Welcome to Surplus Energy Economics at WordPress, the blog site for Dr Tim Morgan, former head of research at Tullett Prebon.
Although this blog will cover a wide range of topics, my main interest is in a radically new way of thinking about economics. This is explained in my 2013 book Life After Growth.
Disclaimer
This website is intended for those interested in economics and related subjects. It does not provide investment advice, and must not be used for this purpose. Information given here is believed to be reliable but cannot thus be guaranteed. No liability can be accepted for any material contained on this website. Material published here is copyright, but can be quoted in brief, provided that attribution is given.
Surplus Energy Economics 
Tim, you need to familiarize yourself with Gail Tsverberg’s views ( ourfiniteworld.com) that the financial cost, not the energy cost , is a more practical way of looking at the dynamics of future oil
supply.
But money IS energy…….. and I don’t agree that Gail Tverberg is as one eyed as you make her to be at all…
Tverberg is by far the best analyst of the broader energy situation that I am aware of.
Tim’s Perfect Storm is without a doubt the single best piece of analysis that I have seen.
“Money IS energy”, Mike. So how do you heat your house and run your car with it? Just stuff banknotes (or better still, pixels – whilst the grid continues to run) into the boiler or the fuel tank and – somehow, magically – they turn into oil and natural gas; and perfectly refined at that, to keep all the machinery actually running.
Really? I wish you’d explain to the agog world how you make that work.
Or putting it another way, you win last century’s prize for the daftest illusion of modern economic theory: The loony notion that growthforever is NOT dependent on material resources, critically including actual, realworld sources of actual realworld energy – which are now on their ‘bumpy plateau’ of all-time peak production, and will be unmistakably setting into their long-term production shrinkage any time now.
I think his point is that money has no intrinsic worth, but commands value only as a claim on energy. Prosperity is energy, and money is a way of exchanging prosperity.
Can’t find your email Tim . Thought this might interest you. Basically says world won’t have enough electricity to run computers by 2040
http://www.theregister.co.uk/2016/07/25/semiconductor_industry_association_international_technology_roadmap_for_semiconductors/
I really like your blog on surplus energy economics. I believe that oil , like horse-drawn and coal fired steam power is going to become obsolete and be replaced by electricity from solar and wind. Thus a new currency will be required that is compatible with electrical energy , I believe bitcoin may become the new global energy currency. I have built a prototype system I call VCFSEE which creates virtual currency from surplus electrical energy. Please check out my white paper VCFSEE. Thank you. Tim Wayre.
Well I believe that there will be serious electricity shortfalls within ten years.
Oh Tim! You ‘believe’ that ‘renewables’ will replace the vast energy splurge from sequestered hydrocarbons that currently supports hitech industrial civ? And you ‘believe’ in bitcoin too!?
Ah bless! 🙂 And do you still believe in Father Christmas and the Tooth Fairy, dear?
Tim, have you come across this idea of doing some basic clueing-up research before treating us to your fantasies?
‘Renewable’ systems aren’t renewable, depending as they do on constant energy-subsidies from hydrocarbon-derived energy to build, maintain and replace them. Also, they only produce electricity, which no-one knows how to store adequately, and which is never going to replace hydrocarbon-derived energy-dense liquid fuels as power for ALL our – utterly vital – transportation systems.
And there is – literally – zero prospect of ‘renewables’ ever producing as big a gush of energy as we now get from the hydrocarbons. The numbers just don’t add up; quite apart from the iron realities of EROEI/ECoE, which – as Gail Tverberg lays out so clearly – will put an end to our hydrocarbon splurge before we’ve even managed to use up all the oil/gas/coal still known to be down there…
Forests, savannahs, and prairie/steppe grasslands do the very best job that we know of so far at capturing Sun energy and storing it; and even they aren’t all that efficient; yet none of our ‘renewable’ techie-toys come anywhere near even that – not when all EROEI/ECoE calculations are done FULLY.
The wisest way to deal with our upcoming energy famine is to re-green the entire planet with permaculture land-management.
By the time our current population-overshoot episode has resolved itself (mostly by the end of this century, according to the ever-reliable ‘Limits To Growth’), we – hom sap – in our reduced numbers should be able to live pretty well within those natural limits; certainly not in the profligate energy-wasting way that we live now; but very tolerably, as our ancestors did.
Catch up, Tim!
I have NEVER said that renewables will replace fossil fuels at their current scale. Renewables might be able to support an economy that is a lot smaller than the one we have now.
