It is reliably reported that capacity utilisation in the oil industry stands at over 99% and furthermore that stocks have been run down to half in the previous 6 months (Barclays commodities).

These issues have been brought together in a recent article in Nature which concluded that the global oil industry has been unable to respond to increases in demand, and has been in this condition for 5 years.

Demand for energy continues to surge.  At the stage of development that China and India are at, and that is quite different (China’s GDP is $7.31 trillion, whereas India’s is $1.84) demand for energy usually comes in at twice the annual growth rate in GDP.  Growth in China is running at near 10% whereas India is almost 8%.  35% of the world’s population lives in these two countries.  A crude calculation indicates that their energy demand would double every 5 to 6 years if it could.  For a variety of reasons this cannot happen.  The oil to allow this isn’t there.  Coal is nominally plentiful.  However the methodology for estimating coal reserves has been challenged and some recent reports are casting doubts on the amount of coal available in the Earth’s crust.  There is gas for now, but one would like to see an independent source give an objective measure of recoverable reserves. 

The only accurate price signal is that relating to oil.  It would do national and continental (Blocks such as EU, India, US, and China) political economists well to heed this signal, and to plan their energy strategies carefully. 

I like to pose this question “is it a coincidence that of the 11 recessions in the US since the Second World War, 10 were preceded by an oil price spike?”  Energy is the primary input into economic growth.  It wasn’t identified as such throughout the industrial revolutions, simply because fossil energy was so prevalent in the earth’s crust.  It was cheap.  So cheap in fact, that when the  Shah of Iran, at the funeral of President Eisenhower in 1969 offered President Nixon a 10 year contract for oil at $1 per barrel, Henry Kissinger reported that  Nixon refused the offer because he, and every oil economist  thought that the price would fall well below this figure over the course of the coming 10 years.  Today most commentators still live in this misplaced cocoon. 

Part of the reason for this overconfidence in the supply of fossils is the fear factor.  What will happen in a world without the energy that got us here?  Another reason for the overconfidence in fossil supply is the attitude of the oil and gas companies.  They know that at elevated prices drilling for smaller quantities of oil in deep offshore is economically justifiable.   They also know that drilling in environmentally sensitive areas would now be hugely profitable, and gets to be worth the effort and public opprobrium.  They reassure policy makers and the general public that further drilling will stabilise prices.  If one looks at most market projections it can be seen that their propaganda is winning.

There has been alot of debate in recent years about peak oil.  It has been immensely reassuring  to those of us who believe the market has its price right, that the leaders in the peak oil debate were always the geologists.  Better than oil company marketing executives or indeed anyone else they are familiar with the geological science underpinning oil well performance and output.  They coined the term and lead the peak oil debate.

The net outcome of the above is that we have a full throttle energy crisis on our hands. How will ever scarcer energy resources be allocated between the advanced economies and the emerging ones?  Does any plan exist for this eventuality?

Groucho Marx said “I would not want to be a member of a club that had somebody like me as a member”.

The crisis in the Euro is affecting every European country.  Unlike the previous downturn in 2009, when the world relied on emerging markets to create growth there appears to be contagion now.  Emerging markets have seen their currencies slide and their growth begin to falter.  This is not entirely due to the Euro woes as China for instance is engaging in an internal correction process which was spelled out in the 12th five year plan.

If European Governments were not motivated enough by internal (to Europe) concerns then the prospect of causing a worldwide recession should get the heads up and doing.

There has been much debate about what is wrong and it has taken me time to internalise all the sometimes conflicting theories.

We have a single currency in seventeen countries.  These countries are united in having a common legislative framework; and in having free movement of goods, capital and labour.  More importantly these countries along with the Non Euro members of the EU have a vast disputers resolution methodology that has evolved out of the ruins of World War 2 and been forged by a collective will since.

The EU is the world’s largest market and it faces a crisis which was described by Mrs Merkel at the CDU Conference as “the toughest since the Second World War”. 

She then went on to say “that the task of our generation is to complete economic and monetary union and build political union in Europe – step by step”.

This is very helpful talk.

Currently we have one currency in seventeen different cultural entities.  Countries,  that have different histories, traditions, languages and expectation from life.  Very like the United States, I hear you say.  Certainly from the Bible Belt Tea Party culture to the Kyoto Treaty creators in Washington and from Silicon Valley  to Memphis Tennessee we observe almost as much diversity as there is in the E.U.

