The Facts

 

Today fossil fuels such as coal, oil and natural gas account for 90% of total primary energy supply. Estimated total world consumption of primary energy, in all forms (including non-commercial fuels like biomass), is approximately 400 EJ per year, equivalent of some 9,500 million tonnes of oil (mtoe) per year. This page will look at the headings below:

  • Fossil Fuel reserves
  • Oil
  • Natural Gas
  • Vulnerability due to Centralised
  • Renewable Energy Sources
  • Hidden Cost of Fossil Fuel Utilisation
  • Energy Subsidies
  • Military
  • Radiocative Waste


Reserves of Fossil Fuels

Fossil fuels are valuable natural energy sources which required several millions of years for their creation but are now rapidly being depleted. The prominent worry that fossil fuels will run out was reported almost 30 years ago by the influential book Limits to Growth. This book reported a series of computer simulations of future resource use in which world fuel consumption continued to rise exponentially. The predicted result was an ultimate collapse in fuel supplies, regardless of the amount of fuel assumed to be available.

These fears came into sharp focus in the 1973 fuel crisis, when the member nations OPEC were able for the first time to co-ordinate their policies and raised the price of oil dramatically. One of the factors which gave the OPEC states the power to exert their influence so strongly was that the USA, formerly a major exporter of oil, had become an importer. United States had used up most of the easily obtainable oil from the Texas oil fields.

The shortage expected in the dramatic concerns of those days does not seem imminent at present. The general principle that the amount of fossil fuels remaining is ultimately limited and cannot last for ever is obviously true, but estimating how long they will last is not a simple process. In any year, newly reported figures for 'proven reserves' of oil, gas and coal are available. Proven reserves are generally taken to be those quantities which geological and engineering information indicate with reasonable certainty can be recovered in the future from known deposits under existing economic and operating conditions. A useful figure of the merit for fuel reserves is the reserve/production ratio.

If the proven reserves remaining at the end of any year are divided by the production (consumption) in that year, the result is the time that those remaining reserves would last if production were to continue at the then-current level. According to the British Petroleum statistics the reserves/production (R/P) ratio of the world's fossil resources is estimated as:

Like the fossil fuels, uranium is also one of the depletable natural resources. If uranium is only used in a once-through cycle where it is burned in a reactor only once and disposed as a waste thereafter, confirmed reserves are destined to be depleted in the next 60 years.

The reserves/production ratio for any region also gives an indication of the dependence of that area on more favoured regions. For example, for oil, the reserve/production ratio was less than 10 years for Western Europe and for North America it was about 25 years. Obviously, both regions would be in dire straits if they could not import oil from Middle East, where the ratio is nearly 100 years. The Middle East has some 60% of the world's reserves of oil, and Saudi Arabia alone contains about 25 %.

For gas the situation is somewhat different, because of the massive reserves in the former Soviet Union. This region holds some 40% of the world's reserves of gas, and another 40% of gas is in the OPEC region. The world as a whole is greatly dependent upon a limited number of regions which have most of the reserves. The reserve/production ratio for coal is much larger and much more evenly distributed. Unfortunately, coal has disadvantages compared to oil and gas. Coal burning creates more CO² per unit of energy released than is the case with gas and oil, and more sulphur dioxide and nitrogen oxides.


Oil

At some moment during the next five years, we will have consumed more than one half of the total usable fossil oil on Earth. To date, we have extracted 807 billion barrels of crude oil. Only an estimated 995 billion barrels remain that can be extracted at current production costs. If the world-wide rate of oil consumption remained a constant 24 billion barrels of oil per year, we would run out of oil in 2040.

But consumption is not static - it is increasing by about 2 percent per year. It seems clear that demand for oil will overshoot supply well before 2040. At some point between 2010 and 2025, all fuel from fossil oil will be too expensive for the average consumer to afford. Exactly when that point comes will depend largely on the actions of Middle Eastern countries.

