The realities of energy. Book#82

When I heard a few years ago that Vaclav Smil is one of the few fact-focused-observators-of-the-world that Bill Gates has a high opinion of, I got curious. I added all his books to my “to read” list. This one, was the second I went through : Energy, a bigginners guide. I’ll be honest, it wasn’t an easy read. Yet I found it a great reminder that our ability to harness energy is what made our world and our civilisation as we know it. And that made me want to learn more. I found this great video talk on youtube, (see at the bottom of this article) and that was more digestable.

The takeaway is that the western world takes cheap energy for granted. It assumes that technologists will find a solution to make it less polluting and to keep it cheap forever. The problem is that, it is not a trivial issue. And there is no imminent solution to it. Renewables receive a lot of media attention, but the truth is that they are far from being able to replace fossil energy.

Here are some facts and thoughts that I found interesting.

1. We are a fossil fuel civilisation. In 1990, 90 % of planet’s primary energy came from fossil. And in 2015 still 87% of the planet’s primary energy came from fossil. Ie: only 13% of global energy supply comes from non fossil. 7% from nuclear, then 4% from hydro, then 2%-ish from new renewables.
2. We shall remain so for a long time to come, because energy transitions take time. Coal went from 5% of global energy supply to 25% in 35 years. Oil went from 5% of global energy supply to 25% in 40 years. Natural Gaz went from 5% of global energy supply to 25% in 55 years. Scale and complexity is increasing so energy transitions take longer.
3. Power density matters. Oil is the highest density fuel, and hence it has given us immense mobility. Demand is not about to fall. Cheap travel, even in Europe, is taken for granted. Europeans are now flying more per capita than Americans. Wait until 200 mio chinese tourists start travelling at the same pace.
4. It is always better to use energy rationally that to come up with new ways to use it. Yet, the average weight of cars has been ever increasing in the past 40 years. An average european car now weights 1.4 mt vs almost half that 40 years ago. We are making more efficient engines but we are also building bigger vehicles that are ever more enegry consumming. And the components of these vehicles contains ever more embedded energy in their fabrication. To produce 1 metric ton of steel one needs 30 Giga Joules of energy, for 1 metric ton of plastic one needs about 110 Giga Joules of energy and for 1 metric ton of aluminium one needs about 200 Giga Joules of energy.
5. Innovation is overvalued. We are still in the world of 1880s. It is taken for granted that the 18th century was the century of wood, the 19th century that of coal and the 20th century that of oil. It is partly wrong. The 19th century was also the century of wood. France tipped into coal as its primary source of energy only in 1870, the US only in 1884, Japan only in 1901, and China only in 1970. The importance of coal in the global energy supply mix has increased drastically in the last 25 years because of China.
6. Renewables are overrated. First because of their downtime. What’s the average downtime of a nuclear plant? 5%, a coal plant? 20%, a wind turbine? 70% (the wind does not always blow), a solar panel? 80% (the sun does not always shine). Second because of their life cycle. What’s the average life of a wind farm? 15-20 years ? a nuclear plant: 50–60 years?
7. Nuclear was a promising source of energy for the future but series of accidents have changed the public’s perception. No developped country today in the west has been building new nuclear plants in the last 25 years. The only ones doing so are North and South Korea, Iran, India, Russia, and China. It is only a matter of time until a massive accident occurs again.
8. Solar is probably the best option for the world, but not at current productivity rates. Here is a simple rule of thumb according to him: on average big cities consume 100 watts per square meter. Since, solar productivity is on average 30 watts per square meter, one would need solar plants with surfaces 3 times those of cities to accomodate the energy needs. And transporting electricity over very long distances has very high costs and technical challenges too. These are interesting points that I’d like to dig deeper into.

His conclusion is that until solar productivitiy rates double, global warming can only be tackled by increasings taxes on energy consumption.

I keep thinking about one of Bill Gates’s latest concern about the world : “We need an energy miracle”. I find it very true in many way.

Why is it an important topic ?

“Because things we worry about do tend to get solved. While things we don’t worry about, eventually catch up with us.” Vaclav Smil.

I also agree with his last points. Besides the environmental risks for the world, more attention should also be given to i) the risks of water scarcity in big nations, ii) the risks caused by money printing in the west, and iii) the risks of youth unemployment.

Inspiring.

My purpose in life is independence, fulfillment and a better understanding of how the world works. Like Charlie Munger, I believe in the discipline of mastering the best that other people have ever figured out. And like Sir Isaac Newton, I believe in our ability to see further than any others before us by acknowledging that we are standing on the shoulders of giants. With this blog, I hope to keep track of my learning about investing, business, decision making, entrepreneurship, and self-development while inspiring others to do the same. For the moment the format of this blog will be one post for each book that has influenced me, but I expect it to evolve over time. This is book number 82 of my journey. Join me now. John.