Global financial system implosion begins

[Falcon]

expand rapidly to meet the demand from the private capital wishing to invest in renewable energy installations in this country.

To be precise, you are absorbing some of the fake credit emitted by the Quantitative Easing process, on behalf of investors fleeing tanking industries with nowhere else to go, chasing White elephants that only offer a return for as long as government subsidy holds out. Enjoy it while it lasts.

Pension funds in this country had a little over £2 trillion of assets under management in 2009.

The baby boomer cohort is only just starting to retire, and the numbers of workers supporting them is only just starting to fall. The government has worked out the UK pension system is 60% underfunded (two trillion), and that was using a wildly optimistic growth assumption - replace it with a contraction assumption and it is four trillion underfunded. Meanwhile, you can't spend the same pound twice and there are some old ladies with a rather pressing need to pay their spiralling heating bills who might object to you pouring their cash into some stranded, unscaleable science project.

Also, we are not under conditions of energy contraction, not yet anyway.

Per capita energy consumption peaked over a decade ago. No, this doesn't prove how efficient we have become - it proves how protected we have been under conditions of sharply deteriorating global inequality. Conventional hydrocarbon offtake rate peaked in 2008 - the balance is being sustained by liquidising the lunches of brown skinned people in far away places. You are offering a parochial perspective on a global issue.

 

[Falcon]

Well thats not strictly true, since people can imagine conditions other than those which they know of first hand, and plenty of people think that energy woes spell epic problems for the economy.

That would be the difference between trying to change someone's mind, and trying to alter someone's paradigm.

 

[free spirit]

To be precise, you are absorbing some of the fake credit emitted by the Quantitative Easing process, on behalf of investors fleeing tanking industries with nowhere else to go, chasing White elephants that only offer a return for as long as government subsidy holds out. Enjoy it while it lasts.

how do you figure that one out then?

99% of my customers are private customers who've mostly paid their mortgage off, or mostly paid it off and have the £10-15k capital to invest themselves in cash in their bank accounts. They're just investing in solar instead of sticking it into a bond / ISA.

I'd love to know how you make this out to be anything to do with QE - well, unless you're saying the banks wouldn't have had the funds to release to their customers without QE.

 

[free spirit]

That would be the difference between trying to change someone's mind, and trying to alter someone's paradigm.

you realise that works both ways, and despite your apparent certainty that you're right, it's not necessarily so.

eta - actually, there's a problem here in that I don't think our opinions are actually that far apart, other than you apparently thinking we're significantly further down the line than I do. I accept (and have done for 20 years or more) that the current paradigm must either change through our actions, or be forced to change through lack of energy / climate change, but don't accept that we're beyond the point at which we can develop an alternative energy infrastructure capable of adequately meeting the worlds needs to a level of lifestyle equivalent or better to today.

yes we in the developed world (and especially those in the US) will need to use energy (and other resources) far more efficiently, as will the rest of the world as they develop, but we're currently so unbelievably wasteful of energy that I really don't see that being a major stumbling block if we actually make it a priority rather than paying lip service to it.

The doomsday scenario may happen, but if it does, it will be a result of inaction, or action in the wrong direction, action to reduce the energy intensity of our economy / lifestyles, and move us across to a largely renewables based energy supply can only help to either avert the problem or reduce it's impact (providing it's done in at least a relatively sustainable manor, which is a big proviso given the current neoliberal economic paradigm).

My analysis of the situation is that we've still probably got the time and energy reserves required to make these changes if as many countries as possible take the decision to invest heavily in this major global project as a generational thing. My main concern is that the terms of the WTO agreements, and the depression inducing economic strategies currently being pushed around the world will not allow the investment to be made properly until maybe it is too late.

We've already lost 25 years since the Brundtland Report during which time in many respects we've actually moved far further away from anything needed for true sustainable development to become a reality. I guess if it comes down to it, my main hope is that the current policies will prove such an abject failure that they will effectively force a major rethink, and as the only real solution on the table, the world will finally get properly on board with it. Meantime, I'm happy to be part of laying the groundwork for this to happen in terms of training up the people needed to actually implement it, and getting microgeneration technologies out there as quickly and efficiently as possible.