But the U.S. has a central bank, the Federal reserve and it is in charge of monetary policy.  Also a tough set of economic rules governing how States pay for their internal services.

We in Europe do not have a properly funded or even agreed central bank.  We have little financial ability to respond to the kind of banking crisis which now engulfs us.

Perhaps more importantly we in the Eurozone are a club with no rules; rules with sanctions.

I am particularly interested in the imagery used by Mrs. Merkel at the CDU Conference. She is the first German leader I remember who referred to World War 2 at all. It must be a painful race memory to invoke.  I know exactly why she did it and here is my take on it.

The changes facing us all in Europe are as profound as they are necessary.  They are certain to involve a further loss of sovereignty.  For us in Ireland this has been one of the central themes in the debate we have had on every treaty referendum.  At the finish of every great debate we decided that loss of sovereignty was a reasonable trade off to pay for the benefits that always flowed.  Whether it was the CAP in the 1970s, the access to EU markets that encouraged 56 multinationals to locate here, or the single currency with its low interest rate, every change led to greater wealth and a higher standard of living for our citizens.

I do not believe that the German citizen ever saw or had to contemplate a loss of sovereignty up until now.  It was all upside for them.  Open access to a barrier free Europe meant more wealth for German business and citizen.  No intense debate happened at referendum time because there were no referenda.  To be sure the German economy paid to modernise Ireland and the other poorer nations but every investment had an eight month payback period to the German economy.

Now Germany is faced with this issue:  We are creating an entity where Greeks, Irish, Maltese, Portuguese are our equal.  It is as plain as the nose on a face that German people are better organised, more disciplined, more environmentally aware, more profoundly industrialised than the rest of us.

So one begins to see the issues Mrs. Merkel face, seen through German eyes.

•    A German sees that the EU as absolutely necessary to their continued societal and business success.
•    To allow this to happen however Germany is going to have to start paying more.
•    More importantly Germany cannot maintain an open Europe without sharing its sovereignty with the rest of us who are not as well organised.  I imagine it would be for the majority of Germans like asking New England in US to join with Georgia and Louisiana today (assuming the US was a collection of regions).

Another issue which Mrs. Merkel and all Europe faces is that of compliance.  In the context of there being a strong central bank, there needs to be absolute agreement on the sanctions that will apply to a nation state that does not comply with budgetary and broader financial criteria.

One has to agree with Mrs. Merkel’s central thesis.  We in Europe need to move toward more political harmony.

If we are to enjoy the stability of economic growth and low interest rates that being linked to the German economy we face serious changes.  Straight up we need to address the democratic deficit.  One big change is the need for a far stronger and more power European Parliament.  In this regard the US model suggests itself.  A House and a Senate.  Two persons would come from each nation state and members of the House would be present in proportion to the populations.

The Parliament would be responsible for a federal European budget with each nation remaining responsible for its internal budget.  The big difference from what exists currently are the rules about what financial scope each nation has to run up deficits.  There would have to be strict guidelines about the risks that each national government was undertaking.

Of course the Federal EU budget would have to be much bigger than it is today.
It would deal with the big common issues:
•    Energy
•    Defence
•    Innovation
•    Common transportation
•    External relations
•    Fisheries
•    Agriculture.

In passing it is important to point out that Ireland for instance would be able to retain its manufacturing tax rate of 12.5%.  It is clear that if Ireland were to lose this tax the industries so affected would not go to France, Germany, the UK or indeed anywhere in Europe.  They would go to India, Bangladesh, or Vietnam.  Europe would be left with a lot of unemployed people which one way or another would decrease the wealth of the EU.
Wealth as expressed in currency value, employment, business startup rate, productivity, etc would be the sum of all the nations which have the Euro as the currency.  A reduction in any state would mean a reduction for everyone.  If we got the alignment right then all states contribute and see life in this way.

In a world where globalisation is advancing by the day, all European member states need one another to compete.

