1. 24 May 2004World Energy Modeling Global Energy Modeling Dick Lawrence Berlin 2004 Photo from Jim Baldauf

2. 24 May 2004World Energy Modeling Agenda Introductions – who’s here Why we are here Presentation Discussion Is this the right thing to do? What does the project look like? How many people, and who? Modeling expertise? University connections? How is it funded? Sponsoring organizations? Time frame: start => end Modeling tools ARs – What do we do next? When do we meet next?

3. 24 May 2004World Energy Modeling Energy Matters 1 “Energy is at the core of virtually every problem facing humanity. We cannot afford to get this wrong. We should be skeptical of optimism that the existing energy industry will be able to work this out on its own.” Testimony of witness Dr. Richard E. Smalley to the Senate Committee on Energy and Natural Resources – Full Committee Hearing on sustainable low-emission electricity generation, 27 April, 2004 Dr. Smalley is Director of the Carbon Nanotechnology Laboratory at Rice University

4. 24 May 2004World Energy Modeling Energy Matters 2 “… the momentous decisions we take in the next few years will determine whether our heirs thank us or curse us for the energy choices we bequeath to them.” Alex Kirby, BBC News Online environment correspondent, 19 April 2004

5. 24 May 2004World Energy Modeling Everything Depends on Energy Whatever cause motivates you will be a lost cause if we do not have the energy to sustain society, industry, and agriculture in something like its present form … Raising standard of living in developing nations Reducing disease and illiteracy Eliminating hunger and famine in Africa, Asia, South America “Sustainable development” and economic growth Extending democratic institutions around the world

6. 24 May 2004World Energy Modeling Energy? Not a Problem … Right? Why is it so hard to communicate the Peak Oil message? The Boy Who Cried Wolf … “we’ve heard that before” “They’re always finding more oil!” (true, but …) Reserves/production = “40 years, at present rate of use” Acknowledging Peak Oil is only the first step toward understanding the problem: “OK, I buy your Peak Oil story, but market forces will ensure adequate energy for everyone – when prices go up, people will find alternatives!” (free-market theory) “OK, I buy your Peak Oil story, but we’ve got 40 years for science and technology to come through with something!” (they always did, before)

7. 24 May 2004World Energy Modeling Everyone Agrees “Peak Oil” is Just a Matter of Time But… huge uncertainty as to WHEN 1.Optimistic or contradictory oil and gas projections lead to complacency and confusion 2.No agreement on consequences of peak oil, whenever it comes Result: Little has been done since oil crisis of 1973 - Contribution of “renewables” still very small Nuclear is practically at a standstill Economic recovery leading to record consumption of oil, gas, and coal => what about global warming?

8. 24 May 2004World Energy Modeling Huge Disagreement! 1920194019601980200020202040 OPEC USA ROW-Russia World 0 100 80 60 40 20 120 URR According to ASPO URR According to USGS, IEA, … URR = ~2 Trillion Bbl 1+ Trillion Remaining URR = 3 Trillion Bbl 2+ Trillion Remaining Energy Future According to ASPOEnergy Future According to USGS How can something this important have so much uncertainty? (+/-100%!)

9. 24 May 2004World Energy Modeling 1) No Agreement on Crude Oil URR Unreliable, missing, or unbelievable reserve numbers Variable estimates for “reserve growth” applied at global level How much “Yet to Be Discovered” exists? Disagreement on impact of new technology Uncertainty re. relation of price to exploration, discovery, and extraction rates Wildly-varying estimates for future production rates and URR for tar sands, Venezuela heavy, shale oil

10. 24 May 2004World Energy Modeling 2) More Reasons for Confusion and Complacency For every Fossil-Fuel alarmist, there is another expert saying “No problem” Opinions run the gamut: Utopian scenarios of fusion-enabled hydrogen- fueled industry, transport, and agriculture Magical reversion to 18 th -century way of life Cataclysmic scenarios of war, starvation, death Without science or numbers behind them, all opinions are equally valid

