Environmental and Natural Resource Economics 3rd ed. Jonathan M. Harris Updates for 2012 Chapter 13: Energy Copyright © 2012 Jonathan M. Harris

Figure 13.1 Global and U.S. Energy Consumption 2010, by Source Global and U.S. energy consumption is primarily fossil fuels, with renewables supplying only a small percentage. Sources: Energy Information Administration, 2011; International Energy Agency, 2011b.

Table 13.1 Net Energy Ratios for Various Energy Sources Oil (global) 35 Natural gas 10 Coal 80 Shale oil 5 Nuclear 5-15 Hydropower >100 Wind 18 Photovoltaic cells 6.8 Ethanol (sugarcane) 0.8 – 10 Ethanol (corn-based) 0.8 – 1.6 Biodiesel 1.3 Oil, coal, and hydropower have the highest net energy ratios, while ethanol has a very low energy ratio. Wind, photovoltaics, and nuclear have intermediate net energy ratios. Source: Murphy and Hall, 2010

Table 13.2. Energy Consumption by Sector in the United States, 2010 Transportation Industrial Residential and Commercial Electricity Percent of Total Energy Consumption 28% 20% 11% 40% Primary fuel source Oil (94%) Natural gas (41%) Natural gas (76%) Coal (48%) Secondary fuel source Biomass (4%) Oil (40%) Oil (18%) Nuclear (21%) Tertiary fuel source Natural gas (2%) Biomass (11%) Biomass (5%) Natural gas (19%) U.S. energy use is divided between residential, commercial and industrial, transportation , and primary electricity sectors. The transportation sector in particular is primarily dependent on oil, while most coal use is in the electricity sector. Source: Energy Information Administration, 2011.

Figure 13.2 World Energy Consumption, by Source, 1965-2011 Since 1965, 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: British Petroleum, 2012

Figure 13.3 Projected 2035 Global Energy Demand, by Source “Business as Usual” projections show world total energy consumption continuing to rise through 2035. The increase is much less with an aggressive conservation/efficiency scenario, allowing a greater percentage to be supplied by renewables. Source: International Energy Agency, 2011

Table 13.3 Energy Consumption per Capita, 2009, Selected Countries Energy consumption per capita varies widely, with U.S. per capita consumption about 15 times that of India, and 60 times that of Nigeria. China’s per capita energy consumption has risen rapidly; it is now at about half of European levels, though still less than a quarter of U.S. levels. Source: U.S. Energy Information Administration, International Energy Statistics database

Figure 13.4 Past and Projected Energy Consumption, OECD and Non-OCED Nations Although current 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, future growth in consumption will be primarily in non-OECD nations. Source: U.S. Energy Information Administration, International Energy Statistics database Note: The OECD is the Organization for Economic Cooperation and Development, an organization of mainly developed nations.

Figure 13.5 Oil Prices in Constant Dollars, 1990-2010 Oil prices have recently risen to levels equaling those of the “oil crisis” of the late 1970s in constant dollar terms. Sources: Data from Energy Information Administration http://www.eia.gov and http://inflationdata.com

Figure 13.6 United States Domestic Oil Production and Consumption 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: U.S. Energy Information Administration, Annual Energy Outlook database

Figure 13.7 Past and Projected Global 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 in conventional production by 2010, with production from current fields falling off rapidly thereafter. Future oil production depends on discovery of new fields, natural gas liquids, and “unconventional” sources such as shale oil. Environmental costs of unconventional sources tend to be high due to their dispersed nature: large volumes of water, wastes, and CO2 emissions are involved in their production. Source: International Energy Agency, 2010.

