oftwominds-Charles Hugh Smith

Scalability Gaps 

April 14, 2009 

We've addressed Scalability Traps here before (Complacency and Scalability Traps); today we consider the Scalability Gap in alternative energy.

Correspondent K.D. coined the powerful concept Scalability Trap back in February:

I think this "scalability trap" that we find ourselves in (i.e. the more advanced we become, the more things scale, the fewer jobs we need) is like a hidden compounding tax on modernity- and we are about at the place where that tax is going to break the current model of tech innovation and entertainment consumption. A new model will surely replace it, let's just hope it is not some kind of Mad Max paradigm.

Put another way: once a manufacturing fabrication or production process scales up--for example, semiconductor-type solar panels--then the inevitable automation actually reduces the number of workers needed even as production leaps 100-fold.

Scalability Traps are an inherent feature of capitalism, as the best way to gain competitive advantage in high-cost economies is to reduce costly labor inputs, and the best way to gain competitive advantage in low-labor cost economies is also to automate as a way to reduce errors.

Back in 2000 I had the opportunity to tour a number of factories in China manufacturing products ranging from computer monitors to light fixtures. Factories producing high-tech equipment with human labor had very high failure rates--rates which required costly testing and intervention compared to fully automated lines with minimal human assembly workers. Even if labor costs are free, the robotic line is more productive, less costly and thus more profitable than the lines which require human operators.

A Scalability Gap is the yawning divide between the promise of new technology and its scalability to meaningful production. Potentially important new technologies in alternative energy are presently facing Scalability Gaps of momentous proportions--a situation at odds with the smug assumption that some magical new technologies will enable us to somehow replace 40 million barrels of oil-equivalent energy a day without any disruptions in our lifestyle.

Let's turn to an energy analyst's skeptical view of alternative energy, as posted in a recent Wall Street Journal:

Let's Get Real About Renewable Energy We can double the output of solar and wind, and double it again. We'll still depend on hydrocarbons. (WSJ)

During his address to Congress last week, President Barack Obama declared, "We will double this nation's supply of renewable energy in the next three years."

While that statement -- along with his pledge to impose a "cap on carbon pollution" -- drew applause, let's slow down for a moment and get realistic about this country's energy future. Consider the problem of scale.

By promising to double our supply of renewables, Mr. Obama is only trying to keep pace with his predecessor. Yes, that's right: From 2005 to 2007, the former Texas oil man (G.W. Bush) oversaw a near-doubling of the electrical output from solar and wind power. And between 2007 and 2008, output from those sources grew by another 30%. The key problem facing Mr. Obama, and anyone else advocating a rapid transition away rom the hydrocarbons that have dominated the world's energy mix since the dawn of the Industrial Age, is the same issue that dogs every alternative energy idea: scale.

Let's start by deciphering exactly what Mr. Obama includes in his definition of "renewable" energy. If he's including hydropower, which now provides about 2.4% of America's total primary energy needs, then the president clearly has no concept of what he is promising. Hydro now provides more than 16 times as much energy as wind and solar power combined. Yet more dams are being dismantled than built. Since 1999, more than 200 dams in the U.S. have been removed.

If Mr. Obama is only counting wind power and solar power as renewables, then his promise is clearly doable. But the unfortunate truth is that even if he matches Mr. Bush's effort by doubling wind and solar output by 2012, the contribution of those two sources to America's overall energy needs will still be almost inconsequential.

Here's why. The latest data from the U.S. Energy Information Administration show that total solar and wind output for 2008 will likely be about 45,493,000 megawatt-hours. That sounds significant until you consider this number: 4,118,198,000 megawatt-hours. That's the total amount of electricity generated during the rolling 12-month period that ended last November. Solar and wind, in other words, produce about 1.1% of America's total electricity consumption.

Of course, you might respond that renewables need to start somewhere. True enough -- and to be clear, I'm not opposed to renewables. I have solar panels on the roof of my house here in Texas that generate 3,200 watts. And those panels (which were heavily subsidized by Austin Energy, the city-owned utility) provide about one-third of the electricity my family of five consumes. Better still, solar panel producers like First Solar Inc. are lowering the cost of solar cells. On the day of Mr. Obama's speech, the company announced that it is now producing solar cells for $0.98 per watt, thereby breaking the important $1-per-watt price barrier.

And yet, while price reductions are important, the wind is intermittent, and so are sunny days. That means they cannot provide the baseload power, i.e., the amount of electricity required to meet minimum demand, that Americans want.

That issue aside, the scale problem persists. For the sake of convenience, let's convert the energy produced by U.S. wind and solar installations into oil equivalents.

The conversion of electricity into oil terms is straightforward: one barrel of oil contains the energy equivalent of 1.64 megawatt-hours of electricity. Thus, 45,493,000 megawatt-hours divided by 1.64 megawatt-hours per barrel of oil equals 27.7 million barrels of oil equivalent from solar and wind for all of 2008.

Now divide that 27.7 million barrels by 365 days and you find that solar and wind sources are providing the equivalent of 76,000 barrels of oil per day. America's total primary energy use is about 47.4 million barrels of oil equivalent per day.

Of that 47.4 million barrels of oil equivalent, oil itself has the biggest share -- we consume about 19 million barrels per day. Natural gas is the second-biggest contributor, supplying the equivalent of 11.9 million barrels of oil, while coal provides the equivalent of 11.5 million barrels of oil per day. The balance comes from nuclear power (about 3.8 million barrels per day), and hydropower (about 1.1 million barrels), with smaller contributions coming from wind, solar, geothermal, wood waste, and other sources.

Here's another way to consider the 76,000 barrels of oil equivalent per day that come from solar and wind: It's approximately equal to the raw energy output of one average-sized coal mine.