Think coal fired generation for instance:

• Sulphur oxides and nitrogen oxides are almost always produced. They are put up into the atmosphere whence they fall in dissolved acidic form in rain. They deteriorate surface water by acidifying it. Most coal fired plant owners do not pay for the pollution damage.
• Cadmium, chromium, and other heavy metals are deposited into the environment around coal fired power stations. The damage to health is paid for by the State or the families affected, not by the owners.
• Unburnt carbon rises into the high atmosphere and gets deposited a long way from the coal plant. Due to this mechanism the glaciers in the Himalayas are getting blacker. Instead of reflecting radiation from the sun, these black spots absorb it and cause the glacier to melt. It may take one or two centuries to do away with the glaciers but then maybe the great river systems that sustain China will have dramatically changed as a result. These effects will be paid for by the then current generation of Chinese inhabitants.
• Every tonne of coal produced releases 3.1 tonnes of CO2 when burned. Tyndell proved the greenhouse effect 2 centuries ago, pointing out how without it human life on this planet would not have been possible. We humans have elevated the CO2 content of the atmosphere 40% above the level at which it had existed for 800,000 years. The atmosphere is heating up and nobody is sure if we can contain this temperature rise. Lord Stern has proposed that all governments spend 1% of GDP making the transition to zero carbon now. He has calculated that it will cost much more if we wait for our children to do it.
• Many coal fired operations are inland and use is made of fresh water in the steam cycle as well as in the condensing of process steam. Depending on the country and on the method of condensation the costs of water can be significant

So coal fired generation is subsidised, but perhaps not in the way that one normally thinks about subsidies.

What about gas?

• Gas is subsidised in many ways including tax breaks for exploration. A new and interesting subsidy exists in the USA. Gas exploration underground is not subject to environmental impact assessment. Thus by comparison with any surface based form of fuel exploitation, gas is in effect subsidised. Environmental impact assessments cost, a lot. They always involve the expenditure of high risk capital. They cost time as well, in many cases 2 years are spent studying birds, bats, visual impacts etc.
• Of course gas is a fossil fuel. It produces nitrous oxides just like coal. It also produces CO2. For every tome of gas burned 2.8 tonnes of CO2 is produced.

Nuclear is a special case, being the oldest of fossil fuels

• The great thing about nuclear is that when it is fissioned to make electricity there is no CO2 released into the atmosphere. The other great thing about it is the fuel, which despite the huge expense involved in producing it, contributes very little to the cost of generated electricity.
• The generation process does however produce plutonium, strontium, cesium, and iodine, in their radioactive forms. Plutonium is a real beauty. I once read that an orange of plutonium equally distributed across the globe would kill all life…..just from its toxicity.
• This is an unrealistic and maybe irrelevant statistic. What is not irrelevant is the fact that these are radioactive elements, and 3 of them are identical to what the body needs to function properly. Iodine plays an important role in the thyroid gland. Cesium and Strontium are similar to calcium, for which they are able to substitute in our bones. These latter two, in their radioactive form, have a half life of approx 30 years. They have to be stored for at least that period after the nuclear reactor has finished making electricity. Someone has to pay for this. In fact it is usual for States to pay for this. Most nuclear plant insurance comes with a state guarantee, or else it could not be afforded. If anything goes seriously wrong with a nuclear plant, as happened with Fukushima Daiichi, there is but one entity that can afford to manage such an event. That is Government.
• The residual risk arising from plutonium is much greater, its half life being 24,000 years. Future generations will have to safeguard themselves against its hazards. Again the current electricity consumer receives a non transparent benefit from the rest of society, and from future generations.

If oil were used in electricity production then the same arguments used in the cases of gas and coal would apply. Added to them would be the cost of using various armies to protect supply lines.

And so to renewables:

• Wind and solar photovoltaics are the commercial renewable generating methodologies. Both are getting cheaper, and we see much possibility of further reductions in the installed price of photovoltaics.
• As the new kids on the block, a market had to be created for them. Otherwise they would not have been able to achieve scale production, which was probably the principle reason for their price reduction. They were and are subsidised.
• It is however hard to compare the subsidisation effect of renewable generation with that of fossil fuels or nuclear. Firstly all renewable generation is subsidised up front. The only cost that needs lowering by a support scheme is the capital cost. There is no ongoing degradation of the environment caused by them. Use is made of free primary energy, without the use of water in the production cycle.
• What the user pays is totally transparent. It lasts for a definite period. Thereafter there is no subsidy. The cost of making electricity from wind or solar falls to whatever it costs to operate and maintain a plant with zero fuel cost.
• As a final comment it can be said that that wind plant is very lowly stressed compared to thermal generation. Temperatures are low and pressures don’t get much above ambient. In principle wind plant lasts a long time. The blades will have to be replaced after 25 years; certain rings in the gearbox have a 7/8 year life expectancy. The major components, like the tower, the nacelle bed plate, the blade hub, the foundations, the electrical substation should all with care last indefinitely. Again it is hard to capture the customer and societal benefit from this longevity. The only point to be made here is that the benefit exists, and will continue to benefit future generations, instead of costing them as all thermal technologies do.