Exploration for oil, the most important fossil fuel today, is a very expensive business. The amount of exploration is dependent upon economic conditions, particularly the price of oil, and upon political conditions. The world's proven reserves of oil have increased from some 540 billion barrels in 1969 to just over 1000 billion barrels in 1992, but this does not mean that potential reserves are unlimited. The earth has been surveyed in great detail by the oil companies, and the easiest, cheapest and most promising reservoirs have all been found.

Except for the huge pool of oil in the Middle East, the world's most readily exploitable sources of oil and gas have been used up. It is only because of this that such difficult sources of oil as the North Sea and Alaska have become economically viable - that is, the price of oil has risen enough to make them worth exploiting. In physical terms, the more difficult reserves require deeper holes or extraction in more difficult environments, and the use of more materials and effort to supply the same result.


Natural Gas

In 1970, world-wide annual consumption of natural gas was 850 billion cubic meters. Today, annual consumption is over 2000 billion cubic meters and is increasing at 3.5% per year. A 3.5% annual increase in consumption will deplete natural gas reserves by 2050. However, the increase in consumption of natural gas is accelerating at an astonishing rate. Cheap supplies of natural gas will be depleted by 2040.

This fact is recently completely neglected by power companies which are building new natural gas power stations to give customers in their area cheaper and cleaner electricity. Experts believe that by 2010, the supply of electricity from new natural gas power facilities will jump to 100,000 megawatts in USA alone. Natural gas power plants are attractive to investors. They have relative short pay back time (an average six year in the USA) and can produce electricity for a cheap rate of two to three US cents per kilowatt-hour. It seems clear that the demand for natural gas fuel will increase in the near future but will slow down in the second half of the next century.


Vulnerability Due to Centralisation

A related aspect of vulnerability in the present form of industrialisation is the centralized nature of fuel production and distribution. Electricity is generated in relatively few, very large power stations, and distributed through the country. Oil is imported in giant tankers, and converted to fuel in large refineries for further distribution. Concerns have been expressed that these large, vital installations offer potential targets for terrorists or military opponents. As has been seen in recent years in the Middle East (Gulf War), the result can be massive ecological damage as well as economic devastation.

The normal response to such vulnerability is to put greater resources into security and to increased level of protection. High level of centralisation leads also to problems with employment. Decentralized energy production and utilization which is the case of renewable energy sources can create much more new jobs than centralized fossil fuel installations.


Renewable Energy Sources

Fortunately, solutions exist to cut greenhouse gas emissions, reduce acid deposition, and improve air quality and to solve social problems related to recent energy use. Shifting investment from fossil fuels like coal and oil to renewable energy and energy efficiency would allow cleaner, more sustainable sources of energy to take their rightful place as market leaders.

Renewable energy systems use resources that are constantly replaced and are usually less polluting. All renewable energy sources - solar energy; hydro power; biomass and wind energy have their origin in activity of the Sun. Geothermal energy which, because of its inexhaustible potential, is sometimes considered as a renewable source is getting energy from the heat of the earth.

Renewable energy is a domestic resource which has the potential to contribute to or provide complete security of energy supply. Countries that depend on imports of fossil fuel resources are in danger due to the risk of sharp rise of the cost of imported energy (mainly oil). This is particularly so for developing countries, where the oil import bill adds every year to the problem of financing an already large external deficit.

Renewables are virtually uninterruptible and is of infinite availability because of its wide spread of complementary technologies - thus fitting well into a policy of diversification of energy supplies. Renewable resources are well-recognized as a good way to protect the economy against price fluctuations and against future environmental costs. Technologies based on renewables are largely pollution-free and make zero or little contribution to the greenhouse effect with its predicted drastic climatic changes. In addition, they produce no nuclear waste and are thus consistent with environmental protection policies, building towards a better environment and sustainable development.


