Key: Rob’s comments are in italics. Derek’s comments are normal font.
Our topic today is energy, which on the face of it may not seem to relate that obviously to sovereign finance, but we think it does. So where do we need to start?
Why We Need Energy
Let's start first off with why we actually need energy. We need energy first and foremost for staying alive in the form of food. We need energy for moving around and we need energy for moving things around and we need energy for manufacturing anything.
It's important to realise that until the Industrial Revolution, the sources of energy we had consisted of human muscle power, animal muscle power, and a little bit of energy from windmills and water mills, and the burning of wood.
If you think about it, all of that derives directly or indirectly from the sun. The energy from the sun is turned into organic matter by the action of photosynthesis in plants and algae. That is either directly consumed by animals or human beings, or else it's eaten by other things which in turn are eaten by animals or human beings. The wind power derives from the sun warming the atmosphere and creating currents of air as some parts of it rise and air moves from other places to move into it. The water flowing down a stream derives from the sun evaporating the seawater and lakes, going into the atmosphere, condensing as rain and falling, running into the water courses and eventually into a river where it drives a watermill. So the entire thing is from current sunlight.
Even tidal energy would come from the moon?
Well, no, that is actually an exception to it. The tidal energy really is tapping the angular momentum of the Earth and the Moon. The water is, if you like, lifted in a hump towards the Moon and to a lesser extent towards the Sun. As the Earth rotates underneath it, that hump in the water creates a high tide and as it passes it creates a low tide. So tidal energy comes from that angular momentum of the Earth and consequently, if you like, slowing the Earth down and slowing the orbit of the Moon very slightly. In fact, that is happening whether or not we put a Tide Mill somewhere and extract some of it in the form of useful energy.
The laws of thermodynamics
I just want to say briefly a few words about the two laws relating to conversion of energy. These are called the laws of thermodynamics, which makes it sound obscure and complicated. But in everyday terms, we'd say the laws of heat and movement. And in fact, it's slightly wider than that.
It was given that name because the initial interest was in relation to improving the efficiency of steam engines. The first law says that energy is neither created nor destroyed. Since Einstein discovered the principle of relativity and the equivalence of energy and mass, strictly speaking, we should say that the total amount of energy and mass is neither created nor destroyed. I'll come back to that in a minute when we talk briefly about nuclear power. But for all intents and purposes, the traditional law of conservation of energy is the first law. The second law has got various forms.
One way is that heat cannot of itself run from a cold body to a hotter one. Another way is to say that entropy always increases. Entropy is, although I think science courses never discuss this until you get to university level, in fact, something that we're all familiar with. We're all aware that if you watch a movie, it's usually pretty obvious whether the movie is running forwards or running backwards because things look ridiculous if the movie is running backwards. If you have a glass falling from a table to the floor and shattering, the energy at the end of that process is the same as at the beginning. But because there's a certain amount of energy by the fact that the glass is higher up in the gravitational field to start with, as it falls it gets faster and faster. That changes into the energy of movement. When it hits the floor it breaks into pieces, the pieces scatter around and they stop moving. The energy is now being transferred into a small amount of heat because all the molecules in the bits of broken glass are moving a bit faster on average than they were before it happened. But there's no way that energy is going to organise itself so that they all spontaneously move back together, stick together and jump up in the air and go onto the table.
Yeah, just like you can't un-bake a cake.
You can't unbake a cake, can't unscramble an omelette. These are all, if you like, equivalent ways of stating that second law in everyday terms. It also explains the processes of rot and corrosion and decay and erosion by wind and other natural processes. On the face of it, it seems that the phenomenon of life is a contradiction to that, which is why in the past there were various theories about the vital force and so forth. But it isn't actually an exception because whenever you get order happening, and probably the simplest example of this is if you've got a super concentrated solution of salt and something precipitates it's starting to crystallise. Obviously the crystals have got much more order than the solution because there's a structure there, there's a defined position subject to a little bit of vibration of all the atoms in the crystal, whereas in the liquid all the molecules could move around.