The subject was wind energy and how inefficient it was. One of the big questions has to be “why was Mr. Booker given so much space in a daily paper?” Mr Booker’s record gives a clue as to why he should write on wind energy: he is the one who denies the theory of evolution, the one who says global warming is a lie, he who founded Private Eye, and a man who thrives on controversy.

Mr Booker argues like a good lawyer. He throws so much guano around in the hope that some will stick, that there are a thousand starting points to rebut the man. So my intention is not to respond to his agenda at all. Why let him frame the question? Better to restate the obvious, documented advantages of wind energy than to sling mud in the gutter of Mr Booker’s making.

Free fuel
Wind energy uses a free fuel source. No matter what price the oil, coal or gas comes in at, wind costs the same and its fuel source is free. When oil was $30 per barrel wind costs what it costs. Now that oil costs $115 per barrel wind costs the same as it used to.

Fixed cost
The fixed nature of the costs means that the riskiness of the electrical system is reduced. Fossil fuel prices fluctuate wildly, and these costs are passed on to the customer. The introduction of wind onto the system reduces this price risk for the customer. A study carried out in Scotland showed that if the wind component of the system were to go from 21% to 32% then ipso facto, the price the customer pays would drop by 6%.

Yes there are high costs associated with building wind farms. There are lots of tonnes of iron and concrete used in their construction. We are, after all, starting a once off transition to sustainability in the way we make our electricity.

Longer lifecycle
However, once built, they last more or less forever. Sure the blades may have to be replaced, every 30 years or so, but the main components such as the tower, the foundations, the nacelle bed plate, the hub, the electrical substation, all last more or less indefinitely. They are not subject to heat, or pressure, the reasons why all thermal power stations fail to get past 30 to 40 years in age.

Because the capturing of wind energy needs large civil engineering structures to do the job, the building of wind turbines has to be supported in the first flush of youth. In the UK this support lasts for 20 years. For the rest of their lives these majestic structures utilise free energy and deliver inherently low cost electricity. In other countries the support may be of different duration from the UK, but the fundamental truth remains: support is only necessary to deal with high capital cost, the running costs are extremely low and the fuel is free.

Political instability
Imagine if we found a way to power the UK entirely with wind energy. What would be the consequences of this? The fuel source would be entirely our own and free. There would be no pollution. The fuel source would last forever, once the initial investment had been made. No worries about the political instability in any part of the world; no holding of the country to ransom, or the need to do business with bloodthirsty tyrants to gain access to their oil or gas.

Go one step further and imagine the UK making ten times more electricity than its customers need. What would Mr Booker think about this? Millions of people employed in maintenance, trading, and manufacturing. Billions of pounds earned in selling the precious commodity to countries not as well endowed with natural wind resources as the UK.

Export potential
In this, the major exporting scenario, 95% of wind energy would be made at sea. The capacity factor would be 41%. What percentage of the wind farms would be owned by British people? Many would argue that this doesn’t matter, so long as the machines were built. However it seems to me that the vast bulk of ownership would rest with British entrepreneurs and businesses. For have not nations always built their wealth on their natural sources of comparative advantage? Our long and illustrious history has been grounded in our island status. Have we not learned over the centuries to turn our isolation as an island, into one of our greatest strengths?

Up above we asked the question “what if we found a way to power the UK entirely with wind energy?” Although it’s going to be a while before we need to do this it is very helpful to answer the question in the present tense. Do we need, for instance, to build as much gas plant as wind plant? Do we see ourselves remaining an electricity island, isolated from our neighbours? Then the answer would be” perhaps.” However the technology exists to interconnect all of Europe. So in the very short term we can rely on the backup of Germany and the rest of the continent to support a much larger dependency on wind.

