GLOBAL RESOURCES ANALYSIS
INTRODUCTION | SUMMARY
PeakOil: the moment that we've taken out half of the oil that was out there, we're stocked with only the lower grade and much more difficult to explore rest. An era where the times of cheap and abundant oil driven economy are over for ever. A time of severe growth of demand, but declining supply, lower qualities/grades, expensive exploration, and higher prices by these four, beyond limits shortages, huge regional and geopolitical tensions.
Undersupply of everything we need, and oversupply of shortages. Is this situation this our outlook? Let's not hope so. But a 50% more energy demand in the next 2 decades by rapidly declining energy supply the same time is a fact and had it accelerating consequences on the prices of energy for our economies.
The big question is: How to turn on the Peak Oil Caused Crash Armageddon Scenario into a Post Carbon Good World Scenario, without the chaos caused by shortages and by explosive price rises. How do we're able to produce food and create prosperity to all currently 6.7 billion and future 9.0 billion people on earth?
This gap between supply and demand is not a future scenario, but is actually happening and growing since 2005. The gap is still relatively small, but will become more wide year after year, and will cause the logical attached price rises and supply interruptions.
This analysis is no third world story. As you can read in this analysis, it is happening right now and the chance that the so called first world, by her energy deficiency, will become the third world of the world has become a realistic possibility.
Can full prosperity (housing, food, water, energy, mobility and luxury) for everybody (us and others) be realized in PeakOil times and what does it takes? Let's stop hoping that others will do it and start analyzing, searching for new ways, designing solutions and acting.
Knowing the situation. Avoiding the spills. Seeing the advantages. Designing solutions. Financing the solutions. Realize transition. Realizing new capacities. Changing economic models. Solving the problem. It can be done.
The size of the world population we can not steer, the prosperity demand of the world population we can not steer, the size of the natural resources we can not steer. The facets we can steer are technology, organization and capital. And as world community we are good in all these three. Very good. We need renewable energy capacity, both remote and domestic. We need financial structures to finance these investments. We need to change business models and production processes.
The analysis will give you seven simple conclusions (you probably already know if you're familiar with the actual global resources information): 1) The global resources situation (and certainly the global energy situation) faces a very difficult nearby future, more severe than commonly known at this moment, which will certainly hit our cheap fossil energy based/fueled economy severely. 2) We can avoid this major treat to prosperity by a huge energy transition process of a) generating huge new energy capacity and b) transite our economic processes and our fossil energy using installbase -like cars-). 3) The current and future price of energy and new technology has made huge renewable energy cheaper than fossil energy, which will boost renewable energy generation from out the whole economy, to levels we've never seen before. 4) Local wind and local solar power will be everywhere, feeding domestic needs. 5) Cities and industries always are energy deficit and therefore needs large amounts of off-location energy. 6) Super sized windmill parks at sea and huge concentrated solar power parks in the desert will be realized in the next years. 7) Supplying regions will be connected with the demanding regions by the new type of HVDC power infrastructures.
The finance model will give you information about a global model for instant huge energy investments (both large central, as massive decentral) in large numbers worldwide for the total amount of one year world GDP. In a model that is realizable in a severe by subprime caused down writing hit financial market. It's based on a combination of backwards guarantees, forwards guarantees, specification focused fixed amount tendering and performance bonds, all covered with governmental and commercial insurances.
What amount of investments is needed? Let's calculate simple. How big is the global fossil energy (and connected) commodity market (without derivates like anything we make from fossils)? Global daily oil consumption is 85 million barrel a day, at $ 117 end product per barrel (crude, plus transport, plus refinery crack fee, plus storage, plus distribution costs, plus trade margins) is $ 10.000 million per day, and is $ 10 billion a day. Let's double this amount for calculating gas and coal reasons (fossil is 87% world energy market, oil 40%, coal 24% and natural gas 23%, so coal and gas together are the same size -a little more- than oil), that is $ 20 billion a day, is times 365 a year, is $ 7300 billion a year, is $ 7.3 trillion a year. Investments will need a least 10 years to earn themselves back (they will be mainly renewable, therefore is only the investment facet, not a fuel facet) is a $ 73 trillion investment need, which is roughly the current worlds GDP (GWP) of one year. Other calculations give a 2 year WGDP figure ($ 146 trillion) as the needed global energy investment amount (they calculate the replacement of the install base as the second half of this investment).
There are two external influences in this raw calculation model: 1) Higher oil prices, say doubled (it has happened half way in 2007, it can happen again half way in 2008) would literally double the investment amount in this model (we gone pay more for energy, a lot more, cheap energy is over). 2) More efficient renewable power generating technology can lower these investments severely. Imagining a 25% more effective technology, this should cut 20% out of the needed investments. Technological efficiency increase of this size are not possible, because both CSP generated power and wind generated power are well developed yet and based on old standard technologies. But price/performance ratios certainly can be developed much more further by mass production and install adjustment cost reductions. So in other words (as result of these two facets): above calculation is just a forward estimated amount calculation, just of a kind 'better than none'. Backwards calculated, the results of such a calculation will become proven facts. Above raw calculation is no more and no less than just some estimated investments defining calculation model.
Attached to each huge energy transition investment is an economic transition investment fund (funded by the sale of the energy investment contracts to financial institutionals) of the same size as the huge energy transition investments. These economic transition funds are focusing on transition of the economic model to the lower energy using and carbon energy free model in which the capital intensive transition of install base (for example cars from gasoline to electrical) play a significant role. If the investments are made by the designed model, this economic transition investment funds could facilitate in risk capital for micro transition in countries.
The analysis will wake you up from denial of the global resources situation and make you active in finding solutions. The finance model will give the possibility of realization of the designed solutions. All to the financial model attached investment funds will fund local power generation by governments, companies and civilians.
Author: Gijs Graafland
Back to Introduction Index
Download the full Global Resources Analysis report in PDF