Cassandra has moved. Ugo Bardi publishes now on a new site called "The Seneca Effect."

Friday, May 30, 2014

The transition to sustainable energy: how much will it cost?

In a previous post, I used the the concept of "Sower's strategy" to propose that the way to solve our predicament of depletion and climate disruption is to use fossil fuels as a way to get rid of fossil fuels. In other words, we need to use fossil energy - as long as we have it - to develop substitutes to fossil energy. This is equivalent of the old strategy of farmers of "saving your seed corn". But how much corn should we save, exactly? In the present post, Sgouris Sgouridis provides an answer. It turns out that in order to have a smooth and gradual transition to renewable energy before fossil energy becomes too expensive, we need to ramp up investments in renewables by a factor 4-10 that should be reached by means of an annual increase of the current investment between 6% and 9%. Eventually, the investment rate should reach amounts of the order of 1.5-2.5 trillion dollars by 2045. It is a tantalizing result, because  a 9% yearly increase is possible: we have been growing renewable power at faster rates up to now. And even a total amount of a couple of trillion dollars is not impossible considering that the present world's GdP is about 72 trillion dollars (compare also with the 1.7 trillion dollars per year spent for the world's military system). Unfortunately, it is is perfectly possible that the action of the fossil lobby will be able to slow down the growth of renewables or even to stop it completely. In this case, we will not be able to avoid a significant (and probably disastrous) dip in the amount of energy available worldwide as the unavoidable decline of fossil energy plays out. Nevertheless, any investment in renewable energy we can make now and in the near future will help make the transition less hard on all of us. 

Guiding the Energy Transition (Part 1): Principles and Implications

By Sgouris Sgouridis (*)

Abstract: Following on the sower’s metaphor, I present a quantified view of exactly how much energy we need to invest from our current bounty in order to be able to safely navigate a sustainable energy transition. This is in the context of a formal definition of five principles for the energy transition. We currently invest around 0.25% of our net available energy surplus into renewable energy generation capacity (this is the renewable energy investment ratio – "epsilon"). It needs to be increased to about 3% (an order of magnitude) for our energy systems to be able to provide for a 2000W per capita society at a global scale without crossing the IPCC carbon budget. (note that modern western life is consuming around 8000W per capita). If we do allow for unrestrained emissions then we still need to increase this rate to 1.5%.

Energy is a sine qua non for any self-organizing system and yet it features only in the margins of what passes for long-term planning of our societies. We have grown critically dependent on cheap, energy-dense fossil carbon but its price and climate externalities have been rising as we are nearing peak production. This necessitates a transition to renewable energy sources. This post addresses the implicit physical and financial requirements if this Sustainable Energy Transition (SET) is to happen as a result of a planned and seamless transformation; not forced upon our societies. More specifically, in Part 1 I present five principles (the three first are limiting and the latter two normative) that can be used as a guide for the transition. Based on the fourth principle, I demonstrate the need to increase the amount of investment in renewable energy resources globally by one order of magnitude to achieve a Sustainable Energy Transition within the IPCC carbon budget. Details of the assumptions and methodology can be found in Sgouridis & Csala 2014. In Part 2, starting from the fifth principle, I present a concept of an energy currency that could mobilize resources to achieve this target while better aligning the monetary system with the biosphere limits.

It is generally good to start with a definition to create the common basis for understanding and judging an idea. In this case, I will define SET (sustainable energy transition) as: 

a controlled process that leads an advanced, technical society to replace all major fossil fuel primary energy inputs with sustainably renewable resources while maintaining a sufficient final energy service level per capita.

As definitions are wont to be, it tries to capture a lot of concepts sinthetically. But the key words are “controlled”, “technical”, “all” and “sufficient”. The ideas conveyed indicate that the transition should be smooth and not associated with dramatic social dislocation (controlled). It should allow for society to at least maintain its technological capabilities (technical), and at the level of the individual meet a certain threshold of final energy availability (sufficient).

Knowing that the transition will be complete when practically all fossil fuels are replaced, we can backcast the evolution of the transition to the current energy situation. In this exercise, it is instructive to use an energy metabolism perspective focusing on the net energy availability. This way, an unambiguous and transparent picture emerges that pulls back the veil that economics placed in long range planning.

In order for this transition to be indeed “sustainable" we would need to concern ourselves with each of the three sustainability pillars (environmental, social, economic). Extending Daly’s ideas, we propose five principles that need to be met - de minimis - for a SET to be successful: 

I. The rate of pollution emissions is less than the ecosystem assimilative capacity.

II. Renewable energy generation does not exceed the long-run ecosystem carrying capacity nor irreparably compromises it.

III. Per capita available energy remains above the minimum level required to satisfy societal needs at any point during SET and without disruptive discontinuity in its rate of change.

