Thoughts on the 'End of Abundance'

"We are living through the end of abundance" was the alarming message from French President Emmanuel Macron.?The news reporting rising gas prices and warnings of winter shortages certainly supported his gloomy statement.

?This set me thinking a lot about the four-way conflicting short-term contrary ‘pulls’ around the energy transition:

• Reducing emissions by converting to renewable resources
• National energy security
• Energy equity – providing reliable, constant affordable energy to all consumers and
• Time

?The first three are really must have items that we need to both maintain quality of life and in many cases health and the fourth item, time, represents the practicality of achieving this in a very short term where engineering, procurement and building schedules can only be marginally condensed.?On one side, we must act quickly to counteract CO2 emissions impact on the climate, but the scale of the energy transition project is phenomenal.?

?The task at hand

A recent LinkedIn post by Tatiana Khanberg at the International Gas Union showed a way to look at the magnitude to the task ahead by simplifying EU projections of gas demand into real concrete terms. The most aggressive EU gas demand models show reduced consumption of 260 billion cubic meters of gas per year.?She pointed out that reaching the 2030 lower gas consumption goals requires building about 2,540 Terawatts of electricity.?This would require 508,000 offshore windfarms producing 5 Gigawatts each.?It would be enough renewable electricity to replace five times France’s whole energy production! And this new renewable capacity would have to be online in the next seven years and three months to meet the goal.

?Dutch State agency, EBN has produced a graph showing the “Green Gap” caused by rapidly eliminating natural gas from the country’s energy mix.?The “Green Gap” does not close until about 2050 when declining energy consumption and increasing renewable energy production meet in about 2050.

The EBN example shows that reducing gas consumption so rapidly, creates an impractical timeline to build the replacement infrastructure.?Let’s set aside the impracticality of the timeline, to look at policies and the accompanying modelling as stretch objectives that we will have to wok at very hard to achieve but pushes us farther along than we expect is possible.

?These goals will be hard to achieve.?Permitting, collecting data, engineering, fabricating and installing renewable energy infrastructure has long timelines like any major construction project.???Today, major offshore wind projects are scheduled to take about seven years from conception to commissioning.?European offshore wind is one of the more mature markets in the world with many projects in different stages of development and efficiency is increasing.?Of course, when everyone is rushing to build the same types of projects at the same time, resources and skilled people become increasingly scarce.?

?We will have to deploy a lot of science, engineering and technology along huge amounts of capital to realize this huge change in our energy mix.?The United States plans to invest $11 trillion in renewable energy by 2050 and still renewables in USA will not overtake fossil fuels contribution to the energy mix until 2041.?Behind all this, there is a demand for geotechnical data collection, processing and analysis which is already stretching the geosciences community and industrial service providers’ capacity.??

Looking back

Historian and commentator Dan Snow stated, ‘A long dark cold winter looms with soaring energy prices.?Some of the advice we have heard recently includes buying a new kettle or taking a flannel bath…echoing the previous advice given during the brutal fuel crisis of 1973.’ In 1973, OPEC?sent oil prices sky high following the Arab – Israeli War which led to fuel shortages around the world.?Countries coped with kilometres long queues at petrol stations and rolling blackouts to conserve fuel as economies suffered as we entered Stagflation – a new type of recession where growth stagnated, but inflation ran much higher than in previous decades.?Industrial powerhouse regions that thrived in the 1950’s and 1960’s declined into ‘rust belts’ under higher energy costs.?

?These grim times were my formative high school and university years, but I emerged an optimist.?The way industry retooled, and reinvented economies made me a great believer in how science, engineering and technology backed by investment capital and supportive policy can resolve crises.?In fact, I graduated with a brand-new degree in geophysics in the mid 1980’s during a new energy crisis – we had discovered too much oil!

?Almost exactly 50 years after the 1973 OPEC price shock, we are in a seemingly similar situation with the Russian invasion of Ukraine and subsequent economic sanctions driving up gas prices.??

?The backdrop in today’s case is very different.??Ambitious renewable support policies and falling technology costs are raising the share of renewables in the global power mix.?The good news is that we started the transition long before today’s conflict rather than as a reaction.??We are in the early stages of changing about 65% of the world’s energy mix from fossil fuels to renewable energy.?Natural gas will be necessary as ‘transition fuel’ well into the next decades.?

?We run risks that some of the critical minerals in our new renewable energy supply chain are only mined in a few countries which could expose us to supply disruption especially since some of the largest rare earth mineral producers are in unstable regions.?

?Hope for the future

The energy industry has contributed to some great successes along the way from the 1973 energy crisis to today.?

?Sustained worldwide petroleum exploration discovered and developed new resources around the world which weakened OPEC’s stranglehold on our economies.?Natural gas, especially through LNG development, went from being a troublesome by oil product to becoming the fuel for economic development of whole national economies.

?We are doing much more with a lot less energy today.?Energy efficiency in everything from cars to electric motors to the whole economy increased drastically over the last 50 years.?For example, the US economy produced 16 times more GDP per exajoule than in 1973.?

?The world has brought reliable electricity to more people.?In 2012, nearly 25 percent of the population of 105 countries had no electricity.?Today, for the first time less than a billion people, 930 million people, live in the dark.?Unfortunately increasing energy prices are rapidly increasing energy poverty even in highly developed countries.?In 2019 in some European countries, up to 22% of households were returning to heating systems based on firewood?or coal.

?I was part of the boom of young engineers, geologists and geophysicists that joined the industry in response to exciting careers and economic opportunities to help fuel the world.?Geoscientists today have the opportunity be part of a new, exciting ‘moon shot’ scale energy transition.

Dr. Dr. Gehrig Schultz

November 2022