Energy Sector Outlook

Efficiency: The Way to Close the Renewables Gap

With peak oil already upon us, sustaining oil supply is akin to running up the down escalator.
Or, as Nate Hagens put it at the ASPO peak oil conference earlier this month, "Technology is in a race with depletion and is losing (so far)."

The urgent question then is: Can renewables fill the gap of oil depletion? Mind the Gap
The most recent global data summarized by fuel available from the EIA is, unfortunately, for 2006 and only preliminary (I know they're trying to improve their reporting, but seriously - they need to do better than that). But we'll use what we've got. . .

In 2006, the total amount of energy the world consumed was 469 quadrillion BTUs, or quads.*
If the latest information I gathered at the ASPO peak oil conference is correct (and I think it is, or at least as close to, correct as anybody is going to come at this point), then we should expect oil to begin declining at about 5% per year, starting around 2012-2014.

Of the 157 quads provided by oil, a 5% decline rate will give way to 7.85 quads lost per year, or 1.7% of the world's primary energy supply.
The "Geothermal and Other" category - supplying 1.6% of the world's primary energy - represents all the renewable sources combined: geothermal, solar, wind, biomass, and so on.
Since 1.7% is very close to 1.6%, we can put the challenge of substituting renewables for oil this way: Starting around 2012-2014, we will need to build the equivalent of the entire world's existing renewable energy capacity every year just to replace the lost BTUs from oil.

Fortunately, renewable energy of all kinds is enjoying a massive growth spurt, attracting trillions of dollars in investment capital. On average, the sector seems to be growing at about 30% per year, which is phenomenal. . . but it's not 100%.

In terms of BTU substitution, then, it seems unlikely that renewables can grow at the necessary rate.
Not Just BTUs
However, the challenge is more complex than mere BTU substitution.
Replacing the infrastructure, particularly transportation, that's based on oil with one based on renewably generated electricity will in itself require energy - and lots of it. As Vail pointed out, between 80% and 90% of the energy inputs for renewables must be made up front, before they start to pay any energy out.

Even if renewables were able to make up all of the lost energy from oil, still more would be needed to afford any economic growth.

In all, it seems a fair bet that it will take at least a decade for renewables to merely catch up with the annual toll of oil depletion. The gap will likely manifest as fuel shortages in the OECD, when the developing world outbids it for oil, and a long economic recession or depression. . . unless efficiency comes to the rescue.

To that point, Jeff Vail, an associate with Davis Graham & Stubbs LLP, said at the conference that population increase alone could offset as much as 30% of the improvement in conservation and efficiency. He noted that despite the recession, car sales are up 29% in India as people buy their very first cars.
Falling Net Energy

Until next time,
Chris
Chris Nelder is a self-taught energy expert who has intensively studied peak oil for five years, and written hundreds of articles on politics, peak oil and energy in general.