Interconnection
In the slightly longer term we use the grid to even out the local variability of wind. After all, the wind is always blowing somewhere. If we can connect up all the “somewheres” together, do we not deliver an even amount of electricity all of the time? The mathematics indicates this is so.

What happens in the massive export situation we foresaw above? By the time this happens we will be using exclusively electricity powered cars. In this most likely of futures, the battery in each car acts as a backup to the grid. On a windy night the overproduction of electricity from wind gets stored in your car. When put along with smart grids these same batteries act as millions of small power stations the next day. For do not most of us simply drive our cars to work and leave them parked all day in readiness for driving home in the evening?

In this distant scenario the Alps will be connected strongly to the Scandinavian mountains. The great reserves of hydro power, kept behind dams and available for backup will further reinforce the security of our electrical system. The whole lot will be connected to the solar resources in the Sahara.

I would expect that by 2050, when we have to have full freedom from fossil fuels in our electrical setup, that we will be connected to the geothermal resources of Iceland. These are fully switchable, just like fossil fuels are today.

The vision is freedom, freedom from pollution, freedom from price hikes, freedom to be in charge of our own political future. Interdependence with our European neighbours reinforces the freedom from war that it took us ten centuries to learn.

On a recent visit to Norway I was told that the Ecofisk field was engaged in CCS. Actually what happens is that CO₂ comes up with oil.

The platform operator is able to easily separate the pure CO₂ from the oil. The CO₂ is re-injected into the well. This technique allows more oil to be recovered than would otherwise be the case. There is clear economic benefit from this activity. The paymaster for the activity is the extra oil that is recovered.

Therefore according to the fossil fuel companies CCS is a good thing.

It works to enhance oil recovery so why can’t it be used to create clean natural gas burning or indeed clean coal?

That is where the analysis breaks down. Where is the paymaster for all the extra cost involved in separating the stream of gases at the back end of a power station? Using CCS in electricity production has no economic advantage, except that if it worked some of the vast amount of CO₂ made from burning fossil fuels would be buried.

So it comes down to a comparison of the benefits and costs. There is however one other factor. Does anyone rationally believe that CCS will allow China to go on burning 2,600,000,000 tonnes of coal per year? That India, Indonesia, the US, etc can continue to destroy the biosphere on the promise of a CCS technology becoming commercially available at some time in the future?

Just to revert to the problems of capturing carbon dioxide at the back end on a power station.

80% of the gases coming off the back end of a coal boiler are nitrogen (N2).

The CO₂ has to be separated from the mixture. Apart from the vast investment that would have to be done to carry out this gaseous separation, the efficiency of the power station would be reduced by between 10 and 20%. Then the CO₂ has to be compressed, or frozen and transported to a hole in the ground. At the hole there would be a further expenditure of energy to pump it underground…

And then there is the smell test.

If that hole was under your garden, would you believe that the stuff would stay buried forever? Particularly when you know that it is heavier than air, and that in certain weather conditions it would blanket the ground and do away with the local supply of oxygen.

The misled ones, those that believed that it was possible to commercialise CCS were lulled into a sense complacency. Coal fired generation took on the mantle of a technology whose time was about to come again.

Worse, CCS was grant aided by all the big democracies.

Am I concerned? Not really. Over the next few years CCS will be let slide into the obscurity whence it emerged. It is the lessons we learn that are important.

There is no quick fix. There doesn’t have to be. Wind and solar are enough. They work. They are getting cheaper. We can build a sustainable future using them alone as the source of primary energy.

The world was in full throttle dependence on hydrocarbons then. Fuel could be transported; power stations could be located at any suitable location; most governments encouraged electricity monopolies and used the electricity system to further social aims such as development of local coal mines, lignite and peat. The grid of the day was adequate for this generation arrangement. It was built almost entirely within national boundaries, in a Europe dominated by national interests.

The original HVDC connected these national grids together.

The Supergrid is a very different proposition. It takes into account that 50% of Europe’s generation will probably come from wind by 2050. It recognises the fact that only 250,000MW will be able to be built on land, with 1,000,000MW to 1,500,000MW being built at sea. In concept the Supergrid is designed to facilitate pan European trading in electricity, in the context of a single market. The Supergrid has to be able to provide bulk electricity as reliably across Europe as the current AC transmission grids do now. Obviously it must, by design, integrate with current grids.

