Policy Implications of Increased Energy Consumption

So far I believe I have made a credible case that the world will consume close to 1,000 quads in 2030, far more than the 721 projected by U.S. and international agencies. If I’m off, I’m not off by much. I have a long way to go to make the case that consumption will continue to increase to 2,000 quads by 2050 and 3,000 by 2075, but the short term case looks pretty solid.

What does that mean for us? I would like to examine the implications for public policy and would definitely like your input.

I think the first finding would be that the decision by Germany and Japan to retire most or all of their nuclear power generation is something they will regret fairly quickly. Japan imports almost all of its fuel at present, while Germany’s replacement for nuclear may well end up being the dirtiest of brown coal sources. The fungible nature of fossil fuels and the market structure of the energy sector pretty much guarantees that an unexpected increase of 25% in demand will cause energy prices to rise dramatically.

The second thing to jump out at me is that, along with other major fuel-rich countries, the U.S. stands to benefit greatly from this development, a point I have seen made recently in major media, from Tom Friedman’s semi-jocular question about the U.S. joining OPEC to more serious analysis of our improved balance of trade.  The U.S., which still has a lot of oil, gas and coal, should be able to not only meet domestic demand, but sell a lot of it abroad. The U.S. will be happily joined by countries like Brazil, Russia and Nigeria. Major importers like China, India and Japan will have to make adjustments in their policies as well as their markets.

The third effect is the boost that rising oil prices will give to renewable energy. Ethanol will be back and more investment will be made in the sexy new fourth generation biofuels–heck, maybe one of them will work. But gas prices will rise, too–in part because the infrastructure to transport it is only partially built and in part because demand will outstrip even the huge supplies of frackable gas. And as that happens, the other renewables–wind and solar–will begin to compete on cost as well as ‘ethical purity‘. Not a minute too soon.

I believe there will be a chain reaction of consequences beyond the three I’ve mentioned here–and I would welcome input from those of you with time to give it some thought.

7 responses to “Policy Implications of Increased Energy Consumption

  1. Like your thoughts, still digging through your evidence. I’ve been thinking that the grand challenge for this new generation is going to be power, how to generate, distribute, and store it. You have focused on the demand side, and the fact that coal won’t do it. What we are looking for is something that works like a hydro dam without the side effect of flooding huge areas 🙂 There are no easy answers here, but the policy should be one that helps to solve this grand challenge.

  2. Hi DavidG,

    Thanks for your comment. Because all of the attention in the energy debate has been about production rather than consumption, I decided to focus for now on the latter. So, I guess I’m saying you’re right. But I don’t see how we pick winning technologies for supply without knowing what demand will be…

  3. Yes and no. Without production you can’t meet the demand, without consumption you don’t know how much you need to produce. But the trick is that we KNOW we need more, lots more, and simply wishing that wind and solar are going to fit the bill is a recipe for disaster. You could easily say we need a new technology that will provide 100 quads by 2020. While it wouldn’t solve the problem it would give us all sorts of leads on what to do and not do. I called it a grand challenge for a reason it’s hard. For example a friend in the power industry said that if everyone switched to electric cars and everyone plugged in for the night, the wires would sag and short out (if not melt). that’s just a small part of the problem that has to be solved. I wish my kids luck.

  4. Tom,
    I’m not so sure about ethanol. If its production and distribution are more energy intensive than other energy transfer systems, the costs may rise with the costs of other energy and it might never be cost competitive.

    I wrote a post at Lucia’s earlier in the year describing the operation and support infrastructure for compressed natural gas (CNG) vehicles in Thailand.

    To wit: http://rankexploits.com/musings/2012/traveling-by-cng-in-thailand/

    We had taken a CNG bus from central Thailand to Bangkok not knowing it was so fueled. When we pulled into a gas station 15k from Bangkok and the hood was opened for refueling, we discovered the CNG part and then marveled that there was a fuel-stop entirely dedicated to CNG fueled vehicles and there were enough to form queues including other buses, vans, cars, and pick-up trucks, including one converted to CNG by its owner.

    This seems a much more plausible option, given the apparent ubiquity of natural gas, it’s ease of transportation, assuming fields have sufficient volume to support connection to our pipeline system, or alternatively, that package processing can support its sale at the wellhead so to speak.

    It might be nice it we could discourage politicians to quit trying to do engineering.

  5. Hi J Ferguson

    I have concerns about CNG, mostly safety related, but also I wonder if using it as a transportation fuel would just have us blow through natural gas supplies we might have a better use for later. What do you think? That said, politicians aren’t exactly improving their track record these days…

    • like a man.I appreciate those swmatran arguments, however I think it is you who should consult his doctor. Have him check up on those delusions of yours, because I haven’t said anything feminist or unwarranted in this thread whatsoever. Have a nice day and remember, eat loads of carrots because they’re good for your eyes.@fracked again I’ve heard some rumours, though I can’t verify anything because I don’t have a TV.

  6. Thomas,
    Exhausting the supply on the highway should be thought about.

    If we followed the example of the Dutch, who banned CNG vehicles from underground garages, and we also banned them from tunnels, it might dampen their acceptance.

    It seems to me that we need to devise publicly understandable methods to appraise risk, especially where the failure mode is easy to understand yet the likelihood of such an event happening might be very remote.

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