“However, for it to overwhelm economic growth over decades, the price of energy would have to increase an order of magnitude or more, which I don’t think is plausible. I don’t think there is a multiplier effect in equilibrium”
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).
“Resource exhaustion is not nearly that abrupt”
I’d 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 didn’t really decline, it just didn’t 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 haven’t 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 Halstead’s report, page 52-54).
I’d 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 didn’t really decline, it just didn’t grow fast enough). See this graph.
Link didn’t go to specific part of document. But even if it were a shortfall from business as usual demand of 2%/year for oil, that is ~0.8%/year for all energy, which is a different order of magnitude from 10%/year 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 here—if the link doesn’t work, search for the title “The 2008 financial crisis: the third oil shock?”. The graph I refered to that didn’t 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, I’m talking about the fossil fuels dependency that we have right now—and 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 don’t 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 world’s 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 it’s not just “China is mining these minerals” but “China is involved in the material chain at some point, through mining or refining or smelting or manufacturing or recycling” (with varying degrees of dependency). That could be where the 80% figure comes from. 100% is not realistic, but China’s 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).
I’d 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 didn’t really decline, it just didn’t 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 don’t 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 haven’t 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 Halstead’s report, page 52-54).
Link didn’t go to specific part of document. But even if it were a shortfall from business as usual demand of 2%/year for oil, that is ~0.8%/year for all energy, which is a different order of magnitude from 10%/year 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 here—if the link doesn’t work, search for the title “The 2008 financial crisis: the third oil shock?”. The graph I refered to that didn’t 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, I’m talking about the fossil fuels dependency that we have right now—and 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 don’t 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 world’s 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 it’s not just “China is mining these minerals” but “China is involved in the material chain at some point, through mining or refining or smelting or manufacturing or recycling” (with varying degrees of dependency). That could be where the 80% figure comes from. 100% is not realistic, but China’s 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).