The cost of the post fossil-fuel economy - 2 radically opposed visions

Can we evolve to a post fossil-fuel economy by 2050? A recent study at Stanford University investigated the development of an energy system driven solely by wind, water, and the sun. In contrast to that, the article 'Renewables Won’t Keep the Lights On' by Euan Mearns, which appeared in the Oil Drum, sketched a pitch-black view of our energy future and considered nuclear energy the only reasonable option. The fact that both scenarios are possible in terms of energy flows has already been well-argued by David MacKay in his book 'Sustainable Energy Without the Hot Air'. Unlike MacKay, however, the Stanford University and Euan Mearns texts also take the cost of the future energy system into account. It is interesting that they arrive at two radically different conclusions. It should be noted that both articles were written before the Fukushima accident in Japan.

The heyday of fossil fuels is over

Climate change or not, fossil fuels will not provide sufficient energy security through the 21st century. Euan Mearns has a gloomy vision 'over the rising price and growing scarcity of oil and coal — and therefore, inevitably — of gas'. If the energy demand in Asia keeps rising at anything like its present rate, the tipping point of peak oil use is already behind us.

The price of natural gas is still relatively low and has been uncoupled from the price of oil recently. However, according to Mearns, this gives a false picture of what is really going on. The fact that oil companies are actively buying shale gas fields which are not competitive in the current market clearly indicates to Mearns that these companies envision a steep rise in the price of natural gas in the near future.

Cheap coal is no longer as abundant as it once was either. If we have to equip coal-fired power stations with Carbon Capture and Storage (CCS), they risk becoming prohibitively expensive.

Nuclear is the only option, according to Mearns

We need alternatives for fossil fuel, but Mearns does not see any viable solution in renewables. He quotes John Constable of the Renewable Energy Foundation: 'the current renewable energy politics in Europe are failing'. The green charges on electricity are rising, but the actual energy output produced by renewable energy systems built with this money remains small. Germany spent €50 to €60 billion on incentives for photovoltaic (PV) energy, yet those PV installations supply only 2% of the total German power consumption. Spain has incurred a deficit of €22 billion trying to avoid charging renewable energy incentives through to its citizens. All of these massive investments with relatively small results prove — according to Mearns — that renewables as-we-know-them simply 'won’t keep the lights on'. But isn’t this jumping to conclusions?

Nor is Mearns totally positive about nuclear energy. The long construction times and unexpected costs during construction and operation can be serious drawbacks. However, Mearns believes the struggles endured by Finland and France with the construction of their Gen III reactors should not be generalized. He cites China, where new nuclear power plants have been recently built in only three years and without budgets going off the rails. Mearns claims that only a massive deployment of nuclear energy can save us from economic ruin. His article was obviously written before the Fukushima disaster in Japan. This accident again placed the issue of nuclear safety and its moral consequences high on the agenda, an issue about which Mearns remains silent.
Mearns also sees a limited role for coal-fired power plants with CCS, and then only if the captured carbon is used for Enhanced Oil Recovery (EOR). With oil prices expected to rise, EOR could pay back the high costs of CCS. Concerning renewables, he suggests keeping market deployment limited—except for some types of hydroelectric power—and investing mainly in R&D initiatives that can make future renewable technology less costly.

Applying Mearns’ vision, the UK electricity energy mix by 2050 would look approximately as follows: 70% nuclear, 16% clean coal, 7.5% tidal, 4% wind, 2% waste, and 0.5% hydroelectric.

Renewables are the only option, according to Stanford

The paper 'Providing All Global Energy With Wind, Water, and Solar Power' by Mark Delucchi and Mark Jacobson of Stanford University agrees with Mearns on the fact that the heyday of fossil fuels is over. The remainder of this paper, however, propagates a vision that is radically opposed to that of Mearns.

According to Delucchi and Jacobson, the long building times and the uncertainty of the ultimate cost of nuclear power plants presents a serious drawback. Investment in new renewable power sources can be made in phases and with the expectation of at least some reasonable degree of return on investment in the relatively near term. Investment in a nuclear power plant however only starts to be paid back after nearly a decade (the average construction time for new nuclear power plants in the US since 1970 was 9 years). On top of that, a robust global expansion of nuclear power would dangerously increase the risks of the proliferation of nuclear weapons of mass destruction. This is a risk which is relatively seldom discussed, in contrast to the heavily debated issues of safety and nuclear waste. Concerning nuclear safety, Delucchi and Jacobson wrote: '… accidents at nuclear power plants have been either catastrophic (Chernobyl) or damaging (Three-Mile Island), and although the nuclear industry has improved the safety and performance of reactors, and has proposed new (but generally untested) "inherently" safe reactor designs there is no guarantee that the reactors will be designed, built, and operated correctly.' This was obviously also written before the earthquake in Japan.

The big question remains. Is the much-vaunted economy based solely on wind, water, and solar power (WWS) technically and economically feasible? The paper investigates a plan to attempt 100% WWS globally by 2050. In this plan, a 30% demand reduction is achieved through the electrification of road transport and the installation of heat pumps in all non-passive buildings. For the remaining consumption, the following mix of sources is proposed: 50% wind, 20% CSP, 14% PV plants, 6% rooftop PV, 4% geothermal, 4% hydroelectric, 1% wave, and 1% tidal power.