Renewables cannot be expanded without huge amounts of raw materials which only FFs can make available. REs are less concentrated than FFs, so cannot, irrespective of quantity, replace FFs in the dissipative landfill economic system. Western economies cannot grow at ECoEs above about 5%, and I can’t see the ECoEs of REs going much below 12%.
Replacement of oil by alternative sources
While oil has many other important uses (lubrication, plastics, roadways, roofing) this section considers only its use as an energy source. The CMO is a powerful means of understanding the difficulty of replacing oil energy by other sources. SRI International chemist Ripudaman Malhotra, working with Crane and colleague Ed Kinderman, used it to describe the looming energy crisis in sobering terms.[13] Malhotra illustrates the problem of producing one CMO energy that we currently derive from oil each year from five different alternative sources. Installing capacity to produce 1 CMO per year requires long and significant development.
Allowing fifty years to develop the requisite capacity, 1 CMO of energy per year could be produced by any one of these developments:
4 Three Gorges Dams,[14] developed each year for 50 years, or
52 nuclear power plants,[15] developed each year for 50 years, or
104 coal-fired power plants,[16] developed each year for 50 years, or
32,850 wind turbines,[17][18] developed each year for 50 years, or
91,250,000 rooftop solar photovoltaic panels[19] developed each year for 50 years
The world consumes approximately 3 CMO annually from all sources. The table [10] shows the small contribution from alternative energies in 2006.
http://en.wikipedia.org/wiki/Cubic_mile_of_oil
Renewable energy ‘simply won’t work’: Top Google engineers
Two highly qualified Google engineers who have spent years studying and trying to improve renewable energy technology have stated quite bluntly that whatever the future holds, it is not a renewables-powered civilisation: such a thing is impossible.
Both men are Stanford PhDs, Ross Koningstein having trained in aerospace engineering and David Fork in applied physics. These aren’t guys who fiddle about with websites or data analytics or “technology” of that sort: they are real engineers who understand difficult maths and physics, and top-bracket even among that distinguished company.
Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear.
All these things are made using mammoth amounts of energy: far from achieving massive energy savings, which most plans for a renewables future rely on implicitly, we would wind up needing far more energy, which would mean even more vast renewables farms – and even more materials and energy to make and maintain them and so on. The scale of the building would be like nothing ever attempted by the human race.
In reality, well before any such stage was reached, energy would become horrifyingly expensive – which means that everything would become horrifyingly expensive (even the present well-under-one-per-cent renewables level in the UK has pushed up utility bills very considerably).
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/
http://techcrunch.com/2011/11/23/google-gives-up-on-green-tech-investment-initiative-rec/
http://dailycaller.com/2015/12/25/top-11-problems-plaguing-solar-and-wind-power/
Germany Runs Up Against the Limits of Renewables
Even as Germany adds lots of wind and solar power to the electric grid, the country’s carbon emissions are rising. Will the rest of the world learn from its lesson? After years of declines, Germany’s carbon emissions rose slightly in 2015, largely because the country produces much more electricity than it needs. That’s happening because even if there are times when renewables can supply nearly all of the electricity on the grid, the variability of those sources forces Germany to keep other power plants running. And in Germany, which is phasing out its nuclear plants, those other plants primarily burn dirty coal. https://www.technologyreview.com/s/601514/germany-runs-up-against-the-limits-of-renewables/
Germany’s Expensive Gamble on Renewable Energy : Germany’s electricity prices soar to more than double that of the USA because when the sun doesn’t shine and the wind does not blow they have to operate and pay for a completely separate back up system that is fueled by lignite coal http://www.wsj.com/articles/germanys-expensive-gamble-on-renewable-energy-1409106602
Why Germany’s nuclear phaseout is leading to more coal burning
Between 2011 and 2015 Germany will open 10.7 GW of new coal fired power stations. This is more new coal coal capacity than was constructed in the entire two decades after the fall of the Berlin Wall. The expected annual electricity production of these power stations will far exceed that of existing solar panels and will be approximately the same as that of Germany’s existing solar panels and wind turbines combined. Solar panels and wind turbines however have expected life spans of no more than 25 years. Coal power plants typically last 50 years or longer. At best you could call the recent developments in Germany’s electricity sector contradictory. https://carboncounter.wordpress.com/2015/06/06/why-germanys-nuclear-phaseout-is-leading-to-more-coal-burning/
A pretty sobering post. Have a look at this StratoSolar.com . I’ve always wondered where the energy to replace worn out windmills and solar panels would come from. Perhaps it’s time to move to Scotland and start planting carrots and potatoes. Take 4 windmills with you so you have power for a lifetime. It’s where I’m moving to for my retirement which will begin shortly.