IV. The investment rate for the installation of renewable generation and consumption capital stock is sufficient to create a sustainable long-term renewable energy supply before the non-renewable safely recoverable resource is exhausted.

V. Future consumption commitment (i.e. debt issuance) is coupled to and limited by future energy availability.

The first two principles address the environmental aspect (neither fossil nor renewables should impact the environment irreparably within a human generation). The third addresses the social aspect ensuring that (i) a minimum level of available energy is available, and (ii) the rate of change in energy availability is not so drastic that it creates breakdown of social support systems. A direct corollary of this is that a more equal society faces an easier SET task than an unequal one. Finally, the last two principles address economic sustainability (physical and financial). P-IV, a variant of the Hartwick rule in economic literature, ensures that the rate of investment in renewable energy is sufficient to compensate for the drawdown of the fossil fuel supply while, P-V makes the connection between debt issuance and the availability of energy to service that debt in the future (which is the subject of Part 2).

Viewed from a normative angle, the first three principles act as constraints of the transition function - the first gives an upper limit in the amount of fossil energy available, the second puts a limit in the amount of renewables that can be installed, the third provides a lower bound on the per capita energy availability (and of its first derivative during the transition). The latter two though are prescriptive and actionable - they offer a quantifiable approach to estimate the minimum energy investment in renewable energy and the maximum debt that can be extended for that level of investment. 

Focusing on the physical side, we can essentially create an equation that ties the renewable energy investment ratio (epsilon) to net societal energy availability which can be seen below (derivation in the paper and supplement):

This recursive equation can be solved numerically or analytically to establish the net power available under different assumptions for the value of epsilon. Below I provide, as a starting point of the discussion, a comparison of the evolution of future energy availability under the following scenarios. As typical of energy transitions (and to meet the discontinuity constraints of Principle III), we assume in the paper that it takes thirty years to change epsilon from its current value of around 0.25% (we actually assume 0.375% for this model) to the “target” value and simply compare energy availability with energy demand assuming that (a) population follows the UN mid-projections stabilizing at 9 billion by 2050, (b) per capita power demand converges to 2000W , and (c) the efficiency at which we convert primary to final energy improves by 25%. (the details on the assumptions regarding population are described in Sgouridis and Csala's paper).

Frying the Planet
Available Energy with No Carbon Cap Top: ε = 0.375 %, Bottom ε = 1.5 %.
Left: Breakdown by source. Right: Red line indicates Net Available Energy. Blue Line indicates where we need to be at a minimum 

50% chance of Slow Cooking the Planet
Available Energy with IPCC Carbon Cap Top: ε = 0.375 %, Bottom ε = 3.0 %.
Left: Breakdown by source. Right: Red line indicates Net Available Energy. Blue Line indicates where we need to be at a minimum

The results are starkly clear: if we allow fossil fuels to run their course frying the planet in the process, we will need to increase our rate of investment in renewables fourfold. If we decide to save the climate and adhere to the IPCC recommendations of no more than 3010 anthropogenic Gt CO2 in the atmosphere by 2100 for having a 50% chance of remaining below 2C by the end of the century (which, apropos, is still the moral equivalent of loading a revolver with three bullets and playing Russian roulette with our grandchildren) we need an eight-fold increase of the investment rate in renewables. Of course, there are key sensitive assumptions involved like the EROEI of renewables (in the scenarios shown starts at 20 and increases with installations) - readers are welcome to enter their own assumptions in our model - yet we believe that our choices are neither conservative nor aggressive and we intend to enhance the simulation’s resolution by disaggregating specific renewable energy technologies as we did for fossil fuels.

(*) Sgouris Sgouridis is Associate Professor at the Masdar Institute of Science and Technology (UAE). His research interests focus on understanding sustainable energy transitions using socio-technical systems modeling. He has been working on the energy currency concept, electric vehicle adoption, sustainable aviation, and local and global sustainable energy transitions. He initiated the development of the  Sustainable Bioenergy Research Consortium at MI and was a member of the Zayed Future Energy Prize review committee for the past four years. He holds a PhD in Engineering Systems (MIT-2007), MSc in Technology and Policy  and MSc in Transportation (MIT-2005) and a BS (Hons.) in Civil & Env. Engineering (1999-Aristotle University).


  1. Professor Bardi,
    A very timely area of research and an interesting model to explore. I look forward to the authors distinguishing various renewables, in particular low tech passive solar heating/cooling strategies in building, where I expect very long lifetimes (100+ years), low capital cost (compared to "indifferent "design of buildings), and very good EROEI values (60+) are possible.
    The graphics shown in this article, however, appear incorrect regarding the 1.5% epsilon, (having run that scenario).
    Enjoy your blog very much, Regards, Robert Beckett

  2. Mr. Beckett’s suggestion, that the next step in our approach is to disaggregate the renewable energy options by sectoral use is definitely spot on. Of course, passive building technologies with low EROEI are excellent options but they can only cover a portion of energy needs even if fully deployed.

