Wednesday, 5 March 2008
March 2008 Newsletter
The energy-production peak
***
The sixty years stretching from 1945 to 2005 will be remembered, by many of us, as a period of exceptional prosperity having no other equivalent in human history. One of the most significant facts characterizing this period has been the existence of a rapid growth of world population co-evolving with energy produced at low cost and generally sold at low price by the producers (if we except the two short episodes of the 1973 and 1979 oil shocks) though at the same time being able to satisfy a fast growing demand from consumers. The above picture (click on it to enlarge) shows the curves evidencing that the average linear rates of these two growths sharply increased at the very beginning of this period and then remained much higher than they had been all over the 85 previous years. Let us precise that these two growths interacted with each other through intense synergic effects generated by many positive retroactions implying also other simultaneous rapid growths observed in the fields of general and scientific knowledge, skills, technological innovations, means of conveyance, educational services … This list is not exhaustive and the reader can possibly add other items.
But the selling prices started to climb two or three years ago and it seems now that the time of cheaply sold energy is gone. A new epoch is born.
Let us notice, to begin with, that sixty years of continuous growth has substantially enlarged the scale. In 1945 the world energy output was barely 1.5 Gtoe (billion of oil equivalent) mainly supplied by coal. We now have passed 10 Gtoe, the most important part (about 35%) coming from oil (1). And the scale will go on increasing in the future as long as we are able to nourish our appetite for growth. Let us notice, too, that such scale changes are usually ignored or silenced by the many commentators who develop comparisons between the past and the present in order to draw lessons for the future, neglecting or refusing to question our ability to increase year after year the energy production needed to sustain our growing-as-long-as-it-can world.
Our oil production has been stagnating since mid-2006 at 82 million barrels per day. The present economic growth feeds itself by resorting more and more massively to coal (2) but also by developing wind power plants, biofuels and other renewable energies. From those observations, some experts pretend that we have come to Peak Oil (3). But the oil industry professionals generally assert that the annual extraction has not yet reached its final ceiling. They say that crude production will rather resume climbing again and evolve towards a plateau, that is to say a one-or-two-(maybe three)-decade period during which the oil extraction should stabilize on a steady level under the classical effect of supply and demand game. For instance, according to Yves Mathieu (geologist engineer at the department of Geology-Geochemistry at the Institut Français du Pétrole) (4), we will stay on this plateau from 2010 to 2028, with a production stagnating around 90 million barrels per day, taking into account the crudes extracted by means of sophisticated technologies (5). Afterwards the production should decline but one might still pump around 50 million barrel per day (mainly high-tech crudes) in 2050. The energy replacement should then have been secured through wide range diversification, in great part by resorting to coal and nuclear power but also by taking advantage of every other possible opportunity. Do not worry about environmental and safety problems, they will have been solved : the emitted carbon will be sequestered and radioactive waste will be stored in deep and stable geological formations. The latest reactors (safe and reliable super-reactors) will optimize the use of uranium and nuclear energy will be competitive with other available primary energy sources in spite of the high cost of extracting uranium from low-grade but widespread deposits. Afterwards, nuclear fusion should be there. So there is no point in worrying too much : the professionals can do now and will remain able to do in the future. The only condition : we need to engage resolutely in long term investments. Energy will be expensive, but yet plentiful. Such is the rethoric professed today (March 2008) by the energy professionals and we will admit (in the following lines) that this rethoric is founded on solid ground.
Let us be more accurate : “securing the replacement of failing oil by other primary energy sources” must be understood as “securing that we will still be able to increase the annual energy production in spite of the future scale changes resulting from cumulated continuous growth”. Around 2050, that production might range between 17 Gtoe (prolongation of the average linear trend observed from 1945 to 2000) and 25 Gtoe (extrapolation of the exponential trend observed since China has awoken, around 1.8% per year).
Let us compare with coal being replaced by oil, in Europe, when the local mines entered into decline : in 25 years the world annual energy production increased from 1.5 Gtoe in 1945 to 5.25 Gtoe in 1970 with a mean exponential rate ranging around 5% per year. Such a replacement took place using technologies much less efficient than today’s ones. But it remained within small scale, was not yet confronted with acknowledged environmental problems and could rely on profuse resources yet barely exploited and easily accessible ; the geopolitical context (considered in keeping with supplying) was not yet worrisome and a reliable cheap-energy supply had the potential to grow in order to satisfy a growing demand. The opposite is true for the replacement we need to operate in the decades ahead.
