, as will the cost of transporting the waste to the TDP plant and then transporting the oil from the TDP plant. Thermal Depolymerization is a useful process but it will contribute very little.

Are all these alternatives useless then?
They will all be part of an increasingly diverse energy mix, but even combined, they will not be able to replace the decline of oil.

What about increasing efficiency?
What may seem a common sense solution is to make everything dependent on energy more efficient. Jevon’s Paradox states that as the efficiency of something such as fuel is increased, total consumption of the resource actually increases rather than decreases because it makes more available, at a cheaper price.

So, if you made a car’s petrol usage twice as efficient and the cost of the fuel remained the same, you’d be getting the twice the amount of fuel for your money, in effect. However, this decreases demand so the cost of fuel drops, making it more accessible to others, thus increasing consumption. You get better usage from the fuel but it doesn’t mean that less is used. Jevons noticed this in his 1865 book “The Coal Question”. Consumption of coal soared when James Watt’s coal-fired steam engine was introduced. It was more efficient that Thomas Newcomen’s earlier design so it was more cost-effective, therefore more people could afford it, and it could be more widely adopted by industry. As a result, overall coal consumption rose even though less coal was required than before to do the same work.

Some say that Jevons Paradox ceases to apply once we past the oil peak As the price of oil continues to rise, to maintain the same standards of living for the same cost, efficiency must increase.

How is oil linked to economic growth?
http://www.peakoil.net/uhdsg/weo2004/OilDemandAndGDP.jpg

This graph from the World Energy Outlook 2004 shows clearly the link between Oil Demand and GDP growth.

Is this more of an economic crisis than an energy crisis?
The two are inextricably linked. Just as a crisis which is solely economic will reduce energy consumption, so a crisis that is solely based on a lack of energy will cause economic recession. Whilst peak oil will create both an economic and an energy crisis, it is the basic flaw in the conventional wisdom of modern economics which has created it: the belief in year on year economic growth in a finite world. A lack of understanding of the power of the exponential function (the increase of anything by a percentage amount) has led to business, academics and policy makers becoming disconnected from the effects of economic growth.

It is also important to understand that an oil crisis does not just affect energy prices, oil is important for almost every part of the economy.

[1] Evar D. Nering ‘The Mirage of a Growing Fuel Supply’, New York Times 2001

[2] Dr. Albert Bartlett: A Lecture on Arithmetic, Population and Energy, 2005

http://www.globalpublicmedia.com/lectures/461

Hasn’t economic growth been decoupled from energy growth?
No. Economic growth cannot be decoupled from energy growth, there is, and always will be a correlated relationship between what an economy produces and how much energy it uses. This relationship is of course different for different industries and different countries, some are more energy intensive and so the relationship may be equal, and others biased towards less energy intensive industries like the service industry will use less energy for every percentage increase in energy use. Currently world economic growth is around 3-4%, whilst world primary energy demand is projected to expand by more than half between now and 2030, an average annual growth rate of 1.6%. Some point to the oil shocks of the 1970s and to current high oil prices and ask why there has not been a recent economic recession, what this fails to take into account is the fact that oil prices were much higher in the 1970s if inflation adjusted.

How is money created?
Banks loan money into existence, when you or I put £100 into a bank £10 of it is kept by the bank, the rest is loaned to businesses and people. So now you have £100 in your bank account, and someone else has a £90 loan, and the bank has kept £10 to cover withdrawals, so in effect there is now £190 in existence where only £100 existed before you went to the bank. This cycle of deposit and loan continues until the original deposit has created about six times its original amount in money terms. Banks expect interest to be paid on the amount they loan out, more than they pay you or deposits. But interest can only be paid if the loans banks make are successful themselves in making money.

What will happen to the financial system once everyone realises we’ve peaked?
Money is an expression of energy, an exchange medium for work and products and financial system enables the transfer of that energy around the economy. Lets say you take out a loan to buy computers to sell in your computer shop. It takes ten times the weight in fossil fuels to make a computer, so each of the 5kg computers is 50kg of fuel. Lets say the price of oil rises, and your computers are now a third more expensive to buy, which you pass on in the sale price. Now not all of your computers sell because people have less disposable income after an oil price hike, and you cannot pay back the loan plus interest. You default on the loan. You don’t pay your suppliers and they default on their loans. Banks realize that much of the money they leant out will not be returned, they stop loaning anyone else money, and decide their existing loans must be recalled, sending more companies and individuals into bankruptcy. People begin to lose faith in the banking system and demand their money from their accounts. But remember, banks loan out 90% of the money they take in, so if everyone wants their money the bank cannot hope to pay. Riots break out as the banks are besieged by people who want their cash before the bank’s reserves are drained, to see an example of this look at Argentina’s bank run of 2001.