University of Otago Department of Physics

EMAN 410 Energy Management, 19 September 2008

Energy and long-term sustainable

development in New ZealandDr John Peet

… How could we make NZ more Unsustainable ……?

• Paramount national goal – economic growth

• Fossil fuel use – increasing• Greenhouse gas emissions –

increasing• Carbon neutrality target – going

backwards• Transport fuel use – more

motorways, airport extensions, more airliners

• Water abstraction and use – growing

• Rivers – depleted and polluted• Rich/Poor gap – widening• Housing affordability –

decreasing

• Industry – moving overseas• Debt - heavy and increasing

(especially overseas debt)• State of the Environment 2007 –

not good• Soil erosion – continuing• Forests – conversion to dairying• Ruminant animal numbers -

increasing• Biodiversity – trying hard but

arguably losing• Pests - possums, rabbits, stoats,

wilding pines – no improvement• Population policy (… what

population policy…?)• etc……etc……etc…..

A Caution …..

“It ain’t so much the things we don’t know that get us into trouble. It’s the things

we know that just ain’t so.”

Artemis Ward (Charles F Brown) late 19th Century

Strong and Weak Sustainability

• Weak Sustainability – human-made and natural capital are substitutable

• Strong Sustainability – human-made and natural capital are usually complements, not substitutes

• Absurdly Strong Sustainability – human-made and natural capital are not substitutes, and little or no technological progress in the future is possible.

Related standpoints to take into account:

• Oikonomia (Economics)– Management of the household

• Oikologia (Ecology)– Nature’s household

• Oikumene (Ecumenism)– The inhabited earth/known world,

considered as a whole

SO … what is to be sustained in sustainable development?

Two very different answers to this question (Daly, 2003):

1. Utility should be sustained. In practice, surrogates such as Consumption are commonly used, expressed as dollars per capita spent on goods and services. (Weak sustainability position)

2. Physical throughput should be sustained, so that the throughput of resources available to future generations is no less than at present, i.e. Natural Capital is kept intact. (Strong sustainability position)

Then just what is the problem?

• If Utility depends upon Consumption of goods and services, and if

• Consumption presupposes Production of those goods and services, and if

• Production requires transformation of Resources taken from the Environment, (i.e. that to which value is added),then

• The relationship between resource use, transformation processes and consumption is central to the ability to achieve SD.

HouseholdEmployer/

Firm

Pays money

Receives income

Receives goods/services

Provides labour

Goods &servicesmarkets

$

Labourmarkets

$

The circular flow model of macroeconomics

and the place of markets

Circular flow economic model of the NZ economy

In ves to rH o u se ho ld s

W o rke rH o u se ho ld s

E m p lo yer s/F irm s

W ages/Sa lariesDividends

Rein vested Profit

Savin g Consum p tion

G o vern -m e nt

F in an c ia lIns titu tion s

G o v t s p e n d i n g

In c o m eT a x

B e n e f i tsB e n e f i tsB e n e f i ts

Rest of the World

TotalSpending

GrossIncome(GNP)

Exportearningsprofits

Paymentforimportsinterestetc.

Investmentlending

GST

NetIncome(GDP)

Economics - 1

NZ data 2005After Gowdy, 2006

The papereconomy

per person per year

GDP $34955

Labour $14,804 Surplus $15,754 Taxes $4,396

GNE $35429

Consumption Private $20596 Govt $6321

Capital $8217

How to develop policy that addresses the whole issue of

sustainable development coherently, rather than just one or more parts,

incoherently?

I start from the position enunciated by Ernest Rutherford many years ago:

“All science is either physics or stamp collecting”

Relevant lessons from Physics:

• F = ma

– Newton’s First Law of Motion (1680s)

• dS/dT ≥ 0

– The Second Law of Thermodynamics (the Entropy Law) (Carnot, 1824,

Clausius, Thomson, Gibbs etc, 1860/70s)

• e = mc2

– Einstein’s Mass-Energy relationship (Relativity - 1904)

• iћ ∂Ψ/∂t = HΨ

– Schrodinger Equation (Quantum Mechanics - 1926)

Treasury opinion (around 1988) in relation to moving the then Ministry of Energy functions into a section

of the Ministry of Commerce:

“4 The key issue in both the Policy Framework for Energy Management and the Strategic Business Plan is whether or not energy is sufficiently different to other goods and services to justify a specific energy policy ….. We consider that although energy is both essential and strategically important, it is not unique in these attributes.”