From all those news, the ordinary citizen has understood, to begin with, that most of the energy consumed in the world is, for the time being, produced at low cost ; that a substantial proportion of the big profits gathered from high selling prices supports the numerical growth of the populations living in the producing countries and of the ones they provide assistance to, allowing those populations to buy consumer goods and doing so sustaining the world economic growth ; and that another part of the profits allows the wealthy elites ruling those countries to acquire profitable capital, then connecting their interests with the ones of the capitalistic world thriving in western and emergent countries alike.
But he has understood as well that the energy part produced at low cost will considerably decrease over the decades ahead, while the part produced at high costs will therefore have to increase not only in order to replace the growing missing amount but also in order to nourish the growth. He has then guessed that the average cost of production will unavoidably rise (perhaps rapidly, within the scale of a few years, perhaps slowly, within the scale of a few decades) from the present value (still low) to a high value. And if he incidentally happens to have learned elementary physics, he has therefore understood that the pace at which our many growths mutually amplify themselves (by synergic effects) will get slower and slower as the average energy-production cost becomes higher and higher, progressively reducing the investment capabilities of world economies. At some point a threshold will be reached beyond which the synergic effects reverse from positive to negative, destroying all further investment capabilities. We will then reach, or have already reached, the energy-production peak (sharp ? smooth ? flat or wavy plateau ? The bets are open …), likely followed by the population peak (quantitatively speaking the climax of the whole human adventure). Born in the West in the 19th century with the Industrial Revolution and having afterwards spread all over the world, our present economic system will in this way meet the end of its ascending progression. What will happen next lies beyond our horizon of predictability but it remains clear that the chance of rapid collapse of our civilization (under the effect of expansion being reversed into contraction) seems to be very high. In a world addicted to its own growth and becoming more and more unstable as this growth gets closer and closer to its ultimate limits, exacerbated conflicts may eventually paralyze the flows of resources (energy and other ones) allowing (among other vital needs) to sustain a highly mechanized agriculture (operated by scarce farmers) and to supply with food plethoric populations agglutinated in huge cities. Such extreme level of dependence never existed in our previous history. The many annunciations of apocalypse having widely proliferated all over those past years are not founded on thin air.
I recently read a statement issued (in French) by Jean-François Minster, scientific director of Total, translatable as follows : “The energy consumption grows less rapidly than the development itself, about at the rate of 1.5 to 2% per year when economic growth is around 5%. But the development is precisely the reason why the energy consumption grows. And one must not prevent the development. One can only wish for it” (6). Of course, one can only wish for people’s happiness. But the major problem dwells elsewhere : Nature is indifferent to our wishes and only obeys its own laws, one of them being that in a limited world growing systems can appear and thrive temporarily but always comes to an end. If the development implied in Jean-François Minsters’ humanistic statement is the one we qualify as “sustainable”, it is easy to determine that its remaining sustainability lifespan (counted from 2005) will be far shorter than a century : a development growing by 5% sustained by an annual energy production increasing by 1.8% per year multiplies by six (in a hundred years) its energy consumption while multiplying itself by 130 (7). Chères lectrices, chers lecteurs, cherchez l’erreur (8).
André Sautou
The future newsletters will be published on the blog
But the selling prices started to climb two or three years ago and it seems now that the time of cheaply sold energy is gone. A new epoch is born.
Let us notice, to begin with, that sixty years of continuous growth has substantially enlarged the scale. In 1945 the world energy output was barely 1.5 Gtoe (billion of oil equivalent) mainly supplied by coal. We now have passed 10 Gtoe, the most important part (about 35%) coming from oil (1). And the scale will go on increasing in the future as long as we are able to nourish our appetite for growth. Let us notice, too, that such scale changes are usually ignored or silenced by the many commentators who develop comparisons between the past and the present in order to draw lessons for the future, neglecting or refusing to question our ability to increase year after year the energy production needed to sustain our growing-as-long-as-it-can world.
