The subject came up here : How Can We Address Climate Change Besides Limiting Emissions? - #116 by am77494
Looking for models / analysis / predictions published in peer reviewed journals about the economic / political state of the world as we move away from fossil fuels.
Saying things like Saudi-Arabia or Russia or Norway will be screwed is too simplistic. Will the resulting Global turmoil be manageable ?
Thanks
I know that both Saudi Arabia and Norway have giant (trillion-dollar) sovereign wealth funds, partly to diversify their economies against a long-term reduction in oil revenues.
Global turmoil? If done right*, there won’t be any at all. And even if there is some disruptions here and there they will be trivial compared to the immense problems caused by climate change. (What happens when whole countries with millions of people are unlivable?)
* And I know that given what has happened so far, “If done right.” is a pipe dream in some places. But several countries are well on their way to going off fossil fuels and will come thru this a lot better than some others.
Given the continually falling costs of renewable energy is different forms, new storage tech, and on and on we’re going to be in a much better state economically but it’s going to take more than a couple decades.
In general, the post-fossil fuel world seems to rely on the existence of good batteries (both to put in cars and to add in to the power grid) and, possibly, mystery technology Y that can replace base energy stations like coal but that isn’t nuclear fission.
Given the lack of clarity on which technologies will prove out, it’s still too early to really say how things are going to land and so there’s probably not much analysis to do beyond asking who is clearly going to lose - e.g. Norway and Saudi Arabia.
In terms of who will win, economically and politically, you can maybe use the logic that “various raw minerals” will be central to our future technologies. From there, if we assume that those are somewhat randomly spread around the planet, then the countries who have a lot of land (or political influence over a lot of land) are going to come out ahead. And then if you look at lists of nations by land size and lists of nations by influence on nations by land size, you’re probably going to come to the conclusion that the USA, China, and Russia are going to have the most opportunities. That’s already, pretty much, the status quo.
There may be a few small winners - similar to how countries like Norway and Saudi Arabia were given a larger role in oil production than their border length would have suggested - but it’s currently unclear who those nations will be. Australia, Chile, and Argentina have fairly good lithium supplies, and lithium is a necessary component in most (but not all) battery technologies under development, so there’s some chance that they’ll be some of the smaller winners, but that’s as good of a guess (emphasis on guess) as I have.
You should be asking engineers first, because economists don’t understand energy engineering and what it takes, and won’t be able to build rational models. Also, the future is unpredictable and can’t be modeled - especially when we are way out over our skis and trying something that has never been done before and which will change the world dramatically. Economists aren’t fortune tellers.
And much depends on HOW we get to the fossil-free future. Are we headed for a world filled with abundant energy and wealth due to nuclear power? Or are we headed for a world of lower energy density, rationing, and lower standards of living? Engineering and public choices will decide that - not economists.
Here’s an engineering look at the challenges:
This thread probably belongs in Great Debates, as you aren’t going ro get factual answers about a speculative future.
If I’m honest, Mr. Mills’ math and sources look rather suspicious - e.g. research from ExxonMobil.
A lot of it seems to be things like, “This will cost $2 trillion! That’s a lot!” But ignores (if I read his fifth source right) that $2 trillion seems to be the global average spending for energy production per year, already. So he would seem to be saying that we’ll be keeping spending the same as it already is. It is after all a large planet with hundreds of countries and 7.8 billion people all using electricity every day. $2 trillion is basically $0.71 per person, per day, which seems not unreasonable.
Or he says that “we can’t grow the technology by a factor of 90, because of how long it took to increase another thing by a factor of 10”. But if I want to increase something from 10 units to 100 units (which is a factor of 10) and it takes 1 second to make a unit, then it will take 90 seconds. And if I have 1 unit of something and want to get that up to 100 units (a factor of 100), then it will take 99 seconds. It only takes 10% longer even though for the one I was increasing by a factor of 10 and the other was by a factor of 100.
I’d be quite willing to believe (which, note, isn’t the basis for a factual answer) his headline point that the politicians are fudging the numbers for browny points. But, I do note that Mr. Mills also seems to be of the political persuasion more than he’s of the engineering persuasion - regardless that he might have done some physics research 50 years ago, for a year or two after graduating from university.