Investor

Households

Worker

Households

Employers/Firms

Wages/SalariesDividends

Reinvested Profit

Saving Consumption

Govern-ment

FinancialInstitutions

Investment lending

Net Income

Govt spendingGST

IncomeTax

BenefitsBenefitsBenefits

Expenditure

GDP

RAW RESOURCES

POLLUTION

RawEnergyResources

EnergySector

Goods & Services – Energy & Matter

Useful

Inputs

Useless

Waste

InvestorHouseholds

WorkerHouseholds

Employers/Firms

Wages/SalariesDividends

Reinvested Profit

Saving Consumption

Govern-ment

Financial

Institutions

Investment lending

Net Income

Govt spendingGST

IncomeTax

BenefitsBenefitsBenefits

Expenditure

GDP

RAW RESOURCES

POLLUTION

RawEnergyResources

EnergySector

Sun

OuterSpace

Ecosystem services

ENERGY & MATTER

ECOSYSTEM

The Real (biophysical) Economy

Hall & Klitgaard, 2008

Energy Transformation System

Net EnergyThere is a net flow to The economy if, and only if, E is greater than F, or if E/F is greater than 1.

E/F is the Energy Return on Investment, EROI

Some current EROI data

• Global oil EROI roughly 26:1 in 1992, about 19:1 in 2005• Running average EROI for US domestic oil dropped from

about 100:1 in 1930s to about 12:1 today• Oil used within the US for products exported to import oil

had an EROI about 30:1 in 1970, about 20:1 in 2005• Ethanol from corn EROI in the US is at best 1.6:1 and at

worst less than 1:1 (Brazilian cane ethanol around 7 or 8:1)• Biodiesel EROI around 3:1• Oil shale EROI around 6:1• Tar sands EROI around 1:1• Coal liquefaction EROI around 3:1• Nuclear debatable but around 5 – 15:1• Wind energy EROI around 15 – 20:1

Data from Hall et al, 2008 and Cleveland, 2008

Consequences of the transition to lower EROIs

Irrespective of which resources and technologies are used, lower EROI values mean that, to maintain anything like current outputs of liquid fuels (for example), much higher levels of investment and maintenance than in the past will be needed.

The energy and resource requirements will mean less economic output available for consumption, especially discretionary consumption.

Energy in the Economy

Hall, Powers & Schoenberg, 2008

A possible (post Peak Oil) future?!

Economics - 2

Thebiophysicaleconomy

per person per year

Petroleum 1.12 t Coal (net) 0.72 t Gas 38 GJ Water 470 t Aggregate 11 t

Greenhouse gases18.6 t

Solid waste 0.55 t Sewage 117 t Biodiversity loss,

erosion etc.

NZ data 2005, 2006, 2007After Gowdy, 2006

Questions relevant to Sustainable Development

• Are people satisfied and happy?– (sufficiency and equity)

• Can more well-being be achieved with less throughput?– (efficiency of the transformation

process)

• Are ecosystems healthy, resilient and thriving?– (environmental sustainability)

The Daly Rules (1990)

• The Output Rule– wastes ... should be kept within the

assimilative capacity of the local environment:

• The Input Rule– for renewables - harvest rates of

renewable resource inputs shall not exceed the regenerative capacity of the natural system that generates them.

– for non-renewables - depletion rates shall equal the rate at which renewable substitutes are developed by human invention and investment.

“Resource efficiency”

is the answer?

The IPAT equation

Total Social Impact = Population x Affluence x

Technology Impact

or I = P x A x TWhere I = impact

P = people A = GDP/people T = Resource use/GDP

A (very) simple example

X X

=

P A T

I

0

0.2

0.4

0.6

0.8

1

1.2

1 30

Population

0.000

0.500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

Affluence

0.000

0.200

0.400

0.600

0.800

1.000

1.200

Technology

C o n s t a n t 5 % p e r a n n u m 1 0 % D V t o 1 / 4

T i m e s p a n 3 0 y e a r s

Social Impact

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

Peak Oil & Climate Change

• Geology and Physics tell us that Peak Oil is close or already reached - and because of Climate Change we must reduce our net CO2 emissions anyway

• Two radically different views framing the current debate:– Economics and Politics – “transition to alternatives”

view. Result: biofuels, liquid fuels from coal, carbon capture & sequestration etc.