Our oil production has been stagnating since mid-2006 at 82 million barrels per day. The present economic growth feeds itself by resorting more and more massively to coal (2) but also by developing wind power plants, biofuels and other renewable energies. From those observations, some experts pretend that we have come to Peak Oil (3). But the oil industry professionals generally assert that the annual extraction has not yet reached its final ceiling. They say that crude production will rather resume climbing again and evolve towards a plateau, that is to say a one-or-two-(maybe three)-decade period during which the oil extraction should stabilize on a steady level under the classical effect of supply and demand game. For instance, according to Yves Mathieu (geologist engineer at the department of Geology-Geochemistry at the Institut Français du Pétrole) (4), we will stay on this plateau from 2010 to 2028, with a production stagnating around 90 million barrels per day, taking into account the crudes extracted by means of sophisticated technologies (5). Afterwards the production should decline but one might still pump around 50 million barrel per day (mainly high-tech crudes) in 2050. The energy replacement should then have been secured through wide range diversification, in great part by resorting to coal and nuclear power but also by taking advantage of every other possible opportunity. Do not worry about environmental and safety problems, they will have been solved : the emitted carbon will be sequestered and radioactive waste will be stored in deep and stable geological formations. The latest reactors (safe and reliable super-reactors) will optimize the use of uranium and nuclear energy will be competitive with other available primary energy sources in spite of the high cost of extracting uranium from low-grade but widespread deposits. Afterwards, nuclear fusion should be there. So there is no point in worrying too much : the professionals can do now and will remain able to do in the future. The only condition : we need to engage resolutely in long term investments. Energy will be expensive, but yet plentiful. Such is the rethoric professed today (March 2008) by the energy professionals and we will admit (in the following lines) that this rethoric is founded on solid ground.
Let us be more accurate : “securing the replacement of failing oil by other primary energy sources” must be understood as “securing that we will still be able to increase the annual energy production in spite of the future scale changes resulting from cumulated continuous growth”. Around 2050, that production might range between 17 Gtoe (prolongation of the average linear trend observed from 1945 to 2000) and 25 Gtoe (extrapolation of the exponential trend observed since China has awoken, around 1.8% per year).
Let us compare with coal being replaced by oil, in Europe, when the local mines entered into decline : in 25 years the world annual energy production increased from 1.5 Gtoe in 1945 to 5.25 Gtoe in 1970 with a mean exponential rate ranging around 5% per year. Such a replacement took place using technologies much less efficient than today’s ones. But it remained within small scale, was not yet confronted with acknowledged environmental problems and could rely on profuse resources yet barely exploited and easily accessible ; the geopolitical context (considered in keeping with supplying) was not yet worrisome and a reliable cheap-energy supply had the potential to grow in order to satisfy a growing demand. The opposite is true for the replacement we need to operate in the decades ahead.
From all those news, the ordinary citizen has understood, to begin with, that most of the energy consumed in the world is, for the time being, produced at low cost ; that a substantial proportion of the big profits gathered from high selling prices supports the numerical growth of the populations living in the producing countries and of the ones they provide assistance to, allowing those populations to buy consumer goods and doing so sustaining the world economic growth ; and that another part of the profits allows the wealthy elites ruling those countries to acquire profitable capital, then connecting their interests with the ones of the capitalistic world thriving in western and emergent countries alike.
But he has understood as well that the energy part produced at low cost will considerably decrease over the decades ahead, while the part produced at high costs will therefore have to increase not only in order to replace the growing missing amount but also in order to nourish the growth. He has then guessed that the average cost of production will unavoidably rise (perhaps rapidly, within the scale of a few years, perhaps slowly, within the scale of a few decades) from the present value (still low) to a high value. And if he incidentally happens to have learned elementary physics, he has therefore understood that the pace at which our many growths mutually amplify themselves (by synergic effects) will get slower and slower as the average energy-production cost becomes higher and higher, progressively reducing the investment capabilities of world economies. At some point a threshold will be reached beyond which the synergic effects reverse from positive to negative, destroying all further investment capabilities. We will then reach, or have already reached, the energy-production peak (sharp ? smooth ? flat or wavy plateau ? The bets are open …), likely followed by the population peak (quantitatively speaking the climax of the whole human adventure). Born in the West in the 19th century with the Industrial Revolution and having afterwards spread all over the world, our present economic system will in this way meet the end of its ascending progression. What will happen next lies beyond our horizon of predictability but it remains clear that the chance of rapid collapse of our civilization (under the effect of expansion being reversed into contraction) seems to be very high. In a world addicted to its own growth and becoming more and more unstable as this growth gets closer and closer to its ultimate limits, exacerbated conflicts may eventually paralyze the flows of resources (energy and other ones) allowing (among other vital needs) to sustain a highly mechanized agriculture (operated by scarce farmers) and to supply with food plethoric populations agglutinated in huge cities. Such extreme level of dependence never existed in our previous history. The many annunciations of apocalypse having widely proliferated all over those past years are not founded on thin air.