Please see my comments below. I think your analysis is flawed.
I believe you are 100% correct; our energy usage, both present and future, is simply not sustainable.
The *only* solutions are depopulation and degrowth.
These aren’t “choices”, they are harsh facts. Unfortunately, there’s probably going to be blood on the streets on the way there, primarily because political leaders lie.
Tim – regarding energy – what do you think about StratoSolar.com – have a look at their website.
Hi Donald. I believe that solar installations will soon be cheaper than glass and tiled roof and will last over 50 years and become far more efficient than they are today. They will be absolutely everywhere because they will be cheaper to install than traditional roofing materials. Also all electrical appliances will become much more efficient so we will require less electricity. These forces combined will mean we will have surplus energy available within the next couple of decades. We will require a new currency system that is compatible with new forms of Energy , bitcoin is perfect for this because each currency unit is a direct measurement of energy. The incompatible debt based Petro Dollar fiat system will slowly become obsolete as oil phases into obsolescence , just as horse drawn and coal fired steam did , note all major currency shifts throughout history have always occurred lagging behind new technology cycles.
Tim
Thanks for your comments, and debate is always welcome!
My model shows renewables already cost-competitive with fossil fuels, indeed ahead in some instances, and there seems little doubt that, whilst fossil fuels will go on getting costlier, technology will carry on reducing the cost of renewables.
However, I think there’s one distinction I’d like to point out. Technology is not an infinite process, but operates within an envelope determined by the laws of thermodynamics. Renewables can produce energy at lower cost than new oil or gas fields found and developed today. But what they are not (in my view) going to do is to match the cost-effectiveness of the giant oil fields of the past, like Al Ghawar.
Also, we need to use legacy assets to finance the expansion of renewables.
There are so many issues to discuss on this!
You should make sure to have spare parts for all of your windmills – also you will need to have a stockpile of appliances that you will run off your windmills – in case they break…
You might want to have an army as well — because those without windmills will try to take your windmills.
Well I would only use one windmill at a time and keep the others in storage. You’re right about possible problems from others as it would be very difficult to remain completely hidden.
I have been reading about CMO and we just seem to be heading towards an energy disaster which is being denied. If you have looked at the solar website I hope it at least gave you some room for hope.
Replacement of oil by alternative sources
While oil has many other important uses (lubrication, plastics, roadways, roofing) this section considers only its use as an energy source. The CMO is a powerful means of understanding the difficulty of replacing oil energy by other sources. SRI International chemist Ripudaman Malhotra, working with Crane and colleague Ed Kinderman, used it to describe the looming energy crisis in sobering terms.[13] Malhotra illustrates the problem of producing one CMO energy that we currently derive from oil each year from five different alternative sources. Installing capacity to produce 1 CMO per year requires long and significant development.
Allowing fifty years to develop the requisite capacity, 1 CMO of energy per year could be produced by any one of these developments:
4 Three Gorges Dams,[14] developed each year for 50 years, or
52 nuclear power plants,[15] developed each year for 50 years, or
104 coal-fired power plants,[16] developed each year for 50 years, or
32,850 wind turbines,[17][18] developed each year for 50 years, or
91,250,000 rooftop solar photovoltaic panels[19] developed each year for 50 years
The world consumes approximately 3 CMO annually from all sources. The table [10] shows the small contribution from alternative energies in 2006.
http://en.wikipedia.org/wiki/Cubic_mile_of_oil
Renewable energy ‘simply won’t work’: Top Google engineers
Two highly qualified Google engineers who have spent years studying and trying to improve renewable energy technology have stated quite bluntly that whatever the future holds, it is not a renewables-powered civilisation: such a thing is impossible.
Both men are Stanford PhDs, Ross Koningstein having trained in aerospace engineering and David Fork in applied physics. These aren’t guys who fiddle about with websites or data analytics or “technology” of that sort: they are real engineers who understand difficult maths and physics, and top-bracket even among that distinguished company.
Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear.
All these things are made using mammoth amounts of energy: far from achieving massive energy savings, which most plans for a renewables future rely on implicitly, we would wind up needing far more energy, which would mean even more vast renewables farms – and even more materials and energy to make and maintain them and so on. The scale of the building would be like nothing ever attempted by the human race.
In reality, well before any such stage was reached, energy would become horrifyingly expensive – which means that everything would become horrifyingly expensive (even the present well-under-one-per-cent renewables level in the UK has pushed up utility bills very considerably).