11. 24 May 2004World Energy Modeling Oil Demand Exceeding Expectations Population – world population projected to continue rising past 2050 or later (9-10 B) Industrial development – China’s oil imports rise 30+% in 2003, surpasses Japan; India and rest of SE Asia also exploding demand Middle-class aspirations in China, India Although losing industry, N American demand continues to rise – transport, electricity, gas Rest of world coming out of recession – EIA repeatedly raising estimates of demand

12. 24 May 2004World Energy Modeling Agriculture Agriculture was once very labor-intensive in human and animal power; what will substitute for fossil fuels now that we number 6.4 billion (heading for 9 to 10 billion) ? US horse population peaked in 1915 at 25 million; 20% of all arable US land was used to feed horses. US humans numbered 100 million. In 2015, expect 300M people. We have never seen a plan for feeding 9 billion people without fossil fuel!

13. 24 May 2004World Energy Modeling The Big Picture – Oil Production over History 1920194019601980200020202040 OPEC USA ROW-Russia World 0 100 80 60 40 20 M bbl/day ?

14. 24 May 2004World Energy Modeling What the World Needs Now Better data on reserves, production capability (Simmons, Bakhtiari, Campbell et al) – improve forecasts of future oil, gas production A good world energy model (us, here) – improve our ability to: Accompany ASPO’s Peak Oil message with energy modeling to show its implications Understand consequences of decisions made Analyze relative feasibility and net energy of future energy scenarios

15. 24 May 2004World Energy Modeling Complex Systems Modeling History Big Studies Limits to Growth (Meadows et al 1972) Beyond Oil (Gever, Kaufmann, Skole, Vorosmarty 1986, 1991) Techniques, Papers, Books HT Odum, Cutler Cleveland, Charles Hall … Modeling Software and Systems Must handle hundreds of variables, complex feedback relationships Limits to Growth – IBM mainframe, MIT Beyond Oil – Fortran on a Prime supermini Now: Stella – dynamic systems modeling software, used by Richard Duncan and others

16. 24 May 2004World Energy Modeling Linking Multiple Models There are many different “energy models”, most dealing with one aspect of energy – typically focusing on supply only, or demand only, or one particular type of energy Imagine a modeling structure that could tie several models together: output of one model (for example) can be input to another; No model known tackles the problem in a holistic, worldwide and integrated way; we want to understand the implications of an integrated supply and demand model, for all types of energy

17. 24 May 2004World Energy Modeling Raise awareness of fossil-fuel depletion and its consequences for global policy makers, decision makers Analyze and quantify the consequences of fossil-fuel depletion on agriculture, industry, commerce and homes Show the impact of different rates of adoption for various mixes of renewable/fossil/nuclear sources Make world energy information program-accessible, in one database, in standardized format With standardized and rigorous ERoEI methodology, show what mix of conventional and renewable energies has the best outcome – point the way, avoid dead ends What’s an Energy Model Good For?

18. 24 May 2004World Energy Modeling What’s an Energy Model Good For? (detail) Impact of ERoEI on URR (example) Impact of ERoEI on NET ENERGY (example) Quantify impact of delaying investment in alternatives (example) Critical analysis of alternative energy sources –The Hydrogen Economy –Biofuels like ethanol –Tar sands and other unconventional oil –Shale oil –Nuclear power

19. 24 May 2004World Energy Modeling URR Impact of ERoEI on URR Time Total Energy Invested Net Energy Return per Energy Invested Easy Hard Unavailable URR

20. 24 May 2004World Energy Modeling Understanding Net Energy All energy sources require up-front investment in energy, as well as $ capital and human effort, to yield a return on that investment NET ENERGY: Energy Returned on Energy Invested = ERoEI Some investments are better than others Some investments are energy losers! How can we know which ones to invest in?

