The transition to sustainable energy: how much will it cost?

Guiding the Energy Transition (Part 1): Principles and Implications

By Sgouris Sgouridis (*)

Abstract: Following on the sower’s metaphor, I present a quantified view of exactly how much energy we need to invest from our current bounty in order to be able to safely navigate a sustainable energy transition. This is in the context of a formal definition of five principles for the energy transition. We currently invest around 0.25% of our net available energy surplus into renewable energy generation capacity (this is the renewable energy investment ratio – “epsilon”). It needs to be increased to about 3% (an order of magnitude) for our energy systems to be able to provide for a 2000W per capita society at a global scale without crossing the IPCC carbon budget. (note that modern western life is consuming around 8000W per capita). If we do allow for unrestrained emissions then we still need to increase this rate to 1.5%.

Energy is a sine qua non for any self-organizing system and yet it features only in the margins of what passes for long-term planning of our societies. We have grown critically dependent on cheap, energy-dense fossil carbon but its price and climate externalities have been rising as we are nearing peak production. This necessitates a transition to renewable energy sources. This post addresses the implicit physical and financial requirements if this Sustainable Energy Transition (SET) is to happen as a result of a planned and seamless transformation; not forced upon our societies. More specifically, in Part 1 I present five principles (the three first are limiting and the latter two normative) that can be used as a guide for the transition. Based on the fourth principle, I demonstrate the need to increase the amount of investment in renewable energy resources globally by one order of magnitude to achieve a Sustainable Energy Transition within the IPCC carbon budget. Details of the assumptions and methodology can be found in Sgouridis & Csala 2014. In Part 2, starting from the fifth principle, I present a concept of an energy currency that could mobilize resources to achieve this target while better aligning the monetary system with the biosphere limits.

It is generally good to start with a definition to create the common basis for understanding and judging an idea. In this case, I will define SET (sustainable energy transition) as:

a controlled process that leads an advanced, technical society to replace all major fossil fuel primary energy inputs with sustainably renewable resources while maintaining a sufficient final energy service level per capita.

As definitions are wont to be, it tries to capture a lot of concepts sinthetically. But the key words are “controlled”, “technical”, “all” and “sufficient”. The ideas conveyed indicate that the transition should be smooth and not associated with dramatic social dislocation (controlled). It should allow for society to at least maintain its technological capabilities (technical), and at the level of the individual meet a certain threshold of final energy availability (sufficient).

Knowing that the transition will be complete when practically all fossil fuels are replaced, we can backcast the evolution of the transition to the current energy situation. In this exercise, it is instructive to use an energy metabolism perspective focusing on the net energy availability. This way, an unambiguous and transparent picture emerges that pulls back the veil that economics placed in long range planning.

In order for this transition to be indeed “sustainable” we would need to concern ourselves with each of the three sustainability pillars (environmental, social, economic). Extending Daly’s ideas, we propose five principles that need to be met – de minimis – for a SET to be successful:

I. The rate of pollution emissions is less than the ecosystem assimilative capacity.

II. Renewable energy generation does not exceed the long-run ecosystem carrying capacity nor irreparably compromises it.

III. Per capita available energy remains above the minimum level required to satisfy societal needs at any point during SET and without disruptive discontinuity in its rate of change.

IV. The investment rate for the installation of renewable generation and consumption capital stock is sufficient to create a sustainable long-term renewable energy supply before the non-renewable safely recoverable resource is exhausted.

V. Future consumption commitment (i.e. debt issuance) is coupled to and limited by future energy availability.

The first two principles address the environmental aspect (neither fossil nor renewables should impact the environment irreparably within a human generation). The third addresses the social aspect ensuring that (i) a minimum level of available energy is available, and (ii) the rate of change in energy availability is not so drastic that it creates breakdown of social support systems. A direct corollary of this is that a more equal society faces an easier SET task than an unequal one. Finally, the last two principles address economic sustainability (physical and financial). P-IV, a variant of the Hartwick rule in economic literature, ensures that the rate of investment in renewable energy is sufficient to compensate for the drawdown of the fossil fuel supply while, P-V makes the connection between debt issuance and the availability of energy to service that debt in the future (which is the subject of Part 2).

Viewed from a normative angle, the first three principles act as constraints of the transition function – the first gives an upper limit in the amount of fossil energy available, the second puts a limit in the amount of renewables that can be installed, the third provides a lower bound on the per capita energy availability (and of its first derivative during the transition). The latter two though are prescriptive and actionable – they offer a quantifiable approach to estimate the minimum energy investment in renewable energy and the maximum debt that can be extended for that level of investment.

Focusing on the physical side, we can essentially create an equation that ties the renewable energy investment ratio (epsilon) to net societal energy availability which can be seen below (derivation in the paper and supplement):

This recursive equation can be solved numerically or analytically to establish the net power available under different assumptions for the value of epsilon. Below I provide, as a starting point of the discussion, a comparison of the evolution of future energy availability under the following scenarios. As typical of energy transitions (and to meet the discontinuity constraints of Principle III), we assume in the paper that it takes thirty years to change epsilon from its current value of around 0.25% (we actually assume 0.375% for this model) to the “target” value and simply compare energy availability with energy demand assuming that (a) population follows the UN mid-projections stabilizing at 9 billion by 2050, (b) per capita power demand converges to 2000W , and (c) the efficiency at which we convert primary to final energy improves by 25%. (the details on the assumptions regarding population are described in Sgouridis and Csala’s paper).

Frying the Planet

Available Energy with No Carbon Cap Top: ε = 0.375 %, Bottom ε = 1.5 %.

Left: Breakdown by source. Right: Red line indicates Net Available Energy. Blue Line indicates where we need to be at a minimum

50% chance of Slow Cooking the Planet

Available Energy with IPCC Carbon Cap Top: ε = 0.375 %, Bottom ε = 3.0 %.

Left: Breakdown by source. Right: Red line indicates Net Available Energy. Blue Line indicates where we need to be at a minimum

The results are starkly clear: if we allow fossil fuels to run their course frying the planet in the process, we will need to increase our rate of investment in renewables fourfold. If we decide to save the climate and adhere to the IPCC recommendations of no more than 3010 anthropogenic Gt CO2 in the atmosphere by 2100 for having a 50% chance of remaining below 2C by the end of the century (which, apropos, is still the moral equivalent of loading a revolver with three bullets and playing Russian roulette with our grandchildren) we need an eight-fold increase of the investment rate in renewables. Of course, there are key sensitive assumptions involved like the EROEI of renewables (in the scenarios shown starts at 20 and increases with installations) – readers are welcome to enter their own assumptions in our model – yet we believe that our choices are neither conservative nor aggressive and we intend to enhance the simulation’s resolution by disaggregating specific renewable energy technologies as we did for fossil fuels.

(*) Sgouris Sgouridis is Associate Professor at the Masdar Institute of Science and Technology (UAE). His research interests focus on understanding sustainable energy transitions using socio-technical systems modeling. He has been working on the energy currency concept, electric vehicle adoption, sustainable aviation, and local and global sustainable energy transitions. He initiated the development of the Sustainable Bioenergy Research Consortium at MI and was a member of the Zayed Future Energy Prize review committee for the past four years. He holds a PhD in Engineering Systems (MIT-2007), MSc in Technology and Policy and MSc in Transportation (MIT-2005) and a BS (Hons.) in Civil & Env. Engineering (1999-Aristotle University).

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