During his address to Congress, Mr. Obama did not mention coal -- the fuel that provides nearly a quarter of total primary energy and about half of America's electricity -- except to say that the U.S. should develop "clean coal." He didn't mention nuclear power, only "nuclear proliferation," even though nuclear power is likely the best long-term solution to policy makers' desire to cut U.S. carbon emissions. He didn't mention natural gas, even though it provides about 25% of America's total primary energy needs. Furthermore, the U.S. has huge quantities of gas, and it's the only fuel source that can provide the stand-by generation capacity needed for wind and solar installations. Finally, he didn't mention oil, the backbone fuel of the world transportation sector, except to say that the U.S. imports too much of it.

Perhaps the president's omissions are understandable. America has an intense love-hate relationship with hydrocarbons in general, and with coal and oil in particular. And with increasing political pressure to cut carbon-dioxide emissions, that love-hate relationship has only gotten more complicated.

But the problem of scale means that these hydrocarbons just won't go away. Sure, Mr. Obama can double the output from solar and wind. And then double it again. And again. And again. But getting from 76,000 barrels of oil equivalent per day to something close to the 47.4 million barrels of oil equivalent per day needed to keep the U.S. economy running is going to take a long, long time. It would be refreshing if the president or perhaps a few of the Democrats on Capitol Hill would admit that fact.

Mr. Bryce is the managing editor of Energy Tribune. His latest book is "Gusher of Lies: The Dangerous Delusions of 'Energy Independence'"(Public Affairs, 2008).

Many observers have dismantled the breezy claims that "we have unlimited supplies of coal and shale oil which can be converted to liquid fuels." The truth is that the monumental shale oil mines and processing currently tearing up major chunks of Canada produce less than 2 million barrels of oil a day--not even 10% of the oil the U.S. consumes, never mind Canada itself and its other major customer, China. And also never mind the stupendous quantities of natural gas which are needed to heat and process the gooey sand. Just how "net energy productive" is shale oil or tar sand if we're burning natural gas and oil (and using huge quantities of water as well) to process it?

As for biofuels from algae and many other technically achievable ideas: at this point, the Scalability Gap is the approximate size of the Grand Canyon.

I had the good fortune to speak at length this weekend with a Cal Tech (California Institute of Technology) grad student who is working on the nuts and bolts of one energy technology. His lab is working on modifying an existing protein to act as an enzyme which converts CO2 to carbon monoxide--basically peeling off an oxygen atom which would combine with another oxygen atom and a hydrogen atom to form water.

The idea is that carbon, oxygen and hydrogen atoms can be strung onto the carbon monoxide molecule to form a "clean" hydrocarbon chain--a fuel.

The appeal of this process is obvious even to a layperson such as myself: as we seek some way to sequester the potent greenhouse gas CO2, what better way to do so than to process it into fuel and water?

But the realities of scaling such a technology are prodigiously difficult and unknown. Curently the protein is extracted from e. coli bacteria, which must be grown in quantity. The same is also true of algae-based biofuels. What will be the feedstock for these one-celled organisms? Given the energy needed to process the organisms, "manufacture" the enzymes or catalysts used to "process" living bits into fuel, straining out the leftover gunk, etc., how net-energy productive will the process be?

Pundits with zero knowledge of chemistry and biochemistry find it remarkably easy to wax glowingly about how various technologies will "save the day"--insert the favorite of any particular moment: "clean coal," switchgrass biofuel, shale oil, tidal generators, etc.

But the reality is stark: the civilian U.S. populace consumes over 350 million gallons of liquid fuels in vehicles every day, never mind electricity, petrochemicals, aircraft, the U.S. military, etc. Replacing that with technologies which scale up to producing hundreds of millions of gallons of liquid fuels per day (or their electrical equivalents) may--dare we even whisper it?-- may not even be possible.

The more you know the actual science, the more dubious the various "magical" claims become. Those in the know doubt lithium ion batteries can be lowered in cost and produced in sufficient quantity to the point where they can power hundreds of millions of hybrid vehicles. The search for a "Holy Grail" battery which stores electricity at the same energy densities as lithium ion batteries but at lower cost is certainly on. Many candidates are in the works, but we must be mindful of the Scalability Gap in all cases.

Science fiction author Arthur C. Clarke once noted that technologies we don't understand are essentially magic. As we burn through irreplaceable liquid hydrocarbons at the rate of 80 million barrels a day, far too many believe that some inexplicable "magic" technology will arise more or less seamlessly (like the automobile or air travel) and save the day.

High school chemistry and physics is generally more than enough to grasp the basics of any such proposed "magic," and more than enough to see the Scalability Gaps. The possibility that it is perhaps impossible to scale up any technology to replace 40 million barrels a day of oil equivalents is too frightening to even speak.

But maybe it's true, nonetheless. There is simply no way to know at this point.

Thank you to everyone who emailed me in the past two weeks. I will try to respond to everyone over the next week. Your patience and understanding are greatly appreciated.

If you'd like to watch me blink a lot and try desperately not to make a fool of myself answering very tough questions, you might enjoy:

Dangerous Minds w/ Richard Metzger Episode 1 Part 1 (interviewing Charles Hugh Smith)

Dangerous Minds w/ Richard Metzger Episode 1 Part 2

Dangerous Minds w/ Richard Metzger Episode 1 Part 3

Dangerous Minds w/ Richard Metzger Episode 1 Part 4

Thank you, Richard, for giving me a rare opportunity to pontificate on Marx. 

Thank you, Steven S. ($50), for your stupendously generous contribution to this site. I am greatly honored by your support and readership.