Environmental and Natural Resource Economics 2nd ed. Jonathan M. Harris Updates for 2011 Chapter 13: Energy Copyright © 2011 Jonathan M. Harris

Since 1950, world energy use has grown dramatically, with the overwhelming majority of energy use drawn from fossil fuels. The trend has continued into the twenty-first century, with a recent upsurge in both coal and oil consumption. Source: Meadows et al., Beyond the Limits 1992; US Department of Energy, 2009

Figure 13-2a: World Energy Sources The world is heavily dependent on fossil fuels, drawing 87% of its energy from oil, coal, and natural gas, and another 6% from nuclear. Renewable sources include hydroelectric power (6%) and all other renewables (less than 2%). Source: Energy Information Administration, International Energy Annual 2006.

Figure 13.2b: U.S. Energy Sources U.S. energy sources are similar to those for the world as a whole, with a slightly greater proportion of oil and slightly lower proportion of coal. Wind, solar, and geothermal are only 1% of U.S. energy supply. Source: Energy Information Administration, Renewable Energy Trends in Consumption and Electricity 2007 ed.

U.S. energy use is divided between residential, commercial, industrial, and transportation sectors. The transportation sector in particular is primarily dependent on oil, while most coal use is in the industrial sector. Source: Energy Information Administration, May 2011 Monthly Energy Review

Figure 13.3a: World Total Energy Consumption Projections “Business as Usual” projections show world total energy consumption continuing to rise through 2030. Almost of this increase will take place in the developing world. Source: Energy Information Administration, International Energy Annual 2009

Figure 13.3b: Per Capita Energy Consumption Projections Per capita consumption of energy in the developed countries (OECD, or Organization for Economic Cooperation and Development) is much higher than per capita consumption in the developing world. Per capita consumption in the developing world is growing rapidly, but is projected to be still less than a third of developed world per capita consumption in 2030. Source: Energy Information Administration, International Energy Annual 2009. Census data from U.S. Census Bureau

Most standard or “business as usual” projections show the growing energy demand being met by an energy mix that is still overwhelmingly fossil fuels (“Liquids” is oil plus liquids produced from natural gas). Source: Energy Information Administration, International Energy Annual 2009.

Figure 13.4b: World Total Primary Energy Consumption- Ecologically Driven A different future for world energy would maximize conservation and energy efficiency. In this scenario, world energy use still grows, but much less than in the “business as usual” projection. Expansion of renewable energy use makes it possible to reduce use of fossil fuels by 2050 (though not as much as recommended by the Intergovernmental Panel on Climate Change, discussed in Chapter 18). Source: Adapted from Global Energy Perspectives, edited by Nebojsa Nakicenovic, Arnulf Grubler, and Alan McDonald, 1998.

Figure 13-5: The Hubbert Curve and Actual U.S. Oil Production The Hubbert curve, developed in the 1950s by petroleum geologist M. King Hubbert, predicted a peak in U.S. oil production around 1980. This has proven fairly accurate, with a small acceleration in production due to opening of Alaskan oil fields in the 1970s being quickly reversed. Crude oil production has been on a steady downward trend since then, and even including production of natural gas liquids, overall production has declined while consumption has risen. The gap between production and consumption represents the growing volume of imported oil.

The trend of declining U. S The trend of declining U.S. crude oil production continued through 2008, with an uptick in 2009-2010 resulting from increased production of “unconventional” sources such as deep offshore oil and shale oil. After declining during the recession of 2008-9, oil consumption is once again on the increase. Source: Energy Information Administration, 2010

Figure 13-6: Hubbert Curve for World Oil Production World oil production (and consumption) declined markedly during the oil crises of the 1970s, and has since resumed an upward trend, reinforced recently by the rapid growth in China and other emerging economies. Total production in 2010 (not shown on this graph) was 31.4 billion barrels per year. Due to the 1970’s decline, a Hubbert “peak” was not reached in 2000, but some analysts predict a peak, at least of conventional oil production, fairly soon.

Figure 13-7: Actual and Projected World Oil Production Estimates of ultimately recoverable global oil vary widely, and the year of projected “peak oil” production depends on these estimates. The study shown above indicates a peak anywhere between 2008 and 2020. The figures do not include some “unconventional” sources such as shale oil, but the environmental costs of these unconventional sources tend to be high due to their dispersed nature: large volumes of water, wastes, and CO2 emissions are involved in their production.

Figure 13-8: World Photovoltaic Shipments and Prices, 1975-2003 Technology has driven down the price of renewable energy sources such as photovoltaics. This has led to an exponential increase in production and use, but (as noted in earlier slides on energy sources) starting from a very small base as a percentage of total energy production.

Although the declining price tend has moderated, the rapid increase in production has continued. Note that 2009 production of photovoltaics is more than 10 times 2003 levels. Source: Worldwatch Institute Vital Signs Database, Vital Signs 2011.

A long-term perspective shows the steady exponential increase in solar cell production. Whereas total global photovoltaic production in 2000 was considerably less than the capacity of one large nuclear or coal-powered plant, 2009 solar PV production was equivalent to 10 large nuclear or coal plants.

A similar exponential increase is seen in wind power generating capacity over the past several decades, with an eight-fold expansion in total generating capacity since 2000. Wind and solar are still are small percentage of total energy supply, but the impressive increase to date implies that their share could continue to grow rapidly.