21. 24 May 2004World Energy Modeling The Energy Cost of Energy 3% decline per year Annual contribution from alternate energy source 100 75 Cumulative new energy from investment Useful Lifetime 25 Years - NET ENERGY Analysis

22. 24 May 2004World Energy Modeling The Energy Cost of Energy Available (net) Energy after Investment Cumulative new energy from investment 100 75 85 60 - NET ENERGY Analysis

23. 24 May 2004World Energy Modeling Consequence of Delayed Investment begin investment before decline 120 100 80 60 40 20 0 Net Energy Production 0 10 20 30 40 Time Begin investment during decline From Beyond Oil, fig. 7-1

24. 24 May 2004World Energy Modeling Comparative Analysis of Future Energy Resources Any realistic future contains a mix of energy sources; what’s the best mix? Which are the energy losers and dead ends? Where should we invest our energy and $ capital for the best return (net energy), best long-term sustainable future, and best outcome for the environment? Good data and a high-quality model will point the way

25. 24 May 2004World Energy Modeling Model Structure and Organization Database of best-known world energy information World energy information is program-accessible Use of spreadsheets as database inputs, outputs, and program-to-program intermediary Can link multiple programs for energy supply, energy demand, mixes of renewable energy Peripheral programs may input data on oil & gas production, demand, population, … Model output shown as graphs, tables – future total energy and per-capita net energy by type, by region, by year, as function of scenario

26. 24 May 2004World Energy Modeling Model Structure (example) Model Core Dynamic System Simulation (Stella or similar software) UN Population Model Spreadsheet- database Future Scenario Spreadsheet- database Oil & Gas Supply Model Spreadsheet- database Energy Demand Model ASPO Oil-Gas Model, OPEC Model, Wocap Input data from IEA, BP,USGS, O&G Journal

27. 24 May 2004World Energy Modeling Model Attributes Transparency –Model inputs are databases / spreadsheets –Database inputs & outputs directly human-viewable as spreadsheets, or easily converted to spreadsheets –Inner workings of model and underlying assumptions are visible and easy to understand Accessibility –Any reasonably-equipped PC can run the models and view results –Modeling software is reasonably priced, or shareware, or free

28. 24 May 2004World Energy Modeling Model Attributes (detail) Linkable –One model can feed into another via standardized database (e.g. spreadsheet) Standardized Database Format –“Oil Export from Nigeria in 1997” goes to predetermined (Row 97) location in “Africa Production” spreadsheet –Every program has SW modules that tell it where to get input data, and where to put output data Database Structure Has Extensible Detail Level –Data in any cell of a spreadsheet can be sourced from another page of the spreadsheet, or another spreadsheet – down to oil-field level of detail, if wanted

29. 24 May 2004World Energy Modeling Example of Per-Country Energy Spreadsheet Cell ABCDEF Year ConventionalOffshoreDeep WaterGas-to- Liquid Oil Sands Production 0591959 3.50000 0601960 4.60000 0611961 4.80000 0621962 5.40000 0631963 5.80.1000 0641964 6.90.300.200 0651965 7.42.500.310 0661966 7.55.100.550 Country X

30. 24 May 2004World Energy Modeling By-Country Database Development View adjacent countries as 3D space with energy flows across the boundaries; Track all energy flows – all types of fossil-fuel imports, exports; electricity; include storage, gas-to-liquid, refinery gain; Show consumption of all types (net energy of typeX in = consumption + storage); checking mechanism:  (all imports) =  (all exports) for each energy type, elec generation & consumption

31. 24 May 2004World Energy Modeling Tracking Energy Flow Between Countries “Country” is natural boundary for a spreadsheet – IEA data, BP data, etc. all on per-country basis checking mechanism:  (all imports) =  (all exports) for each energy type, elec gen’n & cons’n

32. 24 May 2004World Energy Modeling Building the World Energy Model What’s Needed Work together and agree on goals, scope, and process Identify several strong and committed co-sponsoring organizations Develop preliminary project and funding plan Core team of 4-6 experienced staff for 2-3 years, with solid academic connections & resources Need a strong visionary leader and experienced modeling advisors Identify funding sources to meet staffing requirements Develop model; use worldwide Internet, academic connections for data-entry job developing machine- readable database / spreadsheets; Agree on initial scenarios, start model runs, document results

33. 24 May 2004World Energy Modeling Long-Term Prospect Funded team runs scenarios on model, documents results – but, the need does not end there! World’s need to keep model updated, improve it, run new scenarios will continue beyond this decade The People’s Energy Model Outreach program: Train others to develop and run scenarios Continue to refine detail and accuracy in model’s database Set up energy equivalent to Open Software Foundation for long-term continuing development, maintenance, and future scenario running Could be some great PhD dissertations in this!

