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Let’s talk CROCI

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The one thing that green campaigners share with economists is (with a few notable exceptions) complete blindness to energy.  This may seem an odd claim, given that most green campaigners spend their waking hours arguing for a shift from one source of energy – fossil fuels – to another – renewables.  Dig beneath this veneer, though, and it is obvious enough that the majority of green campaigners have given little thought to the enormous value that fossil fuels have generated since the dawn of the industrial age.

By “value,” I don’t just mean the various financial chicaneries which dominate most contemporary debates about the economy.  Rather, I mean just about everything that we are able to do in a modern and largely urbanised society.  The fact that I am able to write – and you are able to read – this simple post, depends on the burning of vast quantities of fossil fuels in data centres, in delivery trucks that keep replacement parts flowing, in the various machinery and vans that allow maintenance to take place, and in the factories, refineries and mines that provide the components and the raw materials.  Less obviously, without industrialised agriculture and transportation, neither you nor I would have been able to eat; leaving us with little time or energy to read or write posts.  In short, energy determines everything that we do… and yet we treat energy as just another low-cost input to our daily lives.

The reason is simple enough.  We pay only the cost of producing fuels and generating electricity and heat, not the equivalent of the value that they deliver to us.  Moreover, we take no account of the environmental costs associated with the burning of fossil fuels or, indeed, of the manufacturing of solar panels and wind turbines.  Since most of the manufacturing these days takes place in someone else’s country – usually in Asia – we treat the pollution as someone else’s problem.  We, on the other hand, can virtue signal our green credentials by erecting non-renewable renewable energy-harvesting technologies in the pretence that this is doing something to wean the global industrial economy off fossil fuels.

One consequence is that national politicians and campaigners can make wildly inflated promises about how some kind of “green new deal” or “fourth industrial revolution” is going to usher in a new round of “clean” growth and prosperity.  The reality though, is that the world is no less dependent upon fossil fuels today than it was twenty years ago.  Massive subsidised investment in modern renewable energy technologies (i.e. excluding hydroelectric and wood burning) has carved out a four to five percent share (depending upon how reliable you think Chinese data is) of global primary energy.  But this energy has been added to the global mix rather than substituting for the fossil fuels we are supposed to be turning our backs on.

The blithe assumption is that we just need our politicians to subsidise and invest even harder so that we can multiply that renewables base twenty-fold in order to finally dispense with fossil fuels.  But that would only work if we were prepared to give up all economic growth, since without additional energy input the real economy cannot grow; and while this might be covered by growth in the financial sectors of the economy, the debt we have already accumulated means that the mother of all reckonings awaits us long before we get around to de-carbonising the economy.  So maybe we need to multiply our renewable energy forty-fold in order both to maintain growth at a level high enough to service the debt and to replace fossil fuels.  This though, comes with show-stoppers of its own.

In the same way as economists down the ages have simply assumed that we can treat Planet Earth like a sewer without consequence, so they also take for granted that raw materials will always be available in quantities and at a price that we require.  But we “civilised” humans have learned nothing since our hunting and gathering ancestors wiped out the large mammals on every new continent they migrated into.  As with woolly mammoths, we used up all of the cheap and easy mineral deposits so that we now find ourselves exploiting ores containing tiny fractions of the metals we need.  This, in turn, requires us to redirect ever more of the energy available to us to powdering and smelting those ores or, in the case of copper and aluminium, to recycling the metal we have already produced.  In a letter to the UK’s Committee on Climate Change last year, a group of scientists at Britain’s National History Museum set out the material limitations on the various “green” pledges that were being made:

“The urgent need to cut CO2 emissions to secure the future of our planet is clear, but there are huge implications for our natural resources not only to produce green technologies like electric cars but keep them charged.

“Over the next few decades, global supply of raw materials must drastically change to accommodate not just the UK’s transformation to a low carbon economy, but the whole world’s. Our role as scientists is to provide the evidence for how best to move towards a zero-carbon economy – society needs to understand that there is a raw material cost of going green and that both new research and investment is urgently needed for us to evaluate new ways to source these. This may include potentially considering sources much closer to where the metals are to be used.”

For example:

“The metal resource needed to make all cars and vans electric by 2050 and all sales to be purely battery electric by 2035. To replace all UK-based vehicles today with electric vehicles (not including the LGV and HGV fleets), assuming they use the most resource-frugal next-generation NMC 811 batteries, would take 207,900 tonnes of cobalt, 264,600 tonnes of lithium carbonate (LCE), at least 7,200 tonnes of neodymium and dysprosium, in addition to 2,362,500 tonnes of copper. This represents, just under two times the total annual world cobalt production, nearly the entire world production of neodymium, three quarters the world’s lithium production and at least half of the world’s copper production during 2018. Even ensuring the annual supply of electric vehicles only, from 2035 as pledged, will require the UK to annually import the equivalent of the entire annual cobalt needs of European industry.

“The worldwide impact: If this analysis is extrapolated to the currently projected estimate of two billion cars worldwide, based on 2018 figures, annual production would have to increase for neodymium and dysprosium by 70%, copper output would need to more than double and cobalt output would need to increase at least three and a half times for the entire period from now until 2050 to satisfy the demand.”

A “green industrial revolution” is no different to any other form of industrial revolution in its voracious consumption of what remains of Planet Earth.  And insofar as it is primarily the still – for now – solvent western states which will benefit, it should more properly be regarded as the final act of imperialism rather than a genuine effort to decarbonise the economy.  Not least because the additional energy to allow the massive increases in mineral extraction and refinement envisaged has to come from somewhere, and it isn’t going to be from wind turbines and solar panels for much the same reason.

