The Global Energy Footprint — and the transition to Net Zero
A perspective on tech aiding the resource input for the next phase of growth
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This research originated from a larger inquiry about the past and recent periods of growth and the study of the competitive input factors that enabled them. Our curiosity to define patterns of the previous waves of growth and whether they can remain immutable for future waves — led to the below careful overview of the global energy footprint — and the trends that both reinforce it — as well as rebuild it.
We looked both at the sources of energy being generated and the resilience of the transmission networks and consumption networks used to transport it. We studied key emerging paths to compensate for the cost that carbon-heavy means of energy production have — and tried to provide a basic overview as to what technologies and approaches can ameliorate the colossal cost of carbon offset in the energy production and transmission framework.
On the ability to generate, transmit and put to use the volumnous energy from ample deposits of fuel or motions of wind, water or — depends the modern industrialised world.
Modern energy footprint is the result of the formed production system and the current streams powering global growth.
Where coal, contrary to original concepts of historians, probably didn’t contribute that much to the industrial production in 18th century, (Coal and the Industrial Revolution, 1700-1869. // European Review of Economic History) it did provide input for urbanisation.
Coal and the European Industrial Revolution
Founded in 1920, the NBER is a private, non-profit, non-partisan organization dedicated to conducting economic research…
“the introduction of the coal-using technologies of the Industrial Revolution can account for around 60% of European urban growth between 1750 and 1900, even when controlling for period and country-period fixed effects; that is to say, after controlling for the general rise in Europe’s urban population during this period, as well as for any country-specific factors influencing national urban growth over time”. — NBER.
Quoting the legendary business history professor, Alfred Chandler Jr.: “Of all the technological constraints, the lack of coal was probably the most significant in holding back the spread of the factory in the United States” (P. 76. The Visible Hand: Managerial Revolution in American Business).
Before the mid-1830s, when anthracite coal from Appalachian mountains became available in quantity for industrial purposes, nearly all production was carried on in small shops or at home. American manufacturing was still seasonal and rural.
Coal unshackled the industry — and stimulated both the formation of centralised large-scale manufacturing — and innovation around mass production and forming the durable logistical networks (railroads). (Chandler, Alfred D. “Anthracite Coal and the Beginnings of the Industrial Revolution in the United States.” The Business History Review, vol. 46, no. 2, 1972, pp. 141–81. JSTOR).
Railroads further accelerated trends around mass production and development of sophisticated supply chains — as well as engineering schools to both manage the production and distribution networks — and assisted in the formation of a managerial class.
Coal still powers the world: It’s also a principal agent of CO2.
The manufacturing hub that China has built — following gradual opening during Deng Xiaping policies in mid 70ies and the build-up of manufacturnig cities after long decades of agricultural experiments — made China consume enormous swaths of coal, both from substantial internal deposits and importing from Australia and Russia among other places. Yet the massive generation drive of electricity to power industry “only” started in China after its formal admission in WTO in December 2001.
The United States found cheaper alternative to coal in shale gas — thus pushing coal share of power generation further down. Where some this to energy reforms during Obama Administration, a multitude of factors including retiring old coal-fired plants, more stringent regulations on emissions and availability of modern generation methods that can provide better return on capital investment were at play.
“Coal has served the country well. It fueled dramatic increases in electricity demand in the 1950s and 1960s. It was there for us when oil prices skyrocketed in the 1970s.” (What is Killing the US Coal Industry // Stanford Institute for Economic Policy Research).
To the earlier point of China becoming the coal-powered manufacturing plant of the world — one can look at the share of electrical power generated by China vs US — and the rest of the world.
Notwithstanding China leading in terms of share of global electricity generated by other means — 35% of global generation by wind and 30% of global output by hydro — it continues to deploy coal — using Russia for cheap(er) supplies of these fossils due to Russian exports now being “marginalised”.
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China is also concerned with effects climate change has on hydro — instances of sever droughts impacting hydro generation — and that of nuclear-power generation (where water is used for cooling).
These very effects already led to a electricity deficit in France, its first in the last 42 years. The mandate for clean renewables power — to ameliorate the carbon effect on the global environment — now faces strong headwinds of unpredictable events:
- The world is getting hotter — and while it has a “positive” effect in term of warmer winters when countries need to use energy for heating, the world is up for unprecedented and more frequent heatwaves — hence the need for cooling.
- Climatic effects dampen efficiency of renewables: periods of “dunkelflaute” bring gloom for photovoltaics and doldrums for wind turbines.
Energy supply shocks from cutting off fossil supplies from Russia (deficit coinciding with summer events and spot market prices squeezed by inadequate supply) have accelerated the implementation of a renewables rollout across the EU.
Premiums on catastrophe reinsurance are spiking.
Asset managers behind insurers empasize the need to offset the impact of carbon — both focussing portfolio management on the components participating in the rebuild of the supply and demand sides of electric energy — delving in lithium mining and battery production.
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Countries commit not just to power batteries and subsidisation of EVs, but generate clean power across the chain — starting with generation.
Approach to Net Zero requires 1s with many zeroes — each year.
It means not just building more renewable power generation, it means implementing a wide variety of current and next-generation technologies to capture, conserve carbon, as well as improve methods of transportation and efficiency of power transmission.
Build-up of renewables alone — stimulated by subsidies does not equate to them coming online — there is a massive and growing queu of new and depreciating generation capacity — worth trillions of USD — not connected to the grid.
Grid connection requests grow by 40% in 2022 as clean energy surges, despite backlogs and…
The amount of new power generation and energy storage in the transmission interconnection queues across the U.S…
“In total, over 1,250 GW of zero-carbon generating capacity [in the US] is currently seeking transmission access. Solar (947 GW) accounts for the largest share of generation capacity in the queues. Substantial wind (300 GW) capacity is also seeking interconnection, 38% of which is for offshore projects (113 GW).
Solar and battery storage are — by far — the fastest growing resources in the queues. Combined, they account for over 80% of new capacity entering the queues in 2022.”
The grid itself requires investment: it was primed to accommodate stable power input from fossil fuels and has to become compatible with variable power input from renewables.
According to one estimate from Energy Transitions Commission, power networks would require annual investment of ca. 1 trillion USD per year until 2050. Total investment gauged by McKinsey Global Institute puts the bill including organisational changes and offsets higher still.
There are sizeable gains to be had from efficiency improvements from the grid, aside from capital investment in new generation. The investment would follow the framework of reorganising production global chains. Power input, its availability, cost and resilience of the network will be another competitive advantage factor for countries and regions.