3. We know what has happened in the past
Based on Secular Cycles, by Peter Turchin and Sergey Nefedov, Princeton
University Press, 2009.
3
4. Hubbert symmetric model only applies with
identical replacement
Source: M. King Hubbert, Nuclear and the Fossil Fuels, 1956.
http://www.hubbertpeak.com/hubbert/1956/1956.pdf
4
5. Ways Collapse Occurs
Inadequate government funding
Increasingly impoverished workers
Not enough tax revenue
Inadequate oil to “grow” the economy
Need oil for extraction
Need oil for road repair, wind turbines, mining, etc.
Not enough left over for “growth”
Defaulting debt
5
Need economic growth to repay debt
6. Difference in Views
Tverberg
1972 LTG limit is hitting
Appears as Financial
Limit
Dennis Meadow’s model
Verified by Hall; Turner
Debt related
Comes from inadequate
investment capital
High energy costs
adversely affect
6 economy
Randers 2052
Peak oil limit
Based on depletion
Lots of substitution
No adverse financial
impact
7. Specific Energy Problem Areas
C. Hall Quote
‘The problem is not that
oil is running out, rather
than what happens
when oil production can
no longer meet the
world’ s and national
economies’ increasing
needs.’
7
Tverberg view
The problem is that we
are reaching Limits to
Growth in the next few
years. We can expect
Government funding
problems
Debt defaults
Inadequate oil to “grow”
the economy
8. Specific Energy Problems
2.3 Current Economy view
Renewable energy and
improvements in energy
efficiency will be phased
in automatically once
renewables have
become competitive in
relation to fossil energy.
8
Tverberg view
High energy prices of
any kind will sink the
economy.
High priced oil + high
priced electricity sink
the economy
simultaneously.
9. Specific Energy Related Issue
2.3 Green economy view
The higher the EROEI
and scalability (volume)
a form of energy has,
the higher its potential
is.
Tverberg view
9
EROEI does not
measure intermittent
renewables well.
Does not reflect debt
needs, payback.
Market cost calculation
is extremely important.
10. Example of EROEI Problem
Solar PV EROEI supposedly 9.4 to 1
With batteries reaches1.3, after 30 years.
1.4#
1.2#
Dynamic#
EROI#
1.0#
0.8#
OffC id# including#
r PV#
ba< eries#
ba< ery#
replacemeent#
every# years#
7.5#
0.6#
0.4#
0.2#
0.0#
0#
1#
2#
3#
4#
5#
6#
7#
8#
9# 10# 11# 12# 13# 14# 15# 16# 17# 18# 19# 20# 21# 22# 23# 24# 25# 26# 27# 28# 29# 30#
Year#
Dynamic EROEI with batteries, off-grid, based on
figure by Graham Palmer in “Energy in Australia,”
Springer, 2013.
10
11. Very little sustainable “renewable energy”
High cost of wind, solar PV lead to financial
problems for countries using them
Today’s wind, solar PV are very fossil fuel dependent
Intermittent electricity very low quality energy
11
Requires huge costs to fix
Not reflected in EROEI
12. Specific Energy Related Issue
2.3 Green Economy
Energy taxes help to
accelerate the rise in
energy efficiency;
prevent development
that is not energyefficient; and bring
about lower costs in the
long term.
Tverberg view
Energy taxes move
manufacturing to high
carbon parts of the
world.
Ultimately counterproductive
Exceptions:
12
Worldwide tax
Private citizen gas tax
High tax on imported
goods made with coal
13. 4. Role of Business
Large businesses may fail as world changes
13
Need international trade; debt availability
14. 5. Financial System
Credit overexpansion will fix itself very shortly
Massive debt defaults likely in the next couple of years
Lack of credit will lead to rapid decline in energy
production of all kinds
Real Question: How does one develop a financial
system for a shrinking world economy?
14
15. 6. The goal of development
We are facing massive shrinkage of the economy in
the near term
A Steady-State Economy is a pipe dream
Knowledge depends on today’s fossil fuel world
Possible 40 years ago; not possible in the future
No longer have 90% of humans involved in agriculture
Availability of electricity, Internet, computers, books
How do we keep knowledge, as we shrink back?
15
16. Climate Issues
Mentioned in several sections
Far less important, if fossil fuel use is shrinking
rapidly, with no action on our part
16
17. Problems began as extraction became
difficult
Assumes hyperbolic growth in extraction costs.
17
18. Recent price rise due to depletion
Based on BP 2013 Statistical Review of World Energy data.
18
19. Now subsidy to economy is disappearing
Subsidy to economy
from oil
19
22. Contact Information
Gail E. Tverberg
E-mail: GailTverberg at comcast dot net
Website: OurFiniteWorld.com
Twitter: @gailtheactuary
Cell: (407) 443-0505
See my article “Oil Supply Limits and the Continuing
Financial Limits,” Energy, Vol. 37, Issue 1, January
2012, Pages 27-37. (Free version at
http://ourfiniteworld.com/oil-supply-limits-and-thecontinuing-financial-crisis/ )
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