But there is heat released when something crystallises, when anything solidifies. Similarly, you have to put heat in in order to melt something. That actually balances it out because low grade heat, heat which is not significantly different from its surroundings is a higher entropy state than heat which is at a much higher temperature than its surroundings. The same thing happens with human beings. We need to take in something like 2000 kilocalories a day of chemical energy in the form of food. That is for the most part dissipated by the heat that we lose from our bodies to the surrounding environment. The heat that we lose from our bodies offsets the maintenance of the structure and the organisation of our bodies and it also offsets anything that we do, whether it's writing a poem or building a house. That obviously is creating order and it's offset by the disorder that we create by the heat that we radiate.
The entire phenomena of life on Earth and everything that living things do is because of that flow of energy from the sun. You've got the surface of the sun at around about 5,000 degrees centigrade. That arrives at the Earth every day and a similar amount of heat is radiated from the Earth on the dark side during the night time into deep space, which has got a temperature of approximately minus 270 degrees centigrade, three degrees absolute. So it's that flow of energy. Of course, the fossil fuels, that also is energy which came from sunlight. But the difference is it came from the sunlight three or four hundred million years ago, over a long period of time, many millions of years. We have burned through the overwhelming majority of that which is available to us from those sources in the last 300 years.
Of the easy pickings. Yeah.
Using Energy to Get Energy
It's not just a question of difficulty. It's also the question that it takes a certain amount of energy to extract those fossil fuels to transport them from wherever they are to wherever we're going to use them. Whereas 300 years ago, there were lots of coal fields where all you had to do was scrape the surface topsoil off them and dig the coal straight out of the ground. That's why they're called coal pits, even though, of course, before long, it was no longer a pit in the sense of a surface hole like a gravel pit or a chalk pit where you could just dig it up and cart it straight away but the veins were hundreds of feet under the ground. You needed to sink a deep mine shaft and send the miners down in a lift and bring the coal back up in the same haulage arrangement.
Similarly with oil, a hundred years ago you could dig through 20 or 30 feet of rock and the oil would be there under pressure, it would spurt out of the ground and you'd simply have to put a pipe and a valve on the top and run it from there into barrels. Whereas now of course we have to drill down thousands of feet under the ground, often in very inaccessible places on the bed of the sea. All that takes energy.
So you have what we call energy return on energy invested. Once we reach the point where the energy that it takes to get a kilowatt hour of energy worth of oil, once it takes as much energy to get to it as you're going to get back, you're no longer getting a net result. I think we must actually be very close to that because already, as you may well be aware, when you buy a tank full of petrol, 10% of that petrol is actually ethanol, ethyl alcohol.
That comes from the fermentation of cornstarch and then the distillation of that. All of those are pretty energy intensive processes, although the energy going into the cornstarch which you then get into the alcohol, is available to us. It's come from the sun. It's been captured by the leaves of the corn plant stored in the corn cobs. These need to be harvested, mashed, fermented. Heat needs to be put into it to distill the alcohol off. It's difficult for me to believe that that is actually a net energy gain.
The only reason for it is that the economics of it subsidise the cost of the crude oil and the processing of that. Anyway, what we're going to see is not a sudden running out but increasingly increasing difficulties and supply shortages and that and we've had little hints of that already, haven't we?
You've talked in the past about there being various inflection points in human history and the industrial revolution being the last major one of those. And these changes in energy consumption from things like water mills and so on, to fossil fuels. But we're still very much in that. And we're now saying that we're now living through another inflection point in human history. So there is going to be another change in how we harness energy, surely.
The Sun Provides More Than Enough Energy
Yeah, yeah. And one of the ways that I differ from a lot of the commentators on this is that I think that there is a potentially bright future for us. It is possible that we could have a comfortable standard of living for the entire human population using the energy flows from the sun.
We would be doing things massively differently from the way that we are at the moment. And one of the things I would say is that there's, it seems like there's sort of almost frenetic rush to get through these last remaining reserves of fossil fuel as quickly as possible.