 

[Falcon]

99% of my customers are private customers who've mostly paid their mortgage off, or mostly paid it off and have the £10-15k capital to invest themselves in cash in their bank accounts. They're just investing in solar instead of sticking it into a bond .

So some way off the multi trillion investment necessary to replace our existing, incompatible, multi trillion energy infrastructure, then?

As I said. "unscaleable".

 

[Falcon]

We've already lost 25 years since the Brundtland Report during which time in many respects we've actually moved far further away from anything needed for true sustainable development to become a reality.

To make the necessary change, we need two resources: money, and energy (building an entirely different energy infrastructure will itself require enormous inpu of energy. 25 years ago we could conceivably have brought on new energy production to cover the infrastructure rebuild while powering society. Now we can't - the only way to do it is divert energy from society. Since energy is food and money, this is to further stress an already fatally stressed financial and food system.

If our society is like a car with a petrol tank of finite capacity, at some time in the past25 years we reached a point of no return, where we can't now get to the next gas station with the energy at our disposal.

 

[free spirit]

If our society is like a car with a petrol tank of finite capacity, at some time in the past25 years we reached a point of no return, where we can't now get to the next gas station with the energy at our disposal.

ah, but we probably can if we trade the car in for a more efficient model / drive it more economically, and allow ourselves to stop off at the stupidly expensive petrol station en route that we'd not previously considered stopping at.

I don't think we're anywhere near the point that you think we are yet (as in, we're decades away from any actual peak energy point as opposed to simply peak conventional oil reserves, and the more we invest in renewables and energy efficiency, the further away that point will get), and even if we were then there's vast potential within our economies to divert energy and investment from more frivolous sectors of the economy into this building this new energy infrastructure / installing energy efficiency measures should we choose to do so.

more later*

*TM William of Wallworth

 

[free spirit]

So some way off the multi trillion investment necessary to replace our existing, incompatible, multi trillion energy infrastructure, then?

As I said. "unscaleable".

>7 GWp of solar installed in a year in Germany last year says you're wrong on the scaleability factor.

 

[Dr Jon]

http://www.positivemoney.org.uk/

ETA:
There's an interesting interview with Bill Still in the latest Keiser report. He says that the point of debt saturation has been reached and only solution is monetary reform.

... which would be fine if it was just the monetary system that was the problem. As Falcon points out, dwindling energy supplies are a harder problem to fix...

 

[Falcon]

>7 GWp of solar installed in a year in Germany last year says you're wrong on the scaleability factor.

Ok. And you've worked out what 7% per annum conventional hydrocarbon depletion rate (that's about 40 million barrels a day in 10 years) plus 1% growth to maintain the stability of the financial system, translated back into equivalent solar capacity (annual incremental capacity addition) is? You've factored in that the solar manufacturing infrastructure (the factories that make the mining equipment that excavates the ore, the factories that smelt and refine the ore, the trucks that move the refined products to factories for assembly, the assembly factories, the infrastructure associated with the electronics and physical assembly of the units, the infrastructure associated with the manufacture of the distribution infrastructure, etc. Etc. ETC. ) is all currently manufactured and currently powered by hydrocarbon. You've worked out how much power you have left for us after you've plugged all that into the output of your little test plants? You've worked out the capital demand schedule on a £/kW capacity inherent in that depletion/expansion rate?

Science project.

 

[elbows]

I can't do all those sums, but I can say something about that.

For a start I don't know why you are only about the conventional hydrocarbon depletion rate. I'm not happy that the unconventional sources have been used to mask the problem, but they are still a legit and real contributor to current energy availability, so you can't pretend they don't exist. They should not be used to construct a fantasy version of future energy availability, but they are available for a while in a way that contributes to wiggle room, and provides energy that can, if we so wish, be used to manufacture new infrastructure & alternative energy capacity.

