by: Michael Hoexter
In the leisurely way I have been writing and posting on my blog, I have not yet completed my series on how energy supply and energy demand will look in the future, what I am calling the Renewable Electron Economy. Yet, as events are unfolding more rapidly in the world around us, we may see some form of an Electron Economy, perhaps fueled by renewable energy, sooner rather than later.
The Oil Price Spike
One area of the economy that almost all people are feeling the oil price spike is in the price of food. Food prices are also climbing as we start to see how much the global food system is dependent upon fossil energy to produce food and get it to market.
Oil prices, however, affect most sectors in modern economies, as logistics and international trade is heavily dependent on oil. Ordinary citizens in the US, Canada and Australia are in many areas almost entirely dependent on petroleum to do most activities of daily living including getting to work and shopping for, among other things, food.
Whether we see the “End of Suburbia” and severe economic contraction will depend on a number of factors including the willingness of governments to act quickly to both help people adapt to expensive oil and to prepare for a “post-oil” world. As with climate change, there are two levels of response: short-term adaptations and long term energy strategy. Both levels will be necessary to avoid the worst effects.
There are those, critical of the certainties of Peak Oil theory, who say that we are experiencing a speculative bubble in oil prices, which will recede later this year. But Peak Oilers, at least, will say that this amounts to “whistling past the graveyard”, as limits to oil supplies and rising demand will inevitably raise the price of oil dramatically whether this year or next.
My understanding of basic economics would indicate that the Peak Oilers are right about the overall trajectory of oil prices even if the production peak has either already happened or will happen in 5 years time. The way in which energy economics has been treated as exceptional, let’s call it “oil exceptionalism”, is itself a cause for wonder. In addition to the immediate economic crises associated with much more expensive oil, there may as well be a huge crisis in confidence in the profession of economics and political leaders who have not prepared us for what in retrospect may appear to have been an inevitability, predicted over 50 years ago by M. King Hubbert.
The Electric Vehicle Solution
In discussions of the presumed-to-be-distant post-oil future that one has seen in the media, one is presented with a colorful assortment of possibilities that makes for diverting journalistic fare but hides the fundamental physics of energy and energy conversion technologies. The picture is not nearly as complicated which may be unfortunate for those looking for a good story as well as commercial interests betting on biofuels or hydrogen fuel cells. For most transport uses, with a few modifications in technology and some large infrastructure projects, electric motors will drive most on-land transport and machine tools, with biofuels and hydrogen generated from clean electricity used for some specialty applications.
In an era of plentiful and cheap fossil fuels, the massive energy losses associated with internal combustion engines have been deemed acceptable or at least largely invisible to the unconcerned public. But in an era in which energy will need to be actually “produced” from capital-intensive renewable energy conversion technologies or from very capital-intensive nuclear power plants, a more efficient solution is going to deliver more end-use utility from scarcer usable energy. Furthermore most of the renewable energy conversion devices that we have already invented convert renewable energy into electricity; these devices are many times more efficient in producing usable energy than photosynthesis in fuel crops.
I won’t rehearse the whole argument here why electric vehicles that store their energy in batteries, flywheels or ultracapacitors are our first line of defense against climate disaster and peak oil. Ulf Bossel, Joe Romm, Patrick Mazza and Roel Hammerschlag have run the efficiency analyses to show that electric drive vehicles as opposed to hydrogen fuel cell vehicles are going to enable us to use most renewable energy sources to do work in a way that is truly conservative of the energy we will have available, at least in the coming several decades.
There are challenges ahead in extending and reinforcing the electric grid, in improving the energy density of batteries, and in building electric overhead or third-rail energizing infrastructure for trains, trolleybuses, trolley trucks, etc. But electric vehicle (EV) technology is rapidly maturing.
The Turning Point
Local fleets of utility vehicles and trucks can use somewhat larger and heavier conventional battery packs to go the 40 or 50 miles that they need to traverse every day. Fleet vehicles can also pioneer fast-charging infrastructure and/or battery pack exchanges. Vehicle fleets can leverage the existing electric forklift technology that one finds in warehouses and factories making for a faster development and production timeline.
The announcement last week that the Japanese post office is planning a transition to an all-electric fleet indicates to me that it is only a matter or time before most managers of local fleets will start ordering electric vehicles, driven by the rising price of diesel or gasoline. This would mean potentially the purchase of 21,000 electric vehicles. The French post office is starting a similar project. The post office of tiny Monaco is already making a similar move. There are other electric vehicle and plug-in hybrid fleet test projects at other large state agencies. These orders and projects already add to moves by private companies in Europe who have put in orders for or are already using electric delivery trucks by Smith, Modec and other manufacturers (in part a response to the London congestion charge).
Though these vehicles may be moving below the radar of personal car buyers and car fans, they will provide a means to build electric vehicle manufacturing infrastructure. Furthermore, a vehicle that does the work that is asked of it using electricity will become in the future more “sexy” than a vehicle that requires expensive inputs like petroleum fuel to move. More important for achieving economies of scale are fleet buyers who with their buying decisions, can help EV companies survive and thrive. Rather than having to convince or market to often-finicky individual consumers, corporations and governments can lay out their functional requirements to which companies can build vehicles. From this basis, more adventurous EV designs for the public can be attempted.
Shai Agassi’s Project Better Place, which promotes an all-inclusive vehicle plus charge infrastructure package for localities, has a more ambitious plan of converting personal transport to electricity by using a subscription model. PBP has gotten interest from localities that are actual or virtual “islands” where EVs with contemporary batteries would have little problem fulfilling most transport tasks.
Plug In Hybrids
For more sparsely populated regions or users that require trips of variable length, the plug in hybrid or extended range electric vehicle has become the option that has gained a great deal of visibility. The Chevy Volt is now the highest profile PHEV/EREV project. Toyota may respond with a plug in version of the Prius, which has been the object of most aftermarket PHEV conversions. While still 2 to 3 years away as a production vehicle, PHEVs or EREVs will probably gain wide market share, especially with high gas prices continuing. As they have received more coverage, have a number of websites and organizations (calcars.org) devoted to them and are a growing topic unto themselves, I will discuss PHEVs/EREVs in another post. Once available, PHEVs or EREVs will also attract fleet buyers.