Is that not just because that's the way the industry set up so the industry is self-preserving somehow?
It's very difficult to know. I think both politics and commerce and finance all operate on very short time horizons. And no individual has the capability to buck that trend, I would say. That's the best explanation. I mean, as we were talking last week when we discussed the limits of growth, the feeling that I had, and literally many millions of other people had, 50 years ago in the 1970s, was that it was so obvious that we were needing to change course, that we should get on and do that as quickly as possible so that we could have a smooth transition.
But that just did not happen. And we totally underestimated the, you could say, the inertia, the momentum of the existing processes. There were various attempts. I mean, when Jimmy Carter was president of the United States, he famously installed solar panels on the roof of the White House, which is quite a sensible thing to do, and it was also a very good example to everybody. And the first thing that Ronald Reagan did when he became president subsequently, was he ordered the solar panels to be stripped off, which was another symbolic gesture.
It shows that how you do one thing is how you do everything.
Yes, exactly. You know, and there were 55 mile an hour speed limits. So you had these ridiculous big powerful American cars chugging along the freeways very slowly in an attempt to slow the rate of fuel consumption. And once again, that was repealed. And there was a little bit of a phase for more economical vehicles, but this is offset by a very big trend towards absurdly oversized four by fours everywhere you look around. But one of the things that I've been reflecting on recently, amidst all this madness, is the most extreme example of it has got to be warfare and the preparation for warfare.
The Impact of War
I've just done a few back of an envelope calculations on this. And it's obviously particularly relevant now that we've got two major conflicts going on. There's the incessant bombardment of Gaza, which it seems there's no end to until the entire area has been obliterated. And there's the war in Ukraine. Now, quite apart from the perilousness of and the recklessness of these enterprises and the sheer callous inhumanity and the suffering, if we look at it from an energy point of view, it really becomes quite extraordinary. Every ton of high explosive is equivalent to 120 kilowatt hours of energy. And to put that in perspective, that's the energy usage of a typical British household in a week. Now there have been... I just had a quick look to get some statistics. The bombardment of Gaza, the figure I found was from June. I think you could probably increase this by 30% to bring it up to date anyway. But as of June, it was estimated that there have been 70,000 tons of ordnance dropped on Gaza.
That is incidentally, that's about five times the total amount of bombs that were dropped on London during the Second World War. So it's quite an astonishing amount. The energy in that high explosive has got to come from somewhere. The manufacture of trinitrotoluene, TNT, or nitroglycerin is obviously an industrial chemical process. It has to start with chemicals that have got energy into them and the entire process requires more energy. So there must have been energy which is going to have come from oil or coal or natural gas originally to put into that energy in the form of the explosive content. And because we were saying about the second law, I'll just go back and point out to another thing.
That second law, as well as the general sort of dissolution of structure that it implies, also means that it's the reason why there could never be such a thing as a perpetual motion machine. I remember when I was, I don't know, suppose, an eight or ten year old, I used to think about these things. I thought, why couldn't you have a perpetual motion machine. Suppose you had an electric motor and you coupled it to an electric generator and you use the output of the electric generator to drive the motor. Wouldn't that go on forever? Well, there's a couple of things about it. Of course, even if it did, as soon as you actually try and do anything useful with it, like couple it to a machine to lift material up in a hoist or run a lathe to manufacture something, you'd be taking energy out of that and that would run it down. But even if you didn't do anything at all, it wouldn't go on forever for the very simple reason that however good your wires are, there is some resistance in them. So the wires would heat up and energy would get dissipated away. However good your bearings are, there's going to be some friction in the bearings. You've got air resistance as well. So that is basically the reason why there can't be perpetual motion.
Bearing in mind that you've got that 120 kilowatts in each ton of high explosive, it must have taken a lot more than 120 kilowatt hours worth of energy because of the inefficiencies of every stage of the process. And of course, that's just the explosive content. There's also the steel or whatever the casing is made of, the control mechanisms, the fusing, all of those take energy to manufacture and the thing has got to be transported from wherever it's made to wherever it's eventually exploded.