Now I'm not an optimist when it comes to lofty projections about just how much capacity renewable energy can give us in future. But again that does not mean it is a waste of time trying, or that a very real system that supplies a meaningful amount of a nations energy needs cannot be constructed in the time we have left before decline in traditional energy sources makes it difficult.

Will we be able to carry on as if nothing massive had happened? Not without miracle science that stubbornly shows no sign of happening in recent decades (but thats not to say we may never get lucky on this front at some point).

Where I agree with you is that the economy as we know it is unlikely to survive this thing. The consequences of this may be truly epic in their proportions, but it doesn't mean the end of everything. Even if the process doesn't go badly, I could easily imagine millions of deaths, and if we really mess it up it could be billions. But this is something that is all to play for, the inevitabilities are not as all-pervasive as your sort of posts suggests, there is wiggle room, and the story has not yet unfolded, we have barely even begun. There are choices to be made, and although immense amount of opportunities & time has already been lost, we should not pre-judge what will happen once reality has really sunk home.

There is also additional potential wiggle-room from changing the nature of certain economic benchmarks. This idea has its limits, but its certainly possible to imagine the gap from loss of fossil-fuel powered economic activity being offset by activities which use less energy, and the more flexible electric energy rather than increasingly precious liquids.

Globally, it is likely that some of your ugly predictions will bear fruit. It is easy to imagine us attempting to preserve our lifestyles and wealth for as long as possible even if the price is many lives elsewhere, because we have seen this sort of thing a lot before, always lurking in the background, when did it ever go away? Resistance to such things will power many news stories for years to come, though rarely discussed in these terms. The phenomenon could be stripped naked and paraded around in increasingly undeniable ways as the stakes get higher, which in itself may be enough to force a little more fairness into the mix.

 

[Bob_the_lost]

Ok. And you've worked out what 7% per annum conventional hydrocarbon depletion rate (that's about 40 million barrels a day in 10 years) plus 1% growth to maintain the stability of the financial system, translated back into equivalent solar capacity (annual incremental capacity addition) is? You've factored in that the solar manufacturing infrastructure (the factories that make the mining equipment that excavates the ore, the factories that smelt and refine the ore, the trucks that move the refined products to factories for assembly, the assembly factories, the infrastructure associated with the electronics and physical assembly of the units, the infrastructure associated with the manufacture of the distribution infrastructure, etc. Etc. ETC. ) is all currently manufactured and currently powered by hydrocarbon. You've worked out how much power you have left for us after you've plugged all that into the output of your little test plants? You've worked out the capital demand schedule on a £/kW capacity inherent in that depletion/expansion rate?

Science project.

But it's nice to see that it has scaled up to 7GWp (in a year, in northern europe) isn't it. Scaling is awesome.

 

[free spirit]

Ok.

OK what? You accept renewable energy systems are very scalable?

And you've worked out what 7% per annum conventional hydrocarbon depletion rate (that's about 40 million barrels a day in 10 years)

which 10 years are you talking about here?

if you're talking about the next 10 years then you're offering by far the most pessimistic predictions I've seen so far, and I don't see any justification for it at all. the only way I could see this being even close would be if you were to only look at currently producing fields under the worst case scenario of their declines, and not take any account at all even of any of the fields that are currently being developed. If you've got reason to doubt any contribution at all from fields currently under development please post up your reasoning, if not then your figures are seriously out, so it's not surprising you've decided we're into doomsday scenario territory.

40 million barrels a day being a more than 50% drop on current levels btw for anyone wondering.

plus 1% growth to maintain the stability of the financial system

economic growth and energy growth are none linear, ie there could be a 1% economic growth rate maintained even with a 1% per annum reduction in energy if energy efficiency was increasing at 2% per year (or something like that).

translated back into equivalent solar capacity (annual incremental capacity addition) is?

of course not. Aside from your oil depletion figures being wrong, at no point have I suggested that solar can replace oil along. Alongside all the other renewables and energy efficiency measures, and with a more realistic prediction of depletion rates (including new fields etc) however there's every possibility that we'll be able to replace the lost oil availability as it depletes IMO.

