At some point the world will have to face the decline of all fossil fuels. The decline of oil is fast approaching. To some extent oil decline can be temporarily ameliorated by liquid hydrocarbon production from coal and natural gas. This technology might provide an extra 30-40 years of current energy expenditure before an alternative energy source will have to be found. Beyond that time period, the situation becomes murkier. Renewable energies are heralded as the new saviour. The reality is that complete reliance on renewable energy would mean huge social unrest. Unfortunately, the method of agriculture we use to support our populations requires enormous energy inputs and is unsustainable with fossil fuels. Renewable energy cannot supply the energy inputs for modern agriculture, economic growth and employment. The inevitable conclusion is starvation on a global scale unless a new energy source which is equivalent to fossil fuels can be found.
It is difficult to speculate on the political, social and technical developments that will occur beyond the next twenty years. There are, however, a few things of which we can be certain. The development time of new energy technologies is in the order of decades. For example, fusion power, which has the potential to supply our energy needs for hundreds of years with little long-lived waste and minimal weapons proliferation risk, is many decades away from a commercial reality. A commercial fusion reactor is not expected before the 2040s (1). A full-scale roll-out of fusion reactors would be several decades later than this. Clearly, fusion technology is not going to be a permanent fix for our energy problems for several decades.
Until fusion can supply our energy needs, a stop-gap technology is required. In its absence, economic growth and our industrial society would be at serious risk of collapse around 2040-2050. In addition, there may be insufficient energy to enable conversion to a new energy technology such as fusion without a stop-gap. What is required is a technology with a proven track record that can be rolled out in the very near future. It must also have the potential to draw on reserves that are greater than fossil fuels. The only known energy source that fits these two criteria is uranium-derived nuclear fuels.
Nuclear fission reactors have been in existence of over 50 years and contribute a significant amount to energy generation. For example, the world currently derives 15% of its generating capacity from nuclear energy (1). France generates most of its electrical energy from nuclear sources. Hence, this form of power generation has a proven track record.
Regarding the second criteria of potential energy reserves, natural thorium and uranium isotopes, if converted to fissile material using breeder reactors, have the potential to supply our energy needs for hundreds of years (2). Three of the generation IV reactors that are currently in development are fast reactors capable of generating more fuel than they consume. This technology is currently in development and could be rolled out around 2020-2030. Hence, the nuclear fuels meet the requirements of a stop-gap as described above.
The negative consequences of nuclear energy generation are clear: long-term dangerous waste and nuclear proliferation. Hence, a choice must be made between the continuation of industrial society and human population growth with the risk of enormous environmental damage, or the decline of industrial civilization and social upheaval.
1.
Q. Schiermeier, J. Tollefson, T. Scully, A. Witze, O. Morton, Nature 454, 816 (Aug 14,2008).
2.M. K. Hubbert, Drilling and Producton Practise 95, (1956).
For the foreseeable future, we will have to supplement declining oil production with liquid hydrocarbon fuels produced by some other means. Once production peaks, declines of approximately 3% a year are expected (1). Hence to maintain the status quo, a supplementary source would need to increase by about this amount annually. To enable growth, oil production or improvements in energy-use efficiency would have to be even greater. One possibility is production of liquid hydrocarbon fuels using the Fischer-Tropsch process (2). This method was used successfully by Germany during the Second World War and by South Africa during the apartheid regime. In fact, most of South Africa’s diesel fuel during this period was produced by this method. SASOL in South Africa is a major chemical manufacturer currently using this process. Hence, this is a proven technology requiring a large source of fossil fuel such as coal or natural gas.
Synthetic fuel produciton from coal, for example, using Fischer-Tropsch is a two-step process. Firstly, syngas is generated from coal by applying steam and oxygen. Syngas is a mixture of mostly hydgrogen and carbon monoxide gases. These are the components used to generate hydrocarbons using heat and a catalyst in the Fischer-Tropsch process. If we were to use coal as a feedstock for liquid fuel, combined with reduced efficiencies imposed by carbon sequestration, would require a doubling in the rate of use of coal (3). At our current rate of use, world coal resources are predicted to last up to 200 years (4). Hence, using coal to generate liquid fuel we could reasonably expect the world’s coal reserves to last at least for another 50 years. This should provide enough time to develop new sources of fuel and the infrastructure to supply it.
One possible plan could be implemented over the next 20 years which maintains access to liquid hydrocarbons and is carbon neutral and cost effective. The overall strategy is to utilize the Fischer-Tropsch process whilst off-setting the increased carbon emissions by actively substituting lower-carbon electricity generation such as coal-fired with carbon sequestration, geothermal, solar thermal, and perhaps nuclear technologies. To save costs, these plants would come online as older plants are retired. Hence, the plan could be implemented incrementally with minimal disruption. The plan is given below:
1.Encourage the use of plug-in hybrid and all-electric vehicles which can be mostly powered from off-peak electricity generation and which would not require extra generation capacity. These have the added advantage of potentially lowering carbon emissions if certain electricity-generating technologies are used. The purpose of this would be to divert personal transport away from liquid hydrocarbon fuel use so that the remainder can be used for agriculture and industry.
2.For transport and machinery that is reliant on liquid hydrocarbon fuels, an alternative will have to be found. To provide this essential fuel, develop the production of liquid hydrocarbon fuels using the Fisher-Tropsch process to supplement declining oil production. Due to the expected volatility in the oil price, the private sector may not see investment in this technology as particularly attractive. Hence, development of this technology will probably require large government financial incentives. It may also require nationalization of parts of the energy sector to be practical.