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/
http://techcrunch.com/2011/11/23/google-gives-up-on-green-tech-investment-initiative-rec/
Germany’s Expensive Gamble on Renewable Energy :
Germany’s electricity prices soar to more than double that of the USA because when the sun doesn’t shine and the wind does not blow they have to operate and pay for a completely separate back up system that is fueled by lignite coal http://www.wsj.com/articles/germanys-expensive-gamble-on-renewable-energy-1409106602
Why Germany’s nuclear phaseout is leading to more coal burning
Between 2011 and 2015 Germany will open 10.7 GW of new coal fired power stations. This is more new coal coal capacity than was constructed in the entire two decades after the fall of the Berlin Wall. The expected annual electricity production of these power stations will far exceed that of existing solar panels and will be approximately the same as that of Germany’s existing solar panels and wind turbines combined. Solar panels and wind turbines however have expected life spans of no more than 25 years. Coal power plants typically last 50 years or longer. At best you could call the recent developments in Germany’s electricity sector contradictory. https://carboncounter.wordpress.com/2015/06/06/why-germanys-nuclear-phaseout-is-leading-to-more-coal-burning/
Germany Runs Up Against the Limits of Renewables
Even as Germany adds lots of wind and solar power to the electric grid, the country’s carbon emissions are rising. Will the rest of the world learn from its lesson? After years of declines, Germany’s carbon emissions rose slightly in 2015, largely because the country produces much more electricity than it needs. That’s happening because even if there are times when renewables can supply nearly all of the electricity on the grid, the variability of those sources forces Germany to keep other power plants running. And in Germany, which is phasing out its nuclear plants, those other plants primarily burn dirty coal. https://www.technologyreview.com/s/601514/germany-runs-up-against-the-limits-of-renewables/
Nuclear power – according to the website the link about Google engineers took me to – seems to be the only answer. My Dad (who trained to be a scientist but ended up in the Patent office because it paid better) told me this when I was very young and worrying about the oil price shocks of the 1970’s. We may never get Fusion to work so they only alternative must be Fission. However building 2600 nuclear power plants probably isn’t feasible even if there was the will to do it.. Looks like we’re doomed. Have you any ideas before I go and sit in my cave?
I think we need a new discussion on energy – unfortunately, I’ve been bogged down with financial/economic stuff as part of completing SEEDS, and finding ways of enabling us to combat flat-earth economics and neoliberal quackery.
Every 20 minutes this planet receives enough solar energy to power the entire human civilization for 1 year. If we can capture just 0.0038% of the solar energy which touches this planet we will no longer have a requirement for any other energy source. Oil has simply acted as a solar energy battery , a middle-man , until we reach a level of electronics technology where we will no longer require this middle- man , the end of internal combustion marks the beginning of the end for the requirement for fossil fuels. Internal combustion for cars will be completely obsolete by 2030. This will also mark the end of the Petro backed Dollar system and we will require a new type of electronic currency system that will directly represent units of electrical energy.
StratoSolar PV provides a complete, lower cost replacement for fossil fuels
hahahahahahaha … stopped reading at the first sentence.
It’s not my analysis — it is the analysis of these two men – who had a mega million dollar budget to determine the feasibility of a nenewable powered world:
Two highly qualified Google engineers who have spent years studying and trying to improve renewable energy technology have stated quite bluntly that whatever the future holds, it is not a renewables-powered civilisation: such a thing is impossible.
Both men are Stanford PhDs, Ross Koningstein having trained in aerospace engineering and David Fork in applied physics. These aren’t guys who fiddle about with websites or data analytics or “technology” of that sort: they are real engineers who understand difficult maths and physics, and top-bracket even among that distinguished company.
Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear.
Who are you?
Drinking the Kool Aid I see.
Can you point me to a solar panel that was made without fossil fuel involvement?
You have it the wrong way around. All fossil fuels on this planet were created by biological solar panels.
Oh? I thought there were petroelves in the centre of the earth who pooed out oil deposits.
Hi Fast Eddy. Perhaps you think you are some kind of invisible Eddy current which can flow around rational thought and discussion. I believe I have solved the surplus energy problem with VCfSEE using the Virtual Energy Currency system otherwise now known as bitcoin. If you have a rational argument against that then please present it. Thank you.
Drinking the Kool Aid I see.
Can you point me to a fossil fuel that was made without solar panel involvement?
Just to update you, I read these comments but am too busy with other things (such as this morning’s post, a SEEDS) to contribute at the moment.