You've factored in that the solar manufacturing infrastructure (the factories that make the mining equipment that excavates the ore, the factories that smelt and refine the ore, the trucks that move the refined products to factories for assembly, the assembly factories, the infrastructure associated with the electronics and physical assembly of the units, the infrastructure associated with the manufacture of the distribution infrastructure, etc. Etc. ETC. ) is all currently manufactured and currently powered by hydrocarbon. You've worked out how much power you have left for us after you've plugged all that into the output of your little test plants? You've worked out the capital demand schedule on a £/kW capacity inherent in that depletion/expansion rate?

Firstly, to a large extent, if these people, finance and energy resources weren't deployed in this way, they'd only be getting used for something less useful.

secondly - no, it's not all powered by fossil fuels, approx 20% (and increasing rapidly) of world electricity production is from renewable sources, and 13% from nuclear.

Thirdly - yes renewable energy manufacturers, distributors and installers need to take great care to minimise the embeded energy and resource use within these installations, and it's something I'm working on, but it's frustratingly hard to get any real information out of our suppliers.

 

[Nylock]

Free Spirit, are the solar PV systems you install grid tied or do they feed domestic storage -or both? (just curious)

 

[elbows]

Aside from your oil depletion figures being wrong, at no point have I suggested that solar can replace oil along. Alongside all the other renewables and energy efficiency measures, and with a more realistic prediction of depletion rates (including new fields etc) however there's every possibility that we'll be able to replace the lost oil availability as it depletes IMO.

Thats rather optimistic. What decline rate do you have in mind then?

Thirdly - yes renewable energy manufacturers, distributors and installers need to take great care to minimise the embeded energy and resource use within these installations, and it's something I'm working on, but it's frustratingly hard to get any real information out of our suppliers.

Quite the problem that, and a reason to be cynical.

 

[ferrelhadley]

Ok. And you've worked out what 7% per annum conventional hydrocarbon depletion rate (that's about 40 million barrels a day in 10 years)

If this is the IEA study figure then this is the average for existing fields that have gone into depletion. This is ameliorated by new fields coming on line and there are still significant new fields coming on line over the next 5 years. The figure is about 2.5 million bpd per year till 2015. Going past 2015 is a bit more difficult to judge as many fields will only have a 5 year timeline to bring online. We are also liable to see some expansion of Canadian syncrude, lease condesate production and towards the end of the decade the giant Brazilian deep water fields coming online.
We very likely to experiance depletion but I am not really buying c.50% in 10 years.

 

[Falcon]

But it's nice to see that it has scaled up to 7GWp (in a year, in northern europe) isn't it. Scaling is awesome.

Except - it hasn't. It's a technology for (inefficiently) converting hydrocarbon inputs into electrical power via solar cells.

 

[Falcon]

which 10 years are you talking about here?. if you're talking about the next 10 years then you're offering by far the most pessimistic predictions I've seen so far, and I don't see any justification for it at all. ... 40 million barrels a day being a more than 50% drop on current levels btw for anyone wondering.

In exponential maths, as a rule of thumb, dividing the number seventy by the exponential growth or decline rate yields the doubling or halving time in equivalent units. 7% per year decline rate is a halving time of 70 / 7 = 10 years. It is currently 80 million barrels a day and will be 40 million in 10 years time. And it will be 20 million barrels a day in 20 years time. 2% growth rate (our historical energy consumption growth rate) is a doubling time of 70 / 2 = 35 years. So on current growth it will be 160 million barrels a day in 10 years and 320 million in 20.

7% is a conservative estimate of the decline rate - it is accelerating due to the accelerating affect of oilfield technologies which have pulled reserves forward without adding material quantities of new reserves.

The inability to understand the dynamics of compound growth, and just how large and how small things get with apparently small levels of compound growth/decline is the biggest handicap to people understanding how futile the situTion is.

