Imran's personal blog

September 16, 2010

The energy future

Filed under: Economics — ipeerbhai @ 11:21 pm

Recently, I have had a chance to listen to some talks about our energy future. Using my training in economics, I think I can now prognosticate our energy future.

So, here’s the problem.

We are quickly using up the worlds oil, gas, and coal. We sometimes make chemicals from this hydrocarbon stock — plastics, drugs, etc… But far more often, we use oil, gas, coal for power. We just burn the stuff, and throw it into our atmosphere, so we can extract the energy stored within it. Because we, as a species, built an extraction infrastructure for oil, gas, and coal, we had a lot of it around for use as chemical feedstocks practically for free.

Now, here’s what the problem will be.

Hydrocarbons store a lot of energy in their chemical bonds. By burning them with “free oxygen”, we can extract that energy cheaply and use it in our cars, homes, etc… We most commonly convert the energy to motion, like in a steam turbine, then that motion to whatever else we want, like electricity. As we run out of cheap hydrocarbons, we don’t have alternative means of making motion. In some way, we’re still in the steam/Industrial age of the 1800s.

What the problem isn’t.

The problem with oil/coal isn’t really about petrochemicals. If we stopped burning oil, we would have plenty for use in plastics, drugs, etc. We as a species are investing a lot of mental energy to finding alternative feedstocks, and are surprisingly successful.  We may have to do more transformational steps, but we can probably make all of our modern chemicals petrochemicals through renewables or other feedstocks — with a caveat.

That caveat is that a lot of the alternative feedstocks we use contain less energy within them. We have to add energy to them to make them as useful as oil feedstocks, and that energy has to come from someplace.

Now, for the economics.

I view money as an incentive force — it unleashes a force within us as a collective species, that sets up what technologies we use collectively. Oil was cheaper and easier to get than whale oil, and it burned well in lamps to make light. The economics of oil saved the whales, for without the cheapness of oil, the profits of whale blubber would ensure their extinction.

As oil gets more expensive, we will move to one of three alternative technologies, depending on what we can do most cheaply, or some blend.

  1. We will move to another hydrocarbon like coal or natural gas. We already know how to convert these into diesel fuel and feedstocks, and we have plenty of both.  Fischer Tropes chemistry can do all of this now, and countries like South Africa use this technology today to get some of their transport fuels and feedstocks.
  2. We will move to electricity. We already know how to make it without hydrocarbons in large quantities, can distribute it, and can store it well enough to use in cars, busses, etc…  We can also do electrochemical reduction to get hydrogen, and use that hydrogen to synthesize the needed feedstocks for plastics and the like.
  3. We will manufacture oil like substances from some energy source, like solar energy. Biofuels, algae etc…, then use that in our existing oil infrastructure.

With all three technologies, we know now how to substitute for oil in many uses, and with some creative chemistry, perhaps them all. The end of oil, natural gas, and coal will not effect our ability as a species. But as individuals, we will have some problems.

With these new technologies, the up front capital costs to society are very large, and some of the marginal costs larger. In some cases, the marginal costs are smaller. This means that individuals will have to consume differently in the future. Perhaps we will use overheads wires like the busses in Seattle do for our cars. Perhaps we will have biologically derived diesel. We might even make no change, if we can find a cheap way to manufacture gasoline.

And the future.

Now, we can use the above premises to figure out the future.  Unlike some of the worst-case scenarios, we as a species will not go extinct from the end of oil.  Our pharmaceuticals and products can be made from alternatives, and the technology exists now.  The real question is where do we invest?  Unfortunately, the incentives aren’t there now.  Most chemistry evolves from the need to turn waste into something useful.  Petrochemical chemistry evolved because there was a lot of waste carbon that didn’t easily turn into motor fuel, and so things like ethelyne and other waste products existed “free or better” for use.  These became the areas we researched, and built industries out of.  Each of the alternative technolgies will create different mixes of waste streams.  For example, biodiesel made glycerol “free” for a while, but the collapse of the bio-diesel industry removed the over-supply, and thus glycerol is expensive again.  A lot of promising glycerol chemistry  died out due to lack of investment, because there was no longer a waste disposal problem with bio-diesel byproducts.  Trying to predict which of the alternatives will win out won’t be possible without a serious economic study of which of the three has the best cost structure if oil and its derivatives were scare.

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