I recently read a statement issued (in French) by Jean-François Minster, scientific director of Total, translatable as follows : “The energy consumption grows less rapidly than the development itself, about at the rate of 1.5 to 2% per year when economic growth is around 5%. But the development is precisely the reason why the energy consumption grows. And one must not prevent the development. One can only wish for it” (6). Of course, one can only wish for people’s happiness. But the major problem dwells elsewhere : Nature is indifferent to our wishes and only obeys its own laws, one of them being that in a limited world growing systems can appear and thrive temporarily but always comes to an end. If the development implied in Jean-François Minsters’ humanistic statement is the one we qualify as “sustainable”, it is easy to determine that its remaining sustainability lifespan (counted from 2005) will be far shorter than a century : a development growing by 5% sustained by an annual energy production increasing by 1.8% per year multiplies by six (in a hundred years) its energy consumption while multiplying itself by 130 (7). Chères lectrices, chers lecteurs, cherchez l’erreur (8).
André Sautou
The future newsletters will be published on the blog
The next one is scheduled for May or June 2008 and will concern an article published in French by Le blog finance (archives d’avril 2008), titled “Attali : une crise proche de 1929 mais sauvée par la croissance”.
.
References and annotations :
(1) Source : OCDE/AEI 2006, according to which the proportion of crude constituted (in 2004) 35,2% of the world primary energy produced.
References and annotations :
(1) Source : OCDE/AEI 2006, according to which the proportion of crude constituted (in 2004) 35,2% of the world primary energy produced.
.
(2) Consequence : the CO2 emissions are flying up, according to a study published by Michael Raupach and all, Commonwealth Scientific Industrial Research Organization. Around eight billion tonnes of fossil carbon were released in 2005 (Only six billion tonnes in 1995). This result is reported in the French scientific magazine La Recherche, n° 410, juillet-août 2007, page 14, article by Fabienne Lemarchand.
.
(3) Example : in its October 2007 report, the EWG (Energy Watch Group) assert that Peak Oil has been reached in 2006.
.
(4) Reported in La Recherche, cahier spécial, mars 2008, n° 417, titled « Le Pétrole en 2030 » (in collaboration with Total, the BRGM, the ADEME et the IFP), page 14.
.
(5) Examples : « non-conventional oil » such as tar sands or bituminous shales whose exploitation is expensive (noticeably for reasons of environmental problems) ; conventional oil recovered by means of expensive sophisticated methods, after exhaustion of the deposit by classical techniques.
.
(6) La Recherche, cahier spécial n° 417, mars 2008, page 6.
.
(7) The numbers 1.018 and 1.05 raised to the power 100 are approximately equal (respectively) to 5.95 and 131.5 .
.
(7) The numbers 1.018 and 1.05 raised to the power 100 are approximately equal (respectively) to 5.95 and 131.5 .
.
(8) Word to word translation : Dear female readers, dear male readers, look for the error.
______________
Further reading :
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Civilization's golden era is teetering on collapse , by Hans Tammemagi
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Comments:
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I have recently discovered your website and particularly appreciated the graph displayed in this newsletter, after having come across the energy an population curves presented by Prof. Goose in the Oil Drum on September 2007, at the page
http://www.theoildrum.com/node/2960
Your graph shows with a much greater precision the span concerning the industrial civilization and proves that there is a strong connection between energy production growth and demographic growth.
http://www.theoildrum.com/node/2960
Your graph shows with a much greater precision the span concerning the industrial civilization and proves that there is a strong connection between energy production growth and demographic growth.
# posted by 
: 19 April 2008 20:16
: 19 April 2008 20:16
Thank you, anonymous, for your comment. Concerning the increase of our numbers I prefer to use the expression “population growth” than “demographic growth”, because the former combines the effects of 2 main factors : 1°/ “true demographic growth” (in my mind mainly linked to birth rate) and 2°/ very high increase of the average length of human life (which has played a major role (particularly in the developed world) during the last decades.
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