3.To remain carbon neutral, increased carbon emissions from the Fischer-Tropsch process will have to be offset by utilizing increased efficiencies or lower carbon emissions in some other sector. The most effective means by which this could be achieved is to rapidly develop new low emission technologies for electrical power generation. One example in Australia is geothermal energy which could be utilized with virtually no carbon emissions (see Geodynamics). As the sites where this energy could be effectively utilized are quite remote, this technology would require the construction of high voltage transmission lines to remote regions. Again, this would require large government financial incentives.
Some of the extra energy inputs required for liquid hydrocarbon production would not necessarily lead to increased carbon emissions. For example, the energy required for steam generation for synthetic fuel production could come from an electrical source. Hence, there is the potential for the increased carbon emissions from the electrical source to be sequestered. The carbon emission from these fuels would then be limited to the combustion of the fuel itself at the tailpipe.
As previously mentioned, natural gas can also be used as a feedstock for the Fischer-Tropsch process. Countries rich in reserves for natural gas will be able use this to generate liquid hydrocarbon fuels. When it is considered that the energy stored in proven natural gas deposits is equivalent to the energy content of the remaining oil reserves (4), this seems an appealing idea. However, most of the world’s natural gas reserves are concentrated in Russia and the Middle East, particularly Qatar and Iran. Hence, as oil production dwindles, it will be attractive for these countries to develop synthetic fuel production for export to supply energy-importing countries such as the US. In fact, Qatar is currently developing a synthetic fuels production plant. However, due to the concentration of natural gas reserves, using natural gas as a feedstock will not be an option for most countries.
On the other hand, coal is plentiful in many countries such as the US, which has the world largest reserves, and India and China. These countries could develop synthetic liquid hydrocarbon fuels produced from coal to supply their domestic energy needs. The ability of countries with large coal reserves to exploit this energy potential will depend on two things. Firstly, accessing these reserves will have to result in a net energy gain. Secondly, it will also depend on the ability of producers to address regulatory concerns of increased greenhouse gas emissions related to these fuels.
In summary, there will be an increasing role for synthetic fuels produced in Russia and the Middle East for export using a natural gas feedstock, and synthetic fuel production for domestic use in places such as the US, India and China using coal as a feedstock. This is the scenario for the next 20 years and probably some decades beyond. However, at some point cheap accessible coal resources will themselves decline, at which point further alternatives, probably nuclear (see Beyond 2030), will need to be developed.
Macroeconomic
Oil price spikes and rapid fluctuations in demand will be detrimental to economic growth. Modern economies, which require constant growth, could stall after these shocks. There is some suggestion that such a shock contributed to the 2008 financial crisis. Economic modelling reveals that an oil shock will adversely affect the financial sector financial sector (5). To prevent a deflationary spiral and resulting high unemployment, a rapid economic stimulus could be implemented. How this stimulus could be achieved without incurring huge public debt, long-term inflationary effects, or even stagflation is yet to be determined. An important aspect to future economic management will be rapid responses requiring real-time monitoring of demand in the wider economy. The best way might to simply print money (quantitative easing) for a brief period after severe shocks. This environment will be new ground for our understanding of economics which has been used to continual long-term growth. Completely novel approaches might be required to reduce volatility, and maintain wealth and employment.
Microeconomic
The most likely effect at the microeconomic level will be dramatically rising costs over a short period. These costs will be exacerbated by oil price spikes. In order to survive, organizations will have to rapidly restructure. Financial survival will all be about reducing costs to remain competitive. Individuals will have less disposable income, and so companies will find themselves competing in a shrinking market. Depending on how fast the situation changes, some markets for products may cease to exist altogether. Rapid adaptation to the new economic environment will be crucial.
Companies where transportation fuel is a major cost component may find themselves financially unviable. The international aviation industry is one example. Other companies with large transportation costs should shift to alternative fuels or electrically-driven transportation if possible. Alternatives should be found where other inputs have a major oil-related cost. For example, components that are imported from long distances should be sourced locally. It may not be worthwhile for individuals to commute long distances to work when the fuel cost is such a large part of their income. Workers should be encouraged to live close to their workplace or to use electrified public transport systems.
In a world of prolonged recession an increasing proportion of the population will find themselves unemployed for long periods, or even permanently unemployed. Governments rely on personal income and company tax for revenue, and will struggle to provide unemployment benefits and social services. Depending on the severity of the recessions experienced, the economy as we know it may be unable to meet people’s basic needs. People will draw on family and friends for financial support in a way not seen for generations. We could see a return to a partly subsistence way of life for many. That will force migration of people out of cities and into the country where land is relatively more affordable and plentiful enough to enable subsistence agriculture. This would be a reversal of the urbanization of the last 200 years.
1.J. Schindler, W. Kittel, “Crude Oil - The Supply Outlook” (Energy Watch Group, 2008).
2.F. Fischer, H. Tropsch, U. P. Office, Ed. (United States, 1930).
3.P. Jaramillo, W. M. Griffin, H. S. Matthews, Environ Sci Technol 42, 7559 (Oct 15, 2008).
4.S. Shafiee, E. Topal, Energy Policy 37, 181 (2009).
5.C. Kerschner, K. Hubacek, Energy 34, 284 (2009).
