Such Stuff as Dreams are Made On

It is normal to want to live in harmony with nature and the unrelenting negative news about climate and CO2 and energy speaks to this. Exciting examples of how things are being done create expectations about how the system should change but also create exasperation about how slow progress is. But the use of flagship projects should be managed with care – these are often in the news because they are the exception, not the norm.

 Gravity Sucks

A while ago, there was a widely-shared video of a huge truck carrying quarried rocks – the electric truck was painted green (of course) and to much adulation was reported to “never need charging”.   Factually correct because the specific circumstance is that the quarry is high on a hillside and its destination (a cement factory) is in the valley. The truck uses regenerative braking to charge its 600kw batteries, and the charge is sufficient to get it back up to the quarry. Magic. The nuance is of course that it carries load down and comes back up empty; thus the losses in generating and storing electricity are compensated for by the additional kinetic energy provided by gravity on the way down – the unladen truck weights 45 tons and carries 65 tons of material – so is 110 tons on the way down and 45 on the way back up.

In many ways this is not too different to counter-weight systems like funicular tramways or building elevators – only here instead of a mechanical transfer with friction losses and a “top-up” of input energy, there is an electro-chemical transfer (with associated losses but net gains).  The laws of thermodynamics still hold.

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Massive fossil fuel subsides must stop.

Returning to one of my favourite subjects – those disgraceful subsidies for fossil fuels. One of the features of having teenage kids is you often hear “whatever”, or more recently “no one asked” as conversation stoppers. In the same way, having reasonable conversations about fuel subsidies is often met with the “concerned citizen” equivalent – one such appeared on a previous blog post that laboriously (I thought) tried to show that it wasn’t a simple case of “Fossil-Fuels Bad (and subsidised), Renewables good (and yes subsidised, but that’s OK)”. Despite this I got the “whatever” style comment of how “we should just stop subsidising fossil fuels”.

So here I go again.  The infamous $5.2 Trillion headline has been widely debunked so will be ignored hereafter and whilst there are some places that have direct subsidies for production, in the vast majority these are “implied” subsides whereby the specific and very high petroleum taxes simply generate some rebates, and were discussed at length in the previous post.

However, there clearly are countries who subsidise the cost of (notably) petroleum products to their citizens. The headline number is often mentioned “$426bn” or “$372bn” or some such. A far cry from the debunked $5.2 Trillion, but still a big number, but you have to dig pretty hard to see who these bad actors are. The platitudinous headline is “fossil fuels subsides to consumers must stop” or in more thoughtful works, “should be swapped to subsidies for renewables”. Let’s just ignore that petroleum product molecules and renewable electrons are not always interchangeable, especially around transport.

Globally there are still more subsidies directed toward fossil fuel consumers and producers than toward renewable energy: currently around USD 372 billion is spent on producer and consumer fossil fuel subsidies, overshadowing the USD 100 billion in support to renewable energy (Best et al., 2015; International Energy Agency [IEA], 2018b; Merrill et al., 2017).

Note in the 33 pages of this report there is no definition of these subsidies other than the above – it is just gospel that they exist and must be swapped out. When digging, I found the cited IEA reference has no mention of subsidies at all in it, the Merrill paper is better, and references price-gap analysis.

Spoiler Alert: the countries that subsidise their citizens for say gasoline are clearly globally significant, get them to change and all will be well in the world…

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Future Energy – technology will save us

Summary: With a focus on “Greener, Cleaner and Cheaper” energy, we are overlooking the possible negative consequences of cheap energy. More expensive energy can be seen as a big negative as it will slow economic growth, but cheaper energy could accelerate degradation of planetary resources. Damned if you do, damned if you don’t?

About the publisher: Richard Norris is a leading business developer and advisor to energy investors, developers, bankers and the public sector.

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