And all of this increases GDP and therefore is a good thing.
Exactly. That appears to be as far as the thinking goes in a lot of circles.
And of course, when it explodes, it destroys something. I mean, if you take something like a house, for instance, there's something like a couple of man-years of work involved in constructing that house. To actually build it these days, I think it probably takes typically four people working on it at any one time, not necessarily the same for initially there'd be bricklayers and hod carriers and then they're going to be carpenters and plumbers and plasterers and so forth. Typically I think you can get a house built in about three months. There'd be four people working on it any given time. So that adds up to a man year of work. And at a rough guess, I'd say probably another man year in all the various factories to make the bricks and pipes and planks and so forth.
So there's a reduction, if you like, of energy locally in the construction of that house, as there is a local reduction of entropy whenever anything is manufactured. And what you do when you apply that ton of high explosive and destroy that house is you've actually, far from doing anything constructive with it, you've actually hastened the process of energy by destroying something that has been created. And I mean, this obviously pales into insignificance compared with the suffering and the anguish of the people who are caught up in the war.
It's a big opportunity though if you plan to then rebuild that area.
Of course, yeah, exactly so. So anyway, that's just an overview and it is kind of food for thought about how we go about organising ourselves differently over the next couple of decades if we're not going to revert to the feudal ages or the Stone Age.
I'm sure that from a technical standpoint and from an energy flow standpoint, there is no reason why every human being on this planet could not have a satisfactory, comfortable life of health and freedom and self-expression. But we shall see.
There's plenty of energy. So there is plenty of energy coming from the sun every day.
There is several hundred times the amount of energy that we're currently using from all our sources flowing through the Earth from the Sun in total. So we only need to tap a relatively small amount of it. But in so far as thought is being given to that, a lot of the solutions from an engineering standpoint and from a resources standpoint are entirely fanciful.
It's noticeable to me at the moment that there's a lot of, for instance, using agricultural lands to fill it full of solar panels, which clearly doesn't make sense to me. I've seen different applications where people have put solar panels on the top of a car park. That kind of makes sense to me because it's not been used to grow anything or create anything.
Yeah, it makes no sense whatsoever.
And there's plenty of deserts all over the world. I mean, obviously you've got to then, if you're relying on that, you need to transmit the electricity from the desert to where it's going to be used. But that is a solvable problem.
Yeah, and the solar panels have some inputs as well, don't they, in oils and what not, go into them.
Well, the solar panels require very sophisticated manufacturing. So I don't see the African and Asian poverty stricken villages having access to the resources to buy solar panels, for one thing. And for another thing, solar panels use a lot of very rare elements in them.
And I'm not sure what the total availability of those is, it seems like, again, based on a quick back of an envelope calculation, replacing the entire current energy generation capacity is improbable using solar panels, particularly if you then add into that an assumption that we're going to have a similar kind of transport infrastructure with everybody using individual cars, except that they're going to be electric rather than gasoline or diesel.
It doesn't, it obviously doesn't add up just based on the resources needed to make the batteries.
Local Rather Than Centralised Distribution
We need some much bigger blue sky thinking and you know perhaps we can have another whole episode going into speculating about that in more detail.
We're not going to get there by chopping down more forests, putting up more wind farms, putting solar panels in fields, all of that. Which to my eyes is largely what's happening at the moment.
Yeah, well, a lot of this, of course, is still thinking in terms of the centralised distribution method rather than distributed generation. I think the future is definitely going to have a lot more energy capture on the level of individual household and of a village or a community or a district rather than you know the present capacities of multi-thousand megawatt power stations. They will have a place in the overall picture but it will only be part of it.
Even in places like Egypt where they've built huge hydroelectric dams, like it still has huge knock-on effects because it's basically stopped the Nile from running. So then, you don't get the fertile land and it has knock-on, it has these knock-on effects. The same in South America, in Brazil and Paraguay with the Itaipu Dam. Yeah.
Yeah, absolutely.
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