– Ecology and Physics – “energy descent” view.

• Blind faith in the market looks unwise, so …– Chart a new course for the rest of the 21st Century?– Could “Contraction and Convergence” or “Power

Down” be better options?

Peak Everything?

The real issue, it can be argued, is not so much Peak Oil alone, as it is

Peak Consumption of Stuff!

(e.g. Richard Heinberg’s “Peak Everything”, 2007)

Timescale for sustainability?

• Jericho is about 10,000 years old• Athens is about 7,000 years old• Damascus is about 5000 years old• London is about 2,000 years old

• (timescale for mainstream finance and economics – at most, maybe 5 – 10 years, often only a few months, or even a few days!)

• (….. And your timescale…..?!)

My timescale!

We cannot know what technologies we will have available to us even 100 years into the

future. We can, however, make some commonsense assumptions to guide sustainability thinking. These include:

• Humans will be here• Most current cities will be here• Food will be grown• Materials and energy will be required• Human basic needs will not have changed• We will not have Star Trek technology!

Responses to Limits to Growth (1972)

• “With current and near current technology, we can support 15 billion people in the world at twenty thousand dollars per capita for a millennium – and that seems to be a very conservative statement” Herman Kahn

• “The material conditions of life will continue to get better for most people, in most countries, most of the time, indefinitely. Within a century or two, all nations and most of humanity will be at or above today’s Western Living standards.”

Julian Simon

Limits to Growth?

Meadows, Randers, Meadows“Limits to Growth: The 30-year Update”, Figure 4-11 Scenario1: A Reference Point

(cf Figure 35 in (original) 1973 Edition)

2008

In the mainstream (neoclassical) economic approach, a primary

purpose of the economy is to achieve efficient allocation of resources.

The REAL economic problem may be rather more complex (Daly 2003) :

• “A good allocation of resources is efficient (Pareto optimal);

• a good distribution of income or wealth is just (a limited range of acceptable inequality);

• a good scale does not generate “bads” faster than goods and is ecologically sustainable.”

Economics - 3

The (invisible)social

economy

Voluntary work Unemployed Retired Children Gift work Mahi

Children in poverty Elderly in poverty Median income

people Rich-poor gap Social cohesion

“Yes, our new screen IS larger, but I stilldon’t feel we’re getting the big picture.”

“Complex systems such as governments and large

institutions are more like frogs than bicycles” A Mant “Intelligent Leadership”,

1999• One can take a bike to bits, clean

and oil it, inspect and service the parts and reassemble it, confident that it will work as well as before

• One cannot treat frogs like that!

Reminder …..

“It ain’t so much the things we don’t know that get us into trouble. It’s the things

we know that just ain’t so.”

Artemis Ward (Charles F Brown) late 19th Century

• “For every human problem, there is a neat, simple solution, and it is always wrong”

H.L.Mencken

“It is better to be approximately right than precisely wrong”

Warren Buffett

“It is better to deal incompletely with the whole than wholly with the incomplete”

Herman Daly

“Pray to God, but row away from the rocks”Hindu proverb

Systems thinking guidelines:

Shifting MindsetsGrowth is always good.Markets alone can solve all problems.

We are separate from nature.

Problems are caused by the behaviours of “others”.

We exist in a world of limits.Markets don’t measure everything

that is important.We are an integral part of nature.Often the structure of systems

causes problems.

Percent of people accepting

Dominant Mindset Emerging MindsetTime

Copyright, 2001 -- Sustainability Institute

The Earth Charter is probably the best and most comprehensive currently-

available set of basic values to provide an ethical foundation for a 21st Century

mindset. “We must join together to bring forth a

sustainable global society founded on respect for nature, universal human rights, economic

justice, and a culture of peace.” www.earthcharter.org and www.earthcharter.org.nz

A final (?) caution ….

"It has often been said that, if the human species fails to make a go of it here on Earth, some other species will take over the running. In the sense of developing intelligence this is not correct. We have, or soon will have, exhausted the necessary physical prerequisites so far as this planet is concerned. With coal gone, oil gone, high-grade metallic ore gone, no species however competent can make the long climb from primitive conditions to high-level technology. This is a one-shot affair. If we fail, this planetary system fails as far as intelligence is concerned. The same will be true of other planetary systems. On each of them there will be one chance and one chance only."

cosmologist Fred Hoyle