Although for all practical purposes sunlight, wind, tide, waves and geothermal are renewable (biofuels are not once they are used at scale) the technologies that we use to harvest the energy from them are not.  The steel, concrete, glass, refined silicone, plastics and rare metals required to manufacture them all depend upon fossil fuels.  Extracting and transporting these raw materials to the factory also requires burning the most polluting bunker fuel on ships that move materials and parts from one continent to another.  And then there is the transportation and installation, which requires even more shipping and trucking together with heavy lifting equipment in the final installation.  Consider this calculation of the distances involved just to transport the components of wind turbines to a wind farm construction site in New South Wales:

“The 65m long (2/3 the length of a football field) blades were individually trucked 530km from Port Adelaide in South Australia to Silverton, NSW, near Broken Hill….  that’s three trips adding up to nearly 1600km or a thousand miles for you American readers…. and I bet they weren’t cruising at normal highway speed either, almost certainly worsening fuel consumption. And I almost forgot the many pilot and escort vehicles per convoy.

“Worse, a new road was built to bypass Broken Hill and avoid some roundabouts.  Now I realise the cost, both financial and environmental, of the road will be amortised over the total 58 turbines planned for this site, but all the same; it takes a lot of fossil fuels to build roads… especially that far from civilisation.

“’There will be relatively constant deliveries from the start of the new year all the way through to about May’ states the ABC News website. If all the bits have to be trucked that far, three blades, a tower in at least two pieces, the nacelle (assuming it can be trucked in one piece), and god knows what else, I make it out to be almost 185,000km of truck miles, not counting getting cranes and reinforcing steel and concrete there. Oh and did I mention the trucks had to go back from where they came…?  Make that 370,000km or more than nine times around the Earth… or almost the distance from the Earth to the Moon.”

In the emerging energy-based economics, various projects are evaluated in terms of the difference between the energy that has to be invested and the energy generated.  This is expressed as Energy Return on Investment (EROI) Energy Return on Energy Invested (EROEI) or the Energy Cost of Energy (ECOE).  While there is considerable disagreement about how these are measured, the basic proposition is that the closer the ratio gets to 1:1, the less worthwhile the investment is.  Perhaps the most important consideration is what ratio is required to maintain a functioning industrialised economy?  The answer is somewhere between 15:1 and 20:1 – which is roughly the ratio for modern wind turbines at the turbine.

Critics of EROI calculations – myself included – argue that the only calculation which makes sense is of the energy return at the point of use.  The number of barrels of oil equivalent required by a drilling company to produce a barrel of oil at the wellhead may be of use to them when making investment decisions.  But it is the energy cost of the petrol (gasoline) and diesel at the filling station that matters to the wider economy.  In the same way, technicians may need to know how much electricity a wind turbine generates, but what matters to the economy is the availability of firm (i.e. 24/7/365) electricity at the socket – something which generally requires nuclear baseload backed up with gas and occasionally coal power.  In other words, the true EROI of a wind turbine is likely to be a lot less than that required to maintain a functioning industrial economy.

Unfortunately, these energy considerations attract little attention beyond the handful of small online forums which get exercised with such matters.  Insofar as there is a public debate at all – and most people simply assume clever people somewhere else are dealing with it – the focus is upon carbon dioxide emissions rather than energy costs.  And while energy has some impact on the debate, even the cleverest of the clever people charged with finding a solution tend to assume that we can simply unplug the fossil fuels and plug in new renewables without skipping a beat.

Clearly a related measure is required when discussing energy with people whose primary focus is on greenhouse gases.  This is why I am grateful to my correspondent Noel Wilson, who responded to my Failing to square the circle post with this response:

“We need a new acronym for measuring and comparing carbon drawdown technologies. CROCI. Carbon Reduced On Carbon Invested. Next time someone comes up with a scheme, ask what’s the CROCI?”

This is particularly important when evaluating some of the crackpot schemes on offer from members of the UK government.  Given that even senior government officials treat technology as if it has no material, energy or carbon inputs, having to consider the carbon (and carbon equivalent) costs of all of the manufacturing, transportation and maintenance might at least cause some second thoughts.

Interestingly, CROCI also throws up some considerations which might otherwise be overlooked even in the energy-based economics field.  For example, much of the discussion around non-renewable renewable energy-harvesting technologies concerns their relative efficiency.  Early criticism of the energy return on solar panels and wind turbines is considered invalid in some quarters because the technology has improved in the course of the last twenty years.  This said, there are hard limits to efficiency, and these are now late-stage technologies; so further improvement is likely to come at a high cost.  This though, obscures a more devastating problem when we think in terms of CROCI.  Carbon reduction is itself a moving feast.  While less efficient, the first solar panels and wind turbines were exclusively reducing coal emissions – and even then, not to the point that coal power plants could be shut down.  In developed states like the UK and some states in the USA, by 2020 a large part of the coal infrastructure had been closed; meaning that renewables have already had their maximum carbon reduction impact (except in Germany where Merkel took the insane decision to keep burning coal in order to shut down – low carbon – nuclear).  Going forward, wind and solar will increasingly be replacing gas power plants which produce around half the carbon generated by coal.  In other words, the CROCI of renewables has fallen by half despite the increased efficiency of the technology itself.

This is in line with one of my bugbears – that after a certain penetration, adding more intermittent technologies serves to destabilise the electricity grid.  It might well be that the best approach – both in CROCI and grid stability terms – would be a “halt after coal” approach.  That is, once – as is now the case in the UK – renewable energy has eradicated coal generation, investment in more non-renewable renewable energy technologies should cease until the baseload and energy storage issues have been solved.  In the meantime, we can get a bigger CROCI for our buck by investing in energy reduction schemes such as relocalising food production, home insulation and more remote working.

As you made it to the end…

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