Table 13.4 Global Oil Reserves, Consumption, and Resource Lifetime, 1980-2011 Year Proven Reserves (billion barrels) Annual Consumption (billion barrels) Resource Lifetime (years) 1980 683 22 31 1981 696 32 1982 726 21 34 1983 737 35 1984 774 36 1985 803 37 1986 908 41 1987 939 23 1988 1027 44 1989 24 43 1990 1028 42 1991 1033 1992 1039 25 1993 1041 1994 1056 1995 1066 26 1996 1089 1997 1107 27 1998 1093 40 1999 1238 28 45 2000 1258 2001 1267 2002 1322 29 46 2003 1340 2004 1346 30 2005 1357 2006 1365 2007 1405 2008 1475 47 2009 1518 49 2010 1622 51 2011 1653 Despite increasing production, the estimated lifetime of global oil reserves has actually increased due to new discoveries. Source: BP, 2012, Statistical Review of World Energy database

Table 13.5 Availability of Global Renewable Energy Energy Source Total Global Availability (trillion watts) Availability in Likely-Developable Locations (trillion watts) Wind 1700 40 – 85 Wave > 2.7 0.5 Geothermal 45 0.07 – 0.14 Hydroelectric 1.9 1.6 Tidal 3.7 0.02 Solar photovoltaic 6500 340 Concentrated solar power 4600 240 Theoretical availability of renewable energy is very large, although much of this is not in easily developed locations. Nonetheless, the amount available in developable locations considerably exceeds total expected global demand for energy. Source: Jacobson and Delucchi, 2011a.

Table 13.6 Infrastructure Requirements for Supplying All Global Energy in 2030 from Renewable Sources Energy Source Percent of 2030 Global Power Supply Number of Plants/Devices Needed Worldwide Wind turbines 50 3,800,000 Wave power plants 1 720,000 Geothermal plants 4 5,350 Hydroelectric plants 900 Tidal turbines 490,000 Rooftop solar PV systems 6 1.7 billion Solar PV power plants 14 40,000 Concentrated solar power plants 20 49,000 TOTAL 100 To take advantage of renewable energy potential requires major investments in energy infrastructure. Source: Jacobson and Delucchi, 2011a.

Figure 13.8 Levelized Cost of Different Energy Sources, United States (2016) and Europe (2015) Wind and geothermal are nearly cost competitive with traditional power sources, as represented by conventional coal. Sources: U.S. Energy Information Administration, 2011c; International Energy Agency, et al., 2010; Parsons Brinckerhoff, 2010; Department of Energy and Climate, 2011.

Figure 13.9 Cost Comparison of Renewable Energy Sources to Fossil Fuel Electricity Costs Wind and geothermal are close to competitive with current wholesale prices of electricity. Solar photovoltaic is more costly, but since solar photovoltaics can be installed by individual consumers the price of PV only needs to fall to the retail power price to be competitive. Source: International Energy Agency and Organization for Economic Cooperation and Development, 2007.

Figure 13.10 Declining Cost of Solar and Wind Energy 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. Source: National Renewable Energy Laboratory. Renewable Energy Cost Trends. http://www.geni.org/globalenergy/library/energytrends/renewable-energy-cost-trends/renewable-energy-cost_curves_2005.pdf

Figure 13.11 Past and Projected Price of Oil The future price of oil is extremely uncertain. Higher price scenarios would make renewables more cost-competitive. Note that these price projections do not include any policies to internalize fossil fuel externalities. Source: U.S. Energy Information Administration, 2012.

Figure 13.12 Externality Cost of Various Electricity Generating Methods, European Union Externality costs are highest for coal, followed by oil and natural gas. Externality costs for renewables are generally low. Source: Owen, 2006

Figure 13.13 Cost of Electricity Generating Approaches, 2020 Adding in the costs of externalities changes the balance of cost competitiveness, making conventional source more expensive than renewables. Source: Jacobson and Delucchi, 2011b

Figure 13.14 Electricity Prices and Consumption Rates There is a general negative relationship between price and electricity use, with the U.S. and Canada having the lowest prices and high per-capita consumption, while Germany and Denmark have high prices and relatively low consumption. Sources: Energy Prices and Statistics database, International Energy Agency; International Energy Statistics database, U.S. Energy Information Administration

Figure 13.15. Global Potential for Energy Efficiency Under a BAU scenario, global energy demand is projected to nearly double between 2003 and 2050. However, based on the untapped potential for energy efficiency, global demand could be held steady during this time period or even see a slight decline. Source: Blok, et al., 2008.