âHowever, for it to overwhelm economic growth over decades, the price of energy would have to increase an order of magnitude or more, which I donât think is plausible. I donât think there is a multiplier effect in equilibriumâ
Do you have any empirical data on that claim? Or is that just a guess on your part?
On my part, I personally tend to think that my personal instinctive takes about how the economy works are false, so I try to rely a lot on empirical data. For the multiplier effect, see the paper I mention here.
For a carbon tax, the main perk of a progressive carbon tax is that it is predictable and gives time to adapt, so it would be a good thing, I agree. Unfortunately, there are many things preventing a strong carbon tax, like fear of offshoring or overall very low public support (see the Yellow Vests in France).
âResource exhaustion is not nearly that abruptâ
Iâd argue it is quite abrupt, at least when it comes to impact on prices. Like oil price going from $20 in 2002 to $140 in 2008 (when overall oil supply didnât really decline, it just didnât grow fast enough). See this graph. Geopolitical factors like Russia exporting less are expected to increase in the future, not decrease.
To solve the seasonal mismatch of renewable energy and electrical demand, we can just burn agricultural residues or logging residues in repurposed coal power plants.
For biomass, using Fischer Tropsch liquids for coal has been done (and has only been viable with low coal prices and subsidies, like in Germany). But doing that with biomass is far less mature, I havenât seen a commercial plant for that (See this report page 7-8).
Limits for solar are less about the theoretical potential, but about the materials needed to harness it (electric cars and batteries), deployment speed (with the rehauling of the grid), and land use (see Halsteadâs report, page 52-54).
Iâd argue it is quite abrupt, at least when it comes to impact on prices. Like oil price going from $20 in 2002 to $140 in 2008 (when overall oil supply didnât really decline, it just didnât grow fast enough). See this graph.
Link didnât go to specific part of document. But even if it were a shortfall from business as usual demand of 2%/âyear for oil, that is ~0.8%/âyear for all energy, which is a different order of magnitude from 10%/âyear for energy.
Geopolitical factors like Russia exporting less are expected to increase in the future, not decrease.
Renewable energy is better distributed across countries than fossil fuels, so I would expect geopolitical disruptions to decrease in impact.
Well, the shortfall for oil in the 2000s was still big enough to be highly linked to the 2008 financial crisis. You can check it hereâif the link doesnât work, search for the title âThe 2008 financial crisis: the third oil shock?â. The graph I refered to that didnât work was this one:
Relationship between oil price and oil production. Jancovici, based on data from BP statistical review
Renewable energy is more distributed, yes, but when I talk about supply shocks, Iâm talking about the fossil fuels dependency that we have right nowâand that is likely to stay there well into the next 3 decades.
Renewables also rely on metals, some of which are poorly destributed (like lithium and copper in China and Australia, and platinum in South Africa) . China also directly controls approximately 80% of the raw materials value chain (mining, refining, smelting, manufacture and recycling). This does not account for Chinese-held corporate foreign investment in industrial assets worldwide. Specifically, the country has reduced its exports to attract more industry to the country. The Made in China 2025 plan is designed to secure the remaining 20% for Chinese interests in the name of long-term security (see here, page 61).
I looked at the reference and I donât see evidence for the 80% number. The majority of the mineral budget (total ~1% of GDP) is cement, iron, and aluminum. It looks like China mines little iron and aluminum, though it does refine a lot of them. Eyeballing it looks like China is ~half production and consumption minerals, which is a lot. But the idea that China would control 100% of the worldâs mining, refining, smelting, manufacture and recycling is hyperbole.
Ok, I looked again and the 80% figure is a bit a stretch compared to the initial formula, I can agree. I think itâs not just âChina is mining these mineralsâ but âChina is involved in the material chain at some point, through mining or refining or smelting or manufacturing or recyclingâ (with varying degrees of dependency). That could be where the 80% figure comes from. 100% is not realistic, but Chinaâs share is the value chain is increasing.