34. 24 May 2004World Energy Modeling End of Presentation It’s Up to You Now First Meeting of The Club of Berlin Is Now Called to Order Thanks to Ken Deffeyes and son for the design! Your Name Here

35. 24 May 2004World Energy Modeling Backup

36. 24 May 2004World Energy Modeling Outline & notes Things to add: need better reserve estimates, more transparency, standardized test & reporting methods; (reserve growth) The fact that the remaining amount of such a critical resource to global industry, commerce, and civilization as we know it can have such a wide range of estimates ought to be a huge concern for anyone planning more than a decade into the future; governments plan social security, transportation systems, Need better oil & gas future production estimates Need robust ERoEI technique and numbers for FF, nuclear, renewable energy sources Outline: Uncertainty over oil, gas reserve estimates 2:1 range Complexity of economic/energy analysis: response of price to shortage, response of demand to price, Modeling

37. 24 May 2004World Energy Modeling History and Future of Oil Supply Oil & NGL’s, from ASPO You are here

38. 24 May 2004World Energy Modeling Energy Supply ODAC database for all liquid fuels Samsam Bakhtiari’s Wocap program Projections from the reference case of OPEC’s World Energy Model, “OWEM” Richard Shepherd, Maarten van Mourik – see Word doc Other supply-side programs Near-term production estimates use known mega-project developments; longer-term, on basis of known discovery and any other data breakdown by region breakdown by type contribution of fossil fuel alternatives Take into account all known constraints on development and production Some “yet-to-be-discovered” will never be discovered due to energy cost of finding and developing (see Lower48 actual vs. USGS projections)

39. 24 May 2004World Energy Modeling ? The Supply-Demand Gap 0 1920194019601980200020202040 OPEC USA ROW-Russia World 100 80 60 40 20

40. 24 May 2004World Energy Modeling Energy Demand Trend historical; % per year now (1.7%?) basis: population, development, growing expectations per-capita by region by use-type special mention: China

41. 24 May 2004World Energy Modeling Energy Demand If world per-capita energy is to remain constant Population models or tables (UN) are inputs 1AD = 170M, 1500 =.5B, 1804 =1B, 1938 2B, now 6.5B; 2.5B bbl/yr to 27B. Avg rate 0.5% for 5K yrs, now 1.3% By-country data and trends Monitor trends in domestic consumption of Oil- Exporting countries Tellus Institute model? Complication: feedback of supply, demand, mismatch and price => demand

42. 24 May 2004World Energy Modeling Energy Demand Trend historical per-capita by region by use-type

43. 24 May 2004World Energy Modeling Supply-Demand Mismatch No near-term substitute for oil US Hubbert peak 1970 World Hubbert peak (plateau?) 2005-2010 (highlight the gap btwn production curve and demand curve) – see Bakhtiari

44. 24 May 2004World Energy Modeling The Mismatch Show 2 graphs: the pessimist (“realist") version, the optimist (conventional wisdom) version Ask “how much time do we have left?” for case 1, case 2

45. 24 May 2004World Energy Modeling Alternative Energy Sources alternative contribution now hydro, wind, solar, biomass,... hydrogen is not an energy source negative ERoEI for methanol, etc. capital and energy costs of developing the infrastructure estimated ERoEI for each type nuclear and coal

46. 24 May 2004World Energy Modeling Searching for Our Energy Future Rush to coal will accelerate already-high CO 2 growth Nuclear is politically problematic –Concern about weapons proliferation –New issues as terrorist target –Controversial and unpopular in Europe, N America Alternatives to oil –Coal to liquid –NatGas to liquid –Tar sands & Shale Oil

47. 24 May 2004World Energy Modeling Likely energy mix scenario creation of alternative energy infrastructure large enough to make a contribution takes capital, and energy chart from Beyond Oil: per-capita energy decline as function of delay in transition to alternatives Run the scenarios with ERoEI, quantify energy diverted to building/acquiring new infrastructure Many are convinced we should be undertaking massive transitions NOW – while FF energy is still cheap and abundant - to renewable / sustainable sources of energy – but can’t prove it Not convinced that market “price signals” are working well enough to avert disaster A good model should be able to quantify the net-energy impact of delaying deployment of alternative energy sources