TM
Tim. Please send me your email address. Somehow we both appear to be very much on the same identical page but bizarre we both appear to be in a completely different book. But perhaps not ? Venn diagrams come to mind. Have you read my paper on VCfSEE ?
https://www.slideshare.net/TimWayre/vcfsee-62162422 .
Thank You.
Well done. I will watch for you on Bloomberg when you make your first trillion
No worries. I will mention you. Check out my new IoT creation. Feedback appreciated. Surplus energy here we come.
Correction:
Dear Tim,
I recently read your article titled “Death of the High Fashion Model”. In it you argued (correctly) that much of the GDP growth over last 20+ years has been enabled by the spending of borrowed money i.e debt, which is increasing much faster than GDP. You then went onto argue (correctly) that if the global economy had not taken on all this consumer debt, GDP growth would have been much slower. You point out that this hypothetical slower (non debt fueled) GDP growth would have been less than the rate of increase in energy consumption and carbon emissions. Thus, you conclude that the economy is getting less environmental efficient – the opposite of what is often claimed. It is this last part of your argument that I have a problem with.
While it may be true (indeed I feel sure it is) that the current debt bubble portends future financial trouble, still, the spending of consumer debt has – in the short term – enabled continued economic activity as revealed in conventional GDP statistics. As with all economic activity, this debt fueled consumption would have come with an energy and carbon cost. So, to my mind, if the (debt fueled) GDP is rising faster than energy and carbon (as it is, according to your statistics), then it is valid to say that the global economy is becoming more efficient in terms of energy/carbon per unit of GDP (though, of course, the fact that the economy continues to grow, means we are not reducing impact!). Conversely, I don’t think it is valid for you to argue that we should measure efficiency against a hypothetical non-debt fueled GDP rate. After all, if you removed all that consumer debt, there would have been a lot less economic activity, GDP, and therefore energy consumption and carbon emissions.
Another way of making my point would be to say that if the global economy had not experienced the recent debt bubble – and therefore the slower GDP growth you calculate had come to pass – then, very likely, there would ALSO have been greatly reduced energy and carbon growth. In other words, in that scenario, the global economy would still have become more energy/carbon efficient, but the rate of growth in carbon/energy would have been far slower, simply due to the slower rate of GDP growth.
This is all just a minor point, but thought I would share. Very much appreciate your work.
Jonathan
This may seem off the topic, but here I go. There are only two things in the known universe, Energy and Information. Therefore, the most important path is, Knowledge in Action. I summarize that perception is insanity. Therefore you must be able to see without obscuring the vision with your habituated mode of perception. I have come up with the Four Elements of Life, 1) Air, 2) Water, 3) Soil and 4) Peace. I think that until we can build and complete a strategy that makes all life flourish on this planet, we are doomed to miss the mark and suffer the consequences. I feel that we have gone rogue with the life supporting systems here on Earth and we need to double down on saving consciousness, life seems to have been abandoned by the fantasy. Glen
Life is a strange thing, it is not as we would wish, religion mostly dealt with this in the past, now pills.
Life does flourish on this planet, and it has done so for a long time, change is part of life, sometimes it is not the change we ordered.
Dennis L.
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“According to SEEDS, growth without this simple spending of borrowed money would have been only €13bn, not €111bn. Put another way, 89% of all “growth” reported in Ireland since 2007 has been nothing more substantial than the effect of pouring cheap credit into the system, helped, too, by the “leprechaun economics” recalibration of GDP which took place in 2015.”
The ‘supply side’ of the economy has actually produced the goods and services. The increase in aggregate demand {brought about by ‘cheap credit’} has led to an increase in ‘measured GDP’.
Of course, the question is whether or not the increase in aggregate demand brought about by ‘cheap credit’ is ‘sustainable’?
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Tim
May I suggest you add a new tab “Glossary” to your banner? As I see it, this would be primarily to list your acronyms, but also for brief definitions of key terms.
To Tim Morgan.
Just to be clear, my long, deeply-sceptical comment further up about ‘renewables’ becoming the abundant, full – sic! – replacement for our current fossil-hydrocarbon-energy splurge, was addressed to Tim Wayre. I think that people who ‘believe’ that are delusional, indulging blind hope above steely logic. EROEI/ECoE and basic thermodynamics explains why.
The overall ecologically and socially best way to harvest sun energy remains forest and grasslands permaculture – for a seriously-reduced human population.
That’s the actually-practicable future that’s going to happen to the survivors, I suspect – with or without human cooperation.