But even if we were to stick to 50% of control as you suggest, or 60%, this would not change much of the issue that there is a lot of dependency, indeed. A lot of potential vulnerability would arise if China were to cut down some of its exports (whether voluntarily, or by accident, or because of a pandemic).
Do you have any empirical data on that claim? Or is that just a guess on your part?
On my part, I personally tend to think that my personal instinctive takes about how the economy works are false, so I try to rely a lot on empirical data. For the multiplier effect, see the paper I mention here.
For a carbon tax, the main perk of a progressive carbon tax is that it is predictable and gives time to adapt, so it would be a good thing, I agree. Unfortunately, there are many things preventing a strong carbon tax, like fear of offshoring or overall very low public support (see the Yellow Vests in France).
Iâd argue it is quite abrupt, at least when it comes to impact on prices. Like oil price going from $20 in 2002 to $140 in 2008 (when overall oil supply didnât really decline, it just didnât grow fast enough). See this graph. Geopolitical factors like Russia exporting less are expected to increase in the future, not decrease.
Well, current burning of biomass for electricity in Europe already contributes to deforestation. So I donât think residues will be enough.
For biomass, using Fischer Tropsch liquids for coal has been done (and has only been viable with low coal prices and subsidies, like in Germany). But doing that with biomass is far less mature, I havenât seen a commercial plant for that (See this report page 7-8).
Limits for solar are less about the theoretical potential, but about the materials needed to harness it (electric cars and batteries), deployment speed (with the rehauling of the grid), and land use (see Halsteadâs report, page 52-54).
Link didnât go to specific part of document. But even if it were a shortfall from business as usual demand of 2%/âyear for oil, that is ~0.8%/âyear for all energy, which is a different order of magnitude from 10%/âyear for energy.
Renewable energy is better distributed across countries than fossil fuels, so I would expect geopolitical disruptions to decrease in impact.
Well, the shortfall for oil in the 2000s was still big enough to be highly linked to the 2008 financial crisis. You can check it hereâif the link doesnât work, search for the title âThe 2008 financial crisis: the third oil shock?â. The graph I refered to that didnât work was this one:
Relationship between oil price and oil production. Jancovici, based on data from BP statistical review
Renewable energy is more distributed, yes, but when I talk about supply shocks, Iâm talking about the fossil fuels dependency that we have right nowâand that is likely to stay there well into the next 3 decades.
Renewables also rely on metals, some of which are poorly destributed (like lithium and copper in China and Australia, and platinum in South Africa) . China also directly controls approximately 80% of the raw materials value chain (mining, refining, smelting, manufacture and recycling). This does not account for Chinese-held corporate foreign investment in industrial assets worldwide. Specifically, the country has reduced its exports to attract more industry to the country. The Made in China 2025 plan is designed to secure the remaining 20% for Chinese interests in the name of long-term security (see here, page 61).
I looked at the reference and I donât see evidence for the 80% number. The majority of the mineral budget (total ~1% of GDP) is cement, iron, and aluminum. It looks like China mines little iron and aluminum, though it does refine a lot of them. Eyeballing it looks like China is ~half production and consumption minerals, which is a lot. But the idea that China would control 100% of the worldâs mining, refining, smelting, manufacture and recycling is hyperbole.
Ok, I looked again and the 80% figure is a bit a stretch compared to the initial formula, I can agree. I think itâs not just âChina is mining these mineralsâ but âChina is involved in the material chain at some point, through mining or refining or smelting or manufacturing or recyclingâ (with varying degrees of dependency). That could be where the 80% figure comes from. 100% is not realistic, but Chinaâs share is the value chain is increasing.
But even if we were to stick to 50% of control as you suggest, or 60%, this would not change much of the issue that there is a lot of dependency, indeed. A lot of potential vulnerability would arise if China were to cut down some of its exports (whether voluntarily, or by accident, or because of a pandemic).