So at this design stage there has to be built into the Supergrid a certain amount of redundancy. Just in fact like the transmission grids of today. It has to address the issue of failure of a part of the system, and come up with a cost effective design that ensures that the customer is not affected. Those promoting the Supergrid are like the “stout Cortez, standing on a peak in Darien, beholding the Pacific ocean for the first time”. We who promote the Supergrid are equipped with a table raza, and are given a severe test of our imaginations.

As we studied the issue it became clear that a series of meshed nodes was the simplest and therefore the cheapest way to achieve the reliability goal. Such a node would be a collector of power generated from offshore wind, wave or ocean current devices; it would be able to route power to where the demand was greatest; it would contain a number of switches to allow maintenance work to be done on various components; there would be as many information cables as needed to allow the node to be the central piece of equipment used in the trading of electricity.

Such a node is called the Supernode.

Tomorrow we will deal with the issue of how the Europe of 2050 will cope with an electricity supply entirely composed of renewables and nuclear.

Creating the Supergrid has been my most cherished dream for the past decade.  Perhaps I should explain why this is.

When I came into the wind business, I was constantly berated by the non wind community (which was almost everybody) that I was backing the wrong horse.  The storms that beset northern Europe and are the main drivers for our wind power.  They  arrive in an unpredictable manner.  “It can’t be relied upon”.  Nor did I find much encouragement from the official promoters of wind energy.  They seemed happy to connect wind farms to the distribution system, to be small, peripheral.  Interestingly these proponents of wind energy allowed wind to be seen as negative load; not as generators in their own rights.

So wind is variable, does not deliver firm power and is not very predictable in the long term.  The more wind that is put on the system the less firm it became.  I had some knowledge of weather systems from a previous employment, and had some idea that the wind was always blowing somewhere.  With the assistance of Brian Hurley, the great wind analyst, manager, and fellow founder of Airtricity, we quantified the wind systems around Europe, and so the idea for a Supergrid was born.

Using the Supergrid, it is possible to utterly transform the role of wind energy on the electrical system.  Put another way, if wind energy is regarded as a continental phenomenon, rather than a national one, wind becomes firm; it can be relied on.

One of the interesting studies we did resulted from my chairmanship of the EWEA wind conference in Madrid in 2003.  I recall looking at the Red Electrica (the Spanish Grid company) screen and seeing that there was a contribution of 300MW being made by all the wind farms in Spain. At the time there was  about 6,000MW  installed there.  During this time Spain, along with the rest of Europe, was suffering a heat wave and demand for electricity was at a peak.  Brian did a study to find a place in Europe which was negatively co-related with Spanish wind.  In other words we tried to find a place on or off shore where the wind would be blowing if there was a calm in Spain.  In fact we found such a place, in the Bay of Biscay – fairly far out.

So the proposition was good that wide geographic diversity leads to smoothing out of the wind variability.

The next step was to examine the grid technology to see if it could meet the technical needs of a Supergrid.  When moving large quantities of electricity over long distances, underground, the only possible technically feasible solution is DC or direct current.  The cable technology for long distance high voltage DC has existed since the 1950s; from the time that Scandanavia sought ways of moving its huge hydro generated electricity to market in Denmark and Germany in fact.

Next blog explores the difference between the old fashioned point to point HVDC connections and the Supergrid.

Right now we are borrowing or leasing the environment from future generations.

We as a species need a functioning environment to live and grow. Lord Stern reckons that 1% of GDP should be spent here and now to rectify the damage done by burning too many fossil fuels. He further goes on to point out that it will be more expensive to rectify the damage in the future. By not spending that money today we are placing a massive burden on future generations. To reason that it can be rectified in future makes a number of assumptions. They are

• That we are confident that we know all the linkages, pathways, and chemical relationships that lead to climate forcing by greenhouse gases.
• That the damage will be capable of being rectified in future when accumulations are much higher
• That there are no non linearities in the further build up of greenhouse gases. Rises in temperature may not follow a path which is proportional to rises in concentration of greenhouse gases. There could be a sudden acceleration in temperature rise.

It would be much safer to overspend now, and so to minimise the risks we ask future generations to take on our behalf.

