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A Green Economy Is Possible, But At What Cost?

Jonathan Ford, Financial Times

The problem with renewables lies not in capability, but in low productivity

Some US scientists have recently been conducting a rather heated argument about whether it is possible to have an economy that is powered 100 per cent by renewable (or non-fossil) energy sources. The answer, obviously, is yes.

Such economies have previously existed, and not so very long ago. Go back to 17th century Europe, and pretty much all energy production centred on the cultivation of fields, management of woodland and animal husbandry. It meant that a great deal of physical land was needed to support a population a fraction of today’s global billions.

The question is not so much whether you could recreate that sort of society. It is really whether you would want to, and that comes down to the issue of acceptable cost.

The problem with renewables lies not in whether they do the job, but in their low productivity. According to the Institute for Energy Research, the energy sector accounts for about 9 per cent of global gross domestic product. What that means is that it costs us nearly a tenth of our collective output to produce all the energy needed to run the world economy.

It is a figure that conceals technologies working at varying levels of productivity. You get a sense of the underlying picture by calculating the so-called energy return on investment for each given technology, or ratio of the income generated by that fuel or process to the capital and operating costs (excluding fuel costs) expended in actually getting the power.

They range from practically nothing for dung fires, to a 50:1 return on coal and gas, and a towering 70:1 ratio for nuclear, according to research by Professor Michael Kelly of Cambridge university. Meld them all together and the resulting blended ratio stands at about 11:1.

How would that change were the world to switch to renewables completely? Well, we can get some idea from studies of solar energy carried out in Spain for the years 2006-09. You extrapolate the earnings from a solar array over its 25-year life and then calculate the offsetting costs, including everything from land rents, maintenance, permissions to the cost of making and installing the panels. As these add up to about 40 per cent of the revenue, the energy return on investment is about 2.5:1 according to Prof Kelly.

What that’s telling us is that the proportion of our resources that would need to be devoted to energy generation would rise sharply. Compare, for instance, steel consumption sunk into gas-powered generation with that for wind turbines. A kilogramme of steel turned into a gas turbine has the capacity to generate 2 kilowatts; the same metal in a wind turbine nacelle produces just 2 watts. […]

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