Future of Renewables

The shape of our future will be largely determined by how we generate and apply technological innovation the most powerful force for progress in the modern world. The renewable energy sources are able to have a strong transformative effect on the whole of society in the coming decades. By virtually all accounts, renewable energy resources will be an increasingly important part of the power generation mix over the next several decades. Not only do these technologies help reduce global carbon emissions, but they also add some much-needed flexibility to the energy resource mix by decreasing our dependence on limited reserves of fossil fuels. Experts agree that hydropower and biomass will continue to dominate the renewables arena for some time. However, the rising stars of the renewables world - wind power and photovoltaics - are on track to become strong players in the energy market of the next century. Wind power is the fastest-growing electricity technology currently available. Wind-generated electricity is already competitive with fossil-fuel based electricity in some locations, and installed wind power capacity now exceeds 10,000 MW world-wide. Meanwhile, PV electricity - although currently three to four times the cost of conventional, delivered electricity - is seeing impressive growth world-wide. PV is particularly attractive for applications not served by the power grid. Advanced thin-film technology (a much less expensive option than crystalline silicon technology) is rapidly entering commercial-scale production.

The BP gasoline station with photovoltaic panels on the roof.

Perhaps even more promising than the technical developments in renewables are the resounding endorsements from major energy companies like Enron, Shell, and British Petroleum, which have invested heavily in PV and wind in recent years and are planning significant increases in these and other renewables efforts.

The energy-starved developing world, which accounts for a large portion of the projected new electricity demand over the next 20 years, is considered one of the biggest markets for renewables. Many of these countries are attracted to the modular nature of renewable energy technologies, which can be located close to the users. The renewable technologies are far cheaper and quicker to install than central-station power plants and their extensive lengths of transmission line.

Renewables are also gaining favour in industrialized countries. In the USA, national surveys show that well over half of consumers are willing to pay more for green power, and a number of power companies are now offering this option. In Europe, strong public support for clean energy is causing the renewables market to expand rapidly. In 1997, the European Commission released a white paper on renewable sources of energy, in which it noted that renewables are unevenly and insufficiently exploited in the European Union.

Different scenarios show the contribution of renewables by 2010 to range from 9.9% to 12.5%, but a goal of 12% renewables share ('an ambitious but realistic objective') was set, to be achieved through the installation of one million PV roofs, 15,000 MW of wind and 1,000 MW of biomass energy. The current 6% share includes large-scale hydro, which will not expand for environmental reasons. Growth is expected from biomass, followed by 40 GW of wind and 100 million square metres of solar thermal collectors. Photovoltaics will grow by 3 GWp, geothermal by 1 GWe and heat pumps by 2.5 GWth. Total capital investment to achieve the 12% target will be 165 billion ECU (1997-2010), but it would create up to 900,000 new jobs and drop CO² emissions by 402 million tonnes/a.

Contributing less than 6% to the EU's energy consumption, it called for a joint effort to increase this level for export potential and to address climate change. More than half of Europe's energy is imported, and will rise to 70% by 2020 without action.

The European Wind Energy Association estimates up to 320,000 jobs would be created if 40 GW of wind power is installed, the PV Industry Association says it would create 100,000 jobs if 3 GWp is met, the Solar Industry Federation estimates 250,000 jobs under its market objective, and another 350,000 jobs could be created to meet the export market. The white paper proposes a number of tax incentives and other fiscal measures to encourage investments in renewable energies, and measures to encourage passive solar. 'The overall objective of doubling the current share of renewables to 12% by 2010 can be realistically achieved,' it concludes, and the contribution of renewables to electricity generation could grow from 14% to more than 23% by 2010 if appropriate measures are instituted.