Overspending now does not mean less industrial development and employment. In fact it means the opposite. New wind energy and solar plant is replacing old fossil fired plant. There are fortunes to be made and millions of new jobs to be created in the deployment of wind and solar plant. There is a Supergrid to be built in Europe. It will allow us to capture huge quantities of offshore wind as well as solar from the Sahara.

The cost of building one and a half million megawatts of wind plant ( the amount required to power 50% of Europe’s electricity demand in 2050) will be in the order of €4 trillion. The cost of the Supergrid will be somewhere in the order of one €1 trillion. The cost of installing two million megawatts of solar PV (the plant required to deliver 30% of Europe’s electricity demand by 2050) will be at least €4 trillion. The spend on the other renewables and whatever nuclear plant is required will amount to probably €2 trillion. If there are 2 to 3 jobs for every megawatt installed then we are looking at creating between 9,000,000 and 13,500,000 new jobs in Europe by 2050

When we arrive at the zero CO2 emission state we will be living in the now, in one of the most important life sustaining industrial sectors: energy and power. It will have been done at high cost. New industries, and new jobs with limitless export potential will have been created.

With the exception of what we pay for uranium, all of our primary energy will be free. It will all be coming from the sun. There will be no pollution. It will go being free forever. Just as living in the now is the healthiest psychological state; providing our energy in the now, is healthiest for humankind, for the wounded environment, and for the future prospects for our children.

Sustainability is about living in the now.

It is about not borrowing the environment from our grand children and exhausting its potency in a couple of human lifetimes.

It will be about not destroying everything we have been given by the past. What has been given by the past can be used, as it must be to allow the world to grow. However in all this use of the natural resources we inherit, we have to realise that they are limited and that one day there will be no more gold, no more copper, no more phosphates to be dug up.

Living in the now entails making use of what we have to hand already. There are a huge number of ways this thought can influence our thinking. The most obvious is energy. The sun shines and the wind blows, and we have the technology to capture them. Of course there are issues with getting our energy from the natural, recurring, forces of nature. Issues like “the wind is variable” or “the sun doesn’t shine at night”. There are many more unseen issues associated from moving from an all fossil fuel based electricity supply to an all sustainable one. The most important way of solving them is the all important decision that we should begin to live in the now.

The point about living in the now is intuitively correct. It speaks to me about being efficient about our use of natural resources; not wasting them. Our houses and factories should be thermally very efficient. It speaks about recycling. Most metals and chemicals have limited mineable tonnages and at some time in the future we will have to recycle the quantity that is in circulation.

No matter how good we are at recycling, the laws of physics tell us that there is an inevitable ” greying out” of matter and energy. Think of phosphates for instance. Used as fertilisers, they are all soluble. About 30% are used to make crops grow. The rest finishes up in water cources and eventually the oceans. They are as good as irrecoverable there. Living sustainable means that we must do as much R + D as is required to compensate for the inevitable loss of certain raw materials.

When thinking about living in the now, there is one truth that strikes us. Having enough energy compensates for almost everything that we run out of. Take water for instance. Many areas of the world suffer water deficits already, a problem that is being exaggerated by global warming. With enough sustainable energy we can desalinate the sea to create fresh water.

Living in the now does not limit human kind. It allows us to flourish without denying succeeding generations their right to a great life. Whether Gaya, the God in nature exists or not, the value of respect for the earth, the sun, and our environment makes sense, if only to ensure our own survival.

It seems to me that the problem he described is in fact more stark than he assumed. He pointed out that China would double its GDP in ten years implying a growth of 7%p.a. In actuality China has been growing at closer to 15% and this would imply a doubling of its GDP in five years. At the state of China’s level of income per head this would mean a four-fold increase in energy consumption in as little as five years. Incredible as this sounds it is probably closer to the truth than any other estimate. Some five years ago China commissioned 104,000 MWs of new generating plant. A new Germany is added to world demand for energy every year from China alone. When one considers that India, Brazil and Indonesia are growing at a similar rate the stress that this will place on the world sources of energy can begin to be imagined.

So just for clarity sake it is no harm to review options for the world’s economy given this acceleration in the demand for primary energy.

