Economists look at energy as just another commodity. As with wheat, or pork bellies, or orange juice, if there’s not enough to meet demand the price will rise, which makes more investment in the production of product attractive, and the supply will rise to meet the demand.
I look at energy differently: I look at it as the commodity that underpins everything else, including the economy.
What that means is that there’s a price beyond which the rest of the economy suffers. There may be lots of energy sources left ready to supply the world’s demand, but other operators in the economy can’t afford to pay that. In other words, there comes a point where energy becomes unaffordable.
At that point, our use of energy starts to decline, no matter how much demand we have. (It’s the equivalent of turning your air conditioner off in the summer because the hydro bill can’t be paid otherwise, or wearing sweaters in the winter and setting your furnace low because the gas bill would eat you out of house and home if you didn’t.)
The slowing of the economy at the moment, of course, also eats into demand. (It also acts to limit other business’ ability to raise prices to cover costs.) At this point lower demand makes the development of supply less worthwhile, and energy prices fall — a bit.
This “bumpy plateau” — the economy gets energy prices it can (barely) live with, demand picks up a bit, prices rise, they kill demand, the economy slows, prices fall, run the cycle again — is precisely where we’ve been now since the middle of the last decade.
But each year we continue to use up the non-renewable energies that we draw upon. The percentage of energy in the mix that’s cheap to produce continues to fall, and the percentage that requires high prices just to be produced increases. So the prices fall less and less.
Eventually, we choke the economy completely: it can’t move forward, and it can’t fall back to start another run. Then the only way to cope is to seriously remove demand (or transfer it).
The problem we face, though, is that the most efficacious and concentrated forms of energy we have are in the non-renewables. We get more types of use, with more power per unit, from oil and gas than we do anything else. (We get most of our chemical processes, our fertilizers, almost 100% of our transportation needs, as well as a lot of our built infrastructure’s needs, from these.)
When you see that almost all new projects and pretty much all new finds of oil and gas are bitumens (oil sands), shales, trapped kerogens and deep water projects (in coal, the equivalent is more and more lignite and brown coals replacing anthracite and bituminous coals), you know that no matter how much crowing is done about available sources, they’re going to be the expensive ones to develop.
Yes, we can shift our energy mix somewhat (if we’re willing to pay the price of investing in it). We can use solar, wind, geothermal, wave and hydro power: they all convert to electricity. Hydrogen is not an energy source, but an energy carrier as well (just as is electricity), but it could be part of the mix going forward as well. Ethanols could play their part (but only where the investment of oil and gas in their production makes sense). Nuclear plants, as well, can be used to produce electricity.
But none of these allow us to run the world we currently live in in the same way.
Continental scale big box retailers shipping goods on the roads from a few regional distribution centres? It’s not happening in the long run. Whether it’s your local Starbucks getting its sandwiches and pastries from a plant in Seattle, or WalMart filling up its stores with goods, or your grocer having its shelves filled from all over the place, it’s going to change. Local — production, distribution, retail — will again be in vogue.
Railways will need to consider electrification (they are already the most efficient way to use a litre of petrochemical fuel to move goods by quite a bit, but they’re also, thanks to their fixed infrastructure, natural electrical users), be expanded, carry more of the loads.
We’ll, as individuals, spend a lot more time getting around on public transport or our own two feet; driving will become increasingly rare as a way to just run errands and get to work. That means rebuilding our environment, going back to intermixing work, school, retail and homes, building real communities again that don’t require time on the roads.
Our homes will need to be better equipped to stay warm and cool as needed without having to get there with a lot of artificial help.
These are just a few of the things involved in energy descent. The biggest one, though, is that in a world where energy is expensive (especially where mobility is concerned) we can no longer have a “it’s broken, replace it” society. Things will have to be made to last — and to be repairable locally — again.
Every object, every thing in our built world, is a set of choices about energy use. Every item embodies energy used to get its materials, to build it, to ship it. That’s why we’ll need quality and longevity.
We’re already in energy descent. Now it’s time to get serious about it.