    Btw, having crosschecked the graphics as they are generated by the online model they appear correct – in order to replicate the 1.5% graph, the user needs to un-select the CO2-cap and maintain the original values for EROEI_0 and lifetime (20 and 20 years). The graph should be produced exactly as shown in the post. If a mismatch persists, please let us know.

    Thank you for your interest and for trying out the online tool! Best regards, Sgouris Sgouridis

  3. Hello Sgouris,

    I very much like your post above and the ideas and plans that it presents but I wanted to ask you two questions which I think relate closely to it (with two parts each) :

    1) Assuming that an SET to renewable energies (and away from fossil fuels) could be accomplished along the lines (both qualitative and quantitive) which you describe above, do you consider that this would: a) allow humanity to avoid runaway global warming and climate change; and b) also solve or significantly address the range of other serious environmental problems that exist and that are continually worsening, which humanity also faces? (e.g. depletion or exhaustion of various renewable and non renewable resources, and many others too many to mention)


    2) how do you see the SET which you describe above practically taking place in terms of: a) the key actors or actor groupings which will be designing and implementing the actual transition and b) the financial institutions or governments which will finance the overall transition project or programme?

    And related to this, when would the transition begin (and at whose initiative) and by when might it be completed and how will it be sustained through to completion once it starts?

    I realize that the above are difficult quite questions to answer properly (and particularly ex ante) and I am not asking them to try to belittle indirectly the valuable work that you have done which I do think is important and COULD be very valuable.

    But I think it can only be ultimately valuable if what is explicitly or tacitly wished to be achieved, can indeed be realized. Which is why I think my questions also are important. So I think that either you or some other persons or institutions or groups, should be working on their answers too.

    best regards,

    Max Iacono

  4. Dear Professor Bardi,

    I think the work presented here and in the article "A Framework for Defining Sustainable Energy Transitions: Principles, Dynamics, and Implications", by Sgouris Sgouridis and Denes Csala, is truly extraordinary and will lead a before and after in research on sustainable energy transitions. So, congratulations!

    The work not only defines a Sustainable Energy Transition, but also represents a true full model of the (closed) economy of the world. It implements masterfully the ideas of J.Forrester, D.H. Meadows and H. E. Deally, in a program that can be used to make predictions with different values ​​of the parameters and number of virtual experiments to answer questions "what happens if ...?"

    I am testing the model (using AnyLogic) to do my simulations, changing the values ​​of the parameters and I studying the excellent references provided in the article.

    By the way I mean that I agree with Sgouris in that the graphics shown in this article, regarding the 1.5% epsilon (Robert Beckett comment), is correct.

    I believe that the strategy of the sower (seeding now if you want to eat next year) should be seriously considered not only by oil traders but also by other manufacturers whose products use petroleum energy, such as car manufacturers. It seems that something starts moving in that direction, if for instance we look at the recent consortium Tesla-Motors + Toyota + BMW => Tesla's $5B gigafactory, to mass produce electric cars, including batteries and solar chargers. They still make little money selling electric cars but leveraging what they have saved, are sowing for the future.

    It is noteworthy that, after the near failure of previous attempts to manufacture cheap electric cars (for the poor), the Tesla-Motors idea is to produce an expensive car (for the rich). I think this strategy is based on using the feeling of envy, primitive to humans and widely used for ads today on TV, to sell fashion, cars, etc, and it is not new, but was already used by Henry Ford to design the car chain manufacturing. Now (like in the 20s) one can say: "I am buying a Tesla Model S (Ford T) because my neighbor, who is richer than me, has bought one, I do not care to be expensive"

    Returning to the article of SS, I think that researchers in a number of fields related to renewable energy have here an excellent instrument to support and guide their investigations. I would encourage all those people to participate in this or other blogs devoted to the SET subject.

    Kind regards, Jose


  6. The race is on to build the fastest, most powerful, most sophisticated computers ever imagined.

  7. We allow fossil fuels to run their course frying the planet in the process, we will need to increase our rate of investment in renewables fourfold.

    Renewable Energy Company DFW

  8. Although the fuel is massively valuable, enormously very useful, and hugely important Geo-politically, it can tackle global warming.

  9. This is a very interesting article - thanks for posting it. I am personally very interested in sustainable energy and am currently looking at several options for my home with the renewable energy company Isoenergy and also with leading home energy efficiency company Instagroup.



Ugo Bardi is a member of the Club of Rome, faculty member of the University of Florence, and the author of "Extracted" (Chelsea Green 2014), "The Seneca Effect" (Springer 2017), and Before the Collapse (Springer 2019)