To begin with the simplest and most obvious observation:

Energy efficiency drives will achieve very little. The rebound effect is real and ongoing. If the world were to double the efficiency of every appliance and the price of energy did not change then simply everyone would buy more appliances or would heat their houses further. In countless experiments the rebound effect has been observed. The poor families will heat four rooms instead of two while the rich families will buy more appliances. We have seen incredible improvements in appliance efficiencies over the past thirty years yet there is still growth in electricity demand (outside of deep recessions).

People respond to price signals. In industry we observe a slightly different effect. The business that embraces energy efficiency can make cheaper product. It wins the competitiveness race. The less efficient business goes under. The successful business sells more to everybody.

One thing that would help would be for the world to stop subsidising energy. I read recent that Mr. Chavez, President of Venezuela sells a litre of fuel for 5 cents. What a wasteful stupid thing to do. This self styled socialist subsidises not the poor but the rich. He foregoes revenues from an oil thirsty world, revenues he could use to build houses, clear slums, educate the people etc. He is not alone. Most developing nations subsidise fuel.

The US doesn’t subsidise, neither does it address the scarcity issue. If the US were to have the same fuel efficiency in their cars as the EU, they would meet their Kyoto obligations.

The energy facts in this world call for a lot more to be done than taxing fuel or increasing efficiency.

With many European countries and the US in economic difficulties, oil stands at $90/barrel and coal trades at more than $100/ton.

What will happen when the economy reverts to “normal”? Oil will be at $150/barrel and coal at $200/ton.

If any scenario were better designed to cause the world economy to crash once more then I cannot think of it. Before this current, financially driven crash, the last three recessions were caused by oil price hikes.

This set of world circumstances points to the direction in which a solution can be found.

We are on a once off transition to sustainability and the first and greatest crisis to be dealt with is the energy crisis.

What this comes down to is that we have to live currently. Not digging up that which took twenty million years to bury or cheating our children out of their heritage. We lease this environment, this biosphere from our grandchildren and we have to stop fouling the nest.

What does it mean to live currently? It means in the first instance relying on the energy sources to hand, the wind, the sun and other basic forces of nature. We know that Northern Europe, the US, China and South America has enough wind power to completely power them. We know that Africa, southern Europe and the rest of the world have enough sun to supply all energy needs.

Without great breakthroughs in technology we can live currently as far as energy is concerned.

What the thinking person finds irritating is the gigantic emphasis on further energy technology breakthroughs. Nuclear fusion, the hydrogen economy fuel cells, carbon capture and storage, thorium extraction from sea water etc. are all in the class of the magic bullet, the dues ex machina. It is like saying that man who isn’t in the room will solve all our problems.

It is not as if we have to get the whole species evacuated to Saturn by 2020.

By and large we have the wind turbines, the photovoltaic solar converters, the DC grids and the cabling to power this planet. We have, in Europe found the way to deploy these technologies by incentivizing businesses and utilities to get on with the job.

What we lack is leadership. Those of us in the developed world seem to lack the confidence to help the emerging nations to grow their economies sustainably.

One of the reasons why this is so seems to me to be about not having a macroeconomic or microeconomic vocabulary or language to describe what has to be done. If you can’t name you can’t know it. It is a fact that whatever political economy is taught, the underpinning ideas of free fuel (wind and sun) of price risk mitigation (due to using a fixed price fuel) of paying an environmental rent for use of the biosphere are all left unsaid.

So what could and should we be saying to the emerging world.

We could say that we will work openly with you to solve our energy crisis on a global scale. We could, begin to transfer technology and know-how to allow the developing economies to begin to become sustainable. We should transfer sufficient cash resources to the developing world to get their markets functioning efficiently. They would then buy more of our products and create the virtuous circle of increasing trade.

We could say that for every MW of wind and solar installed you create three to four jobs.

We could say that the illusion of cheapness resulting from using fossils applies only in recessionary times. As soon as the economy begins to grow the price escalates and a recessionary cycle is initiated.

We could accelerate trade with emerging nations who embraced energy sustainability. We could and should have a world trade agreement which reduces trade barriers to zero. Developing nations ought to be let feed the world; by and large they have more heat and enough water to do this.

We could accelerate our movement in the developed world into cities where scale could be turned into a more rapid and cheaper movement to sustainability. We would have more use of public transport, more efficient public services.

More on this anon.