Job creation is one of the most important features related to the development of renewable energy sources. The employment potential of renewables can be estimated according to the following data:


Hidden Cost of Fossil Fuel Utilisation

It is important to note that when energy experts are comparing different energy sources the question of their price is the crucial one and renewables are mostly considered as more expensive than fossil fuels. What is not known is the fact that such a comparison is usually based on wrong estimation of costs. When we pay the electric bill to the power company or fill up our car's tank, we usually pay a specific price for the energy which does not express the full cost related to energy consumption. What we do not pay are many hidden costs associated with our energy usage. And there are several of them. Hidden social and environmental costs and risks associated with fossil-fuel use are principal barriers to the commercialization of renewable technologies. It is a well recognised fact that current markets mostly ignore these costs. In effect, relatively harmful sources, e.g., high sulphur coal and oil, are given an unfair market advantage over benign renewable sources. Since competing conventional technologies are able to pass on to society a substantial part of their costs (such as environmental degradation and health-care expenditures) renewable sources, which produce very few or no external and may even cause positive external effects such as job creation, rural regeneration and foreign-exchange earnings, are systematically put at a disadvantage. Internalising all these costs therefore must become a priority if a 'level playing field' is to be created.

While it is extremely difficult to quantify the external costs of such pollution, and some simply cannot be quantified, several studies show them to be substantial. For example, a German study concluded that the external costs (excluding global warming) of electricity generated from fossil-fuel plants are in the range of 2.4-5.5 US c/kWh, while those from nuclear power plants are 6.1-3.1 c/kWh. According to another study sulphur dioxide from US coal burning plants is costing U.S. citizens USD 82 billion per year in additional health costs. Reduced crop yields caused by air pollution are costing US farmers USD 7.5 billion per year. What is important on these US figures is the fact that US citizens are actually paying between 109 billion and 260 billion dollars yearly in hidden energy costs. In other countries similar patterns can also be found. Had external economic effects been included in the market allocation process, renewable technologies would be in a far better position to compete with fossil fuels, and there might already have been a substantial shift to the penetration of renewables in the market.


Energy Subsidies

 

Many governments are heavily subsidising the energy industries. It is interesting to note that the energy technologies with the worst health and environmental impacts usually receive the most government money. The worst polluters, nuclear and combustion technologies, in the U.S. alone receive 90% of the government money. The renewable energy technologies, which offer little or no side effects, receive the least government support. Solar technologies (both PV and thermal together) receive in the USA only 3% of the government money. At the bottom of the list is conservation with 2% of the subsidy dollars. And there is not much difference in other countries of the world. This is amazing since renewables and energy savings offer relief from our energy problems and have no environmental side effects. Something is really wrong here.


Military

World's dependence on imported oil requires that military will keep the international supply lines open. The U.S. military is spending between 14.6 and 54 billion dollars yearly just defending the oil supplies coming from the Persian Gulf. On the low side, the National Defence Council places the Persian Gulf military cost at 14.6 billion. On the high side, the estimate of 54 billion is made by the Rocky Mountain Institute. There are also other hidden national security costs. One of these is military aid to oil producing nations. Another is diplomatic and foreign policy decisions made on the basis of imported oil.


Radioactive Waste

The major problem associated with nuclear power is, 'What do we do with the radioactive waste'? To date, no one has a viable disposal solution for the thousands of tonnes of high level radioactive waste nuclear power plants generate. This problem is made more severe because it is a long term problem. For example, plutonium (Pu239) has a radioactive half-life of 24,400 years and is environmentally dangerous for over several hundred thousand years. We are making nuclear decisions now that will affect our planet, and all life forms on it, for millennia in the future. The World Watch Institute estimates the disposal costs of nuclear waste at between 1.44 and 8.61 billion dollars per year. Radioactive waste disposal is not actually disposal, but containment. We will have to deal with high level waste for thousands of years. We now have no method of actually disposing of high level waste. We simply store it and hope our children can figure out a safe way to deal with it. This estimate doesn't include the cost of nuclear accidents. What does a 'Chernobyl or Three Mile Island' cost to clean up?

Last Updated (Monday, 22 February 2010 11:57)