Implementing this energy mix worldwide would 'only' require an additional land surface of 0.59%, subtracting the installations on rooftops, over water, and those already in place. This does not sound like much initially and seems quite reasonable. Nevertheless, I am not so sure if the word 'only' that Delucchi and Jacobson use in this context is appropriate. It still represents approximately the combined surface area of France and Germany. That is not an insignificant amount of land.

The Stanford paper also investigates the sustainability of the material required for this massive deployment of renewable systems. The authors found no major constraints, but efficient recycling would have to be developed for Neodymium (used in permanent magnets of motors and generators), Lithium (used in EV batteries), and Platinum (used in fuel cells), or else those relatively scarce materials will have to be replaced by other solutions.

A large section of the paper is dedicated to the problem of the variability of the output of renewables. The authors admit this is an important challenge, but believe it can be overcome by the following mix of solutions:

  1. Interconnecting widely separated regions with a super grid
  2. Over-sizing the generation capacity to produce hydrogen for storage
  3. Integrating demand side management, in particular for heating systems
  4. Using EV’s batteries for storage

Concerning the cost of the renewable energy systems, the authors come to very different conclusions than Mearns in his Oil Drum article. Reckoning with the predicted cost developments of renewable energy systems after 2020, they determined that the cost of most renewables (on-shore wind, CSP, hydroelectric, tidal, wave, and geothermal) will be lower or similar to that of fossil fuels by 2030. This remains the case even if the costs for a large super grid and EV battery storage management systems are taken into account. Off-shore wind and PV systems will remain more expensive than conventional energy systems as long as no real technological breakthrough occurs. However, if the social costs of air pollution and climate change damage are included, the cost of those renewables also comes in to play at the same order of magnitude as that of conventional systems.

The general conclusion of this paper is that a worldwide energy economy based on only renewable energy is technically and financially feasible, although the authors admit that it would require 'a war economy' and 'a man-on-the-moon type project' to make this happen by 2050. They claim that the biggest barrier for change is not at a technical or financial one, but is to be found in the dominant paradigm among decision makers. It is these individuals that tend to believe that such a transition is not possible and would lead to a disastrous collapse of the global economy.

What is the origin of this opposition?

How can two comprehensive analyses of the same subject come to such diametrically opposed conclusions?

It is striking that both analyses take a snapshot of a certain moment in time, without taking the dynamics of the transition into account. Euan Mearns bases his conclusion on the cost of renewables in recent years including government incentives, without considering future cost development at all. He does not question whether the examples of costly government incentive programmes are representative and jumps to conclusions very quickly. The Stanford paper, on the other hand, is based on the supposed cost of renewables after 2020, without considering the massive amount of money that governments will have to spend before that date to start building a renewable economy.

For that matter, it is strange that Mearns makes a case for supporting R&D on renewables to make them cheaper, but does not count on any cost decrease of renewables. Delucchi and Jacobson, however, do count on such a cost decrease in the following decade, but don’t say anything about the R&D support that might be required to achieve such a decrease.

Another difference between the analyses is that Mearns mainly gives examples of government incentives for PV installations, while the Stanford paper primarily counts on wind and CSP energy. The latter even admits that the cost of PV is probably going to stay higher than that of conventional energy systems in the forthcoming decades. The Stanford paper also counts — perhaps over-optimistically — on a 30% reduction in demand through the use of EVs and heat pumps, thus reducing the stress on the energy system. Is it genuinely realistic to suppose the entire world is going to drive electric vehicles and heat all buildings with heat pumps by 2050?

These elements could be enough to explain the radically different conclusions. It would be an interesting and useful project to make a dynamic cost analysis of a transition to a renewable economy that takes all intermediate steps and conditions into account, and then comparing various scenarios and transition speeds. A realistic overview can then emerge by making a similar dynamic analysis of a purely business-as-usual scenario confronted with the costs of peak oil and the likely impact of climate change.


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dillon's picture

South Africa is all ready experiencing winter problems with our coal burning power stations, not enough power stations bad road and rail infrastructure to get enough coal to the power stations results in load shedding.

Developing nations hold the key, build sustainable household solutions that are cost effective.

Great article really enjoyed reading it

By dillon (not verified) 31/03/2011
John Howley's picture

Efficiency can reduce consumption by 30% or more from our existing base consumption levels. Net zero residential and office buildings can be built today, and even zero energy buildings are possible. The problem is that consumption growth in the developing world will far exceed a 30% reduction in the current baseline.

John Howley

Millner's picture

Both articles have valid points about future energy generation but future energy needs will most likely be met with a combination of all those discussed. For any combination to occur it will have to get the developing world on board as fast as possible because if they follow the lead of the current developed world it will be almost impossible to met our furture energy needs. Both articles discuss energy costs from 2030 to 2050 with assumptions based on today's technologies. Although a mix of technologies will be needed, advancements in technologies are the key. All forms of energy generation need to become more efficient.

By Millner (not verified) 22/05/2011