Note: I say this not to debate things but, simply, to warn readers to double-check what they’re reading.
The point to make, an important one, is that we will not “run out of oil”. The Alberta Tar Sands, for example, have decades if not centuries at current production levels.
What will happen is that as supplies dwindle, the price will rise, until the commodities from petroleum will price themselves above the alternatives. At a certain point, an electric car will be competitive with an gas car. Electrification of rails will be economically feasible compared to diesel locomotives. increased insulation will be a nobrainer for houses. etc. It will be a gradual shift a is happening already.
There are a lot of competing scenarios here. The OP is extending from the convoy where despite remaining reserves, the coal, oil and gas producers can’t find a market.
So things like peak oil don’t apply. A precondition for this is that the current buyers of fossil fuels are no longer interested in buying. So either they have suffered a catastrophic decline or they have some other cheaper (cheaper as in all costs, including social and ecological) sources that they prefer. So probably the most reasonable situation is where some combination of carbon free/neutral energy generation has pushed fossil fuels out.
What are the geopolitical implications?
Some currently wealthy countries will see their entire income vanish. Some large countries will see their economic power dramatically reduced.
It isn’t as if history has not seen sea changes in the balance before.
Obviously the slower the change the more smooth the change will be. But that doesn’t mean there won’t be points where catastrophic flips occur.
I would guess the experiences from the GFC would provide some clues as to how stable things can be. I might expect once wealthy countries being forced out of the global economic systems as they get squeezed. Some countries will become unable to service their debt. That never ends well for anyone. Just how brittle the system is will be part of the question. Forgiving debt owed by some tiny third world country is a long way away from forgiving debt owed by say Saudi or Russia. A country with its back to the wall and a nuclear arsenal is not to be trifled with.
Some similarities - the West Indies are a counter-example. Before Napoleon and sugar beets, the West Indies’ ability to provide sugar (and rum!) made it a major financial powerhouse for the colonial powers that controlled it. So much so that France gave up New France (Quebec ) but got back many of its Caribbean islands.
Or the horse industry. NYC was close to becoming knee-deep in manure before the automobile came along. Eventually, horses were banned from many roads once the automobile was king. (I see a similar fate for gasoline vehicles in coming years - banned from more and more areas, but then, finding filling stations will eventually be the problem.)
The issue is not “what will happen” but “how fast?”. Not unlike how the internet is replacing so many services, the assumption is pretty much everyone has access to the internet or a smartphone to do assorted tasks. Things will creep up until they are here and we wonder when they arrived at that point.
The question is - how realistic will assorted oil-producing countries be at seeing the inevitable and adjusting. Perhaps a more realistic look would be the Euro crisis - countries like Greece where anyone with a rudiment of economic training could see the disaster coming, yet they blithely sailed of the cliff (or into a brick wall). Or the Detroit financial crisis. Or NYC decades before. Instead of tightening their belts and cutting back, they kept going making the situation worse - whereas someone like Margaret Thatcher turned a country around in time to make relevant once more. The problem is less economics than politics.
Saudi Arabia has plans to produce and export green hydrogen, either as-is or after conversion to ammonia.
Whether that ultimately makes sense isn’t something I’ll get into here, but many countries (e.g. Japan) anticipate needing to import energy in some form.
I’ve had some luck with
post-oil economy [country]
in Google Scholar. E.g.:
There is certainly going to be some demand. Another low hanging fruit is replacing manufacture of ammonium nitrate fertilizer with a process based on green hydrogen. So it isn’t just addressing energy markets.
The difference is that Saudi is not exactly the only country with large amounts of desert and sun. But it is nearby some markets, so it has that going for them. But not as close as the north African countries.
No matter what, it isn’t going to replace the money currently raining from the sky on them.
The main difference is that Saudi Arabia also has the money to create the infrastructure to replace oil with these new technologies and seems determined to get a head start. Plus, doing so with the determination that an autocratic leader can bring to the problem, without worrying about opposition or being derailed by competing demands. (Assuming he can stay the leader… another issue)
Wars are usually fought over land and resources. The idea that rich nations will simply be diminished or destroyed while other nations rise is a prediction of endless war.