48. 24 May 2004World Energy Modeling The Big Picture Oil production USA OPEC ROW-Russia ? Mio t

49. 24 May 2004World Energy Modeling The Big Picture Population trend Graph of population and fossil-fuel use Industrialized agriculture Humans as detritovores, in overshoot Concept of sustainable population Leibig’s theory of population constraint; relation to globalization and increased interdependence The numbers: est’d peak ~10B; decline to 0.5B-2B in next 40 years?

50. 24 May 2004World Energy Modeling The Big Picture (cont’d) Population and energy Malthus, Ehrlich, Jimmy Carter, and the Club of Rome were right Factors presently reducing sustainability for post-fossil-fuel humanity –pollution & environmental degradation –soil degradation and aquifer depletion –majority of world fisheries over-fished

51. 24 May 2004World Energy Modeling Problem Statement: How do we get there from here? Historical record not encouraging Typical: famine, disease, war Resource wars underway? Power centers making resource grabs now Is there a “soft” way down?

52. 24 May 2004World Energy Modeling Soft Way Down? Population must rapidly stabilize and then decline, or Massive transition to non-fossil-fuel sources of energy must begin very soon; it may be too late Maximize investment in alternative energy sources, nuclear,... requires diverting a portion of present cheap energy stream away from current uses Reverse current trend of growing inequality; wealth = access to energy = survival

53. 24 May 2004World Energy Modeling Role of Modeling historical per-capita by region – unlike Limits to Growth, include regional & nation level of detail to encompass huge regional differences in energy production and use by use-type

54. 24 May 2004World Energy Modeling Step 1: World Energy Database Enter world energy statistics into software- readable spreadsheet or database What’s so great about a spreadsheet? –Human-accessible – most people are familiar with spreadsheets, can read and modify them easily –Machine-accessible (1)– programs and database software can extract and use values from sprdsht –Machine-accessible (2)– programs and database software can insert values and generate graphics –Any PC with the right software can run them

55. 24 May 2004World Energy Modeling World Energy Database (cont’d) Put all available energy info into a collection of spreadsheets “Country” boundaries are useful convention to distinguish geographical regions – nearly all energy statistics available on per-country basis, may be aggregated to “region” and “world” Data from EIA, IEA, BP, O&G Journal, ASPO Decide on STANDARD SPREADSHEET FORMAT for the per-country spreadsheet (show example); year on vertical axis, energy type horizontally. Example: Cell 57 J will always be “Conventional oil production in 1957” for a country. Output from another model – for example, Mr. Bakhtiari’s Wocap model – can be input to the spreadsheet and to the world energy use model (see ER 56353) Any existing program, with simple interface software, can send its output to spreadsheet or get its input from a spreadsheet

56. 24 May 2004World Energy Modeling Spreadsheets, cont’d Once we do this right, we’re done; we should never have to go back and re-enter historical data again, just update each year Getting the best agreed-on format at the beginning is critical We may convince other organizations to generate data in compatible spreadsheet format, so it’s automatically ready for direct program accessibility with no human intervention Per-country spreadsheet is “standard” resolution; May be easily aggregated into geographical regions, up to world totals “Drill down” to finer resolution, down to individual fields or wells – any cell value may come from another spreadsheet or defined mathematical operation on other cells Build in “extension” codes to point to additional rows, columns, or other spreadsheets, for expansion and unanticipated data types

57. 24 May 2004World Energy Modeling Relationship of Spreadsheets to Modeling Programs This slide shows a block diagram illustrating how any program can (with small i/f sw) output to a spreadsheet, or input from a spreadsheet; spreadsheet values may also be manually input Example inputs: ASPO data (model?); Bakhtiari model; manually entered (mega-project database*); Tellus Institute model for energy demand; may even have models that try to project energy price as function of supply- demand mismatch, energy supply as function of price, and “demand destruction” as function of price LOPEX (Tobias Rehrl, IER) - oil supply & demand with cost feedback * Petroleum Review, Jan 2004