The "OK" is a conflict avoidance strategy, since I don't have the time or ability to teach you the basic maths contradicti your statements on an iPad in McDonalds as I hitch hike across British Colombia.

 

[audiotech]

The latest report from the International Monetary Fund states that conditions remain fragile and despite risks being transferred from the private to the public sector it's no surprise to read that 'confidence in the banking system has not been restored'.

No surprise to find either that commodity prices are rising (oil notably), which indicates inflationary pressures and of course that could mean a hike in interest rates?

However, the report tries to put some gloss on the crisis:

The global economy has continued to recover over the past year, although growth remains uneven across countries. In many advanced countries, growth continues to be relatively weak, held back by high unemployment rates, weak financial conditions, and concerns about the fiscal and financial sector outlook. Difficulties in a number of European countries have been particularly acute. In contrast, growth in emerging markets is about overheating in a number of these economies.

It also points to an International Labor Organization estimate and warns of a risk to social cohesion. 'As of April 2011 some 205 million people worldwide were still looking for job - up by about 30 million since 2007. The increase in high youth unemployment is a special concern' the report informs us.

And as for low income countries:

Executive Directors noted that the crisis had triggered the sharpest economic slowdown in four decades, pushing an additional 64 million people into extreme poverty by year-end 2010.

Does that cover starvation?

Then, returning to developed nations, this pops up:

The focus should be on reforms to promote growth that place public debt on a sustainable track over the medium term.

Keep smiling, whilst we reduce public services. Anyone wanting to read more see here (pdf of the full report).

http://www.imf.org/external/pubs/ft/ar/2011/eng/pdf/ar11_eng.pdf

 

[Bob_the_lost]

Except - it hasn't. It's a technology for (inefficiently) converting hydrocarbon inputs into electrical power via solar cells.

Hang on, i think we're discussing different topics. Photovoltaic panels scale up wonderfully. As an aside it is amazingly scaleable as it can go both up beyond the limits of conventional hydrocarbon based or nuclear plant limits and below what they require for efficient operation. That photo voltaic can scale up to Gigawat installations isn't in doubt, it's been done and it's being done as we speak. It scales.

Is your point that it's not really a net gain in terms of energy expended (or at least a rubbish ROI or with some sort of externality?). In which case you didn't mean 'As I said. "unscaleable"' you meant uneconomic, unsustainable or some other similar term which would capture your meaning in a more accurate manner.

I don't really have time to teach you that using precise language such as unscalable, which has a specific and well defined meaning, in a slapdash and careless fashion leads to misunderstanding but i hope you'll think on it anyway.

 

[free spirit]

In exponential maths, as a rule of thumb, dividing the number seventy by the exponential growth or decline rate yields the doubling or halving time in equivalent units. 7% per year decline rate is a halving time of 70 / 7 = 10 years. It is currently 80 million barrels a day and will be 40 million in 10 years time.

I understand the maths, but your 7% per year decline rate is about the most pessimistic I've seen, and ignores completely the impact of oil fields currently under development that will come on stream in the next 10 years.

I say again, have you any logical reasoning, or evidence to support this view? if not then the rest of your hypothesis is obviously wrong as it's based on a false premise.

And it will be 20 million barrels a day in 20 years time. 2% growth rate (our historical energy consumption growth rate) is a doubling time of 70 / 2 = 35 years. So on current growth it will be 160 million barrels a day in 10 years and 320 million in 20.

yes, but I've not argued that we can sustain the previous unsustainable growth in energy demand have I?

 

[elbows]

So in the US the federal reserve is launching 'Operation Twist', which sounds like exactly the sort of 'unconventional' measure the IMF called for just yesterday.

http://www.guardian.co.uk/business/2011/sep/21/federal-reserve-400bn-operation-twist

The Fed said it would launch a new $400bn program that will tilt its $2.85tn balance sheet more heavily towards longer-term securities by selling shorter-term notes and using those funds to purchase longer-dated treasuries – a strategy dubbed "Operation Twist", from the card game pontoon.
It will now also reinvest proceeds from maturing mortgage and agency bonds back into the mortgage market, an acknowledgement of just how weak conditions in the sector have remained.