We restricted Japan’s ability to get oil in the 1930’s. The result was Pearl Harbor, not a realization by Japan that it would have to make due with less.
Look at what is happening right now in the Netherlands, in Sri Lanka, in Spain and Italy, in Canada and Australia. We are just getting the very first taste of lifestyle degredation due to climate policy, and there are populist uprisings either underway or starting in all of them. The Ukraine war wouldn’t have happened if Putin didn’t have Europe over an energy barrel.
And NO ONE is going to stop China and India from using fossil fuels. Not without a war. So a future of no fossil fuels is a future where the WEST doesn’t have fossil fuels, but our chief adversaries and competitors do. The economies of the worst actors in the world will benefit greatly from our unilateral withdrawal from a fossil fuel economy. Industry will simply shift there, and global warming will continue. But we will be poorer.
On the other hand, if we embarked on a crash program of building nuclear plants, expanded fracking to get more gas for peaking plants, coupled with more research into even more concentrated forms of energy, we could ‘survive with style’.
The only way to get rid of fossil fuels in a way that doesn’t upend the entire world and lead to war is to lower the costs of the alternatives so that people leave fossil fuels behind voluntarily. Trying to force people into a lower-energy world will result in tragedy. It already is.
And the opinions of economists are completely irrelevant.
Well, we might conclude they ARE fortune tellers, but are pretty bad at it
China is doing ‘all of the above’. Coal, nuclear, gas, wind, geothermal… Thery have announced that they will not let climate concerns get in the way of abundant energy.
It makes sense to build wind and solar - to a certain level. But it won’t replace fossil fuels, and China knows it.
As I noted a long time ago, that will led to the end of the rule of the communist party in China, because when the climate becomes worse and will led to the displacement of millions, the Chinese people will not be amused.
That remains an argument to support authoritarians, Japan was then on a war footing looking to conquer China, that needed a lot of oil.
From your quoted link:
“China’s total renewable energy capacity exceeded 1,000 GW in 2021, accounting for 43.5% of the country’s total power generation capacity…”
The term ‘capacity’ is doing a lot of heavy lifting here. Capacity UTILIZATION is a completely different matter.
For example, Alberta has 12,988 MW of fossil fuel capacity, and 3,246 MW of wind and solar. That’s a lot of renewable capacity. Over 20%.
However, at this moment, this is what our actual generated energy looks like:
https://twitter.com/ReliableAB/status/1552012768911540225?s=20&t=Q5umFXCB1twnbjNQbbRzAw
For example, Coal energy capacity in Alberta is 1266 MW. Wind, on the other hand, is 2269 MW. So we could advertise that we have almost twice as much wind power generation capacity as coal! Man, we look green. Except that wind is currently at 3% capacity factor, and coal is at 99.5%. So in terms of actual generation, wind is currently providing 69 MW of power, and coal is producing 1260 MW. The picture for actual generation looks very different than capacity.
Solar is doing better today, because it’s the middle of the day in the middle of the summer. Even so, it’s only operating at 61.7% capacity. And in a few hours it will be zero.
So even though we have quite significant solar and wind CAPACITY, in reality we still rely on fossil fuels for between 85% and 95% of our power, depending on conditions.
If we did a crash program to double our wind and solar capacity to about 40% of total capacity, today it would be producing 13.4% of our energy. Again, that’s almost best-case. Last night that 40% capacity would have provided 2.2% of our energy. Meaning we have to keep the entire fossil fuel capacity in place. And that’s true even if we quadrupled capacity. Wind and solar capacities do not come close to equalling fossil fuels which can run at close to 100% of capacity.
And winter is very, very much worse.
So don’t be fooled when countries brag about their renewable capacity. Germany has enough wind and solar to provide over 100% of their power if you just look at capacity, but in reality they are increasingly relying on Russian gas and severe energy shortages are looming.
BTW, that Ab energy twitter account is worth following. It’s a bot account that aggregates the public energy numbers and posts them hourly.