 

[ferrelhadley]

7% per year decline rate is a halving time of 70 / 7 = 10 years. It is currently 80 million barrels a day and will be 40 million in 10 years time.

There are two widely used measure of oil, all liquids and C&C. The first includes syncrude, bio-ethanol and coal-to-liquid (SASOL). All liquids come at about 88 million bpd. The C&C figure is just crude oil and lease condisate. C&C is about 73 million bpd. The depletion figures are only for crude fields so do not apply to a large part of the all liquids figure.

 

[free spirit]

There are two widely used measure of oil, all liquids and C&C. The first includes syncrude, bio-ethanol and coal-to-liquid (SASOL). All liquids come at about 88 million bpd. The C&C figure is just crude oil and lease condisate. C&C is about 73 million bpd. The depletion figures are only for crude fields so do not apply to a large part of the all liquids figure.

beat me to that.

the 80m b/d figure for 'conventional hydrocarbon' must include gas liquids, which definitely shouldn't have the 7% figure applied to them. Must admit I missed that on first reading, and assumed Falcon was talking purely about conventional oil liquids being as that's the only section to which the 7% decline rate could reasonably be applied.

The 7% reduction figure for currently producing conventional oil fields may well be reasonably accurate (though this amounts to more like 36m b/d total reduction, not 40m b/d by 10 years time by my reckoning), but portraying this as the figure that renewables would have to replace by 2020 is nonsense unless you were also proposing banning development of all new (as in not currently producing) fossil fuel fields entirely. Some hardcore environmentalists may propose this, but it wouldn't meet my test of sustainable development policy as it'd leave the world's energy supply and economy utterly screwed, and I've never suggested or supported such a policy that I'm aware of. I'm pretty bemused at being asked by Falcon to justify a position I've never taken, and a bit bemused at Falcon seemingly implying that this is actually the reality of the situation as he sees it.

 

[free spirit]

Free Spirit, are the solar PV systems you install grid tied or do they feed domestic storage -or both? (just curious)

grid tied.

 

[Nylock]

Thanks Do most PV installation firms you know of do grid tie only or are there also a good sized proportion that do domestic storage/stoarge+grid tie as well?

E2A: the reason i ask is that if PV installations are on the increase, wouldn't it make sense to store power for light duty things such as lighting while feeding the surplus into the grid and thus lightening the demand for fossil fuels from the grid generation side of things?

 

[free spirit]

Thanks Do most PV installation firms you know of do grid tie only or are there also a good sized proportion that do domestic storage/stoarge+grid tie as well?

if there's a grid connection then 99.999% will be grid tied only in the UK as any financial advantage to battery storage wouldn't justify the additional costs.

This changes if you need the battery storage anyway for another purpose eg electric vehicle

 

[Nylock]

Yes, battery storage gets really expensive if it's used for medium-heavy duty activity, but surely it would make some sort of sense scaled-up across the grid to use it for light load stuff (lighting/Laptop charging/LCD TV's, DVD players etc..)... As you don't need so many batteries for light activity iyswim

 

[Bob_the_lost]

If you've got the connection to the grid then you'd have to be in a situation where you can store and use the electricity for less than you can sell it to the grid and then buy back later. Given you're generating at peak time (daylight) that just doesn't happen. Add in the costs for the battery, the losses and the maintenance and it quickly makes a significant loss. The only time this form of "electrical arbitage" makes money is with the hydro plant in Wales that gets re-filled at night. You'd be doing it in reverse with solar.

 

[Falcon]

.I don't really have time to teach you that using precise language such as unscalable, which has a specific and well defined meaning, in a slapdash and careless fashion leads to misunderstanding but i hope you'll think on it anyway.

Thanks. I'll ponder the novel application of the term "scalable" to a technology that consumes more energy the more you deploy it.