Kip Hansen’s guest essay – May 20, 2022
A friend recently decided to get a pet – a dog to be exact. This friend does a seasonal job, works for six months and then ends the rest of the year. He does useful things with his spare time like rebuilding an old house he bought, stocking a freezer with fish and wild game, and helping out friends and neighbors. I asked him if he knew how much the dogs cost in real money. He replied that he would adopt a shelter dog – for free. I asked him again if he knew how much a free shelter dog would cost him. As you might have guessed, he has no idea of the real Full Cost. Here are the pet industry estimates:
Upfront $1,000 and another $1,000 per year. These charges apply to domestic dogs and do not apply to dogs requiring occasional boarding, dog walking, or dog day care. And that’s only if your dog isn’t sick. In my experience as a pet professional, every new dog gets sick and must visit the vet at least once in the first six months – with an average cost of $250 per visit. , which is more than the usual $250/year of the vet visit bill.
This essay is not about buying a dog, although I can tell you a few hair-raising stories on that topic. It is about Full cost of everything (or FCOT).
What do we mean by Full Cost of Everything?
As the dog-buying example shows, even the free stuff comes with costs – an immediate cost, an additional predictable cost, an expected recurring cost, an unexpected recurring cost, and a long list of things to end up paying. For dogs, that means the cost of the dogs’ dying days (some people spend thousands and thousands of dollars to prolong the dying days of a beloved pet) and the future costs. burial.
For cars, we all have to bear the cost of maintenance, insurance costs, repair bills, body maintenance from minor collisions, new tires, snow tires when moving home for four seasons. Many people are convinced they can afford a car because they can afford the monthly payments only to discover they can’t afford the full cost of ownership – The full cost of the thing. The point here is that there are a lot of costs that come with owning or using something simple.
This brings us to:
“There is no such thing as a free lunch“
In advanced developed countries, we value electricity – when we turn on a light switch, electricity flows and a light bulb (or new LED bulb) illuminates the room. We know that electricity isn’t really free, but most of us don’t mind the cost of using light in our homes when it’s needed.
The average cost of electricity for a house in the United States is about $132 a month, with much variation from state to state. It is the cost that consumers are most aware of. However, the consumer also has to pay the cost of electricity which is included in the goods and the products that he buys are included in the purchase price. This list of ‘hidden electricity costs’ includes things like smelting metals like aluminum, cooling food in the grocery store, additional taxes on street lighting – the list is endless.
When we talk about Global transition to green energy, by any of its many names, we have a much bigger problem. While free energy flows around us, neither created nor destroyed, energy is in forms that we can store and use at will to do the work we need to do, such as lighting a light bulb, making steel, spinning the blades of our lawn mowers or powering our electric cars, comes with a cost.
The idea of ’free energy’ available from solar or wind panels had to be abandoned – there was simply “no such thing as a free lunch” (h/t Robert Heinlein).
There is an important new paper:
This peer-reviewed article has been accepted by Management and Sustainability Magazine and will appear in the June 2022 issue at the Canadian Center for Science and Education. The Journal of Management and Sustainability (JMS) is an international, double-blind, peer-reviewed, open access journal for scholars and practitioners of sustainability management. The summary begins with:
Both abstract and full paper available for free.
Its concepts are previewed in a 19-minute video in “Sage Talks” as The future of energy by Dr. Lars Schernikau.
(click the image or this.)
Current thinking in the energy sector, among policymakers and some utility managers, is that “LCOE – Cost of Energy Equivalence – of onshore solar and wind power at a lower utility scale than coal and gas-fired power plants. ” [ source ]
Schernikau et al. argue that:
“The LCOE is not sufficient to compare intermittent forms of energy generation with variable forms and when making decisions at the national or societal level. We introduce and describe the methodology to determine full cost of electricity (FCOE) or all costs to society. The FCOE explains why wind and solar are not cheaper than conventional fuels and, in fact, the more expensive they are, the higher their penetration in the energy system. The IEA confirms ‘… the systemic value of variable renewables such as wind and solar decreases as their share in the electricity supply increases’. This is illustrated by the high cost of the ‘green’ energy transition. “
The entire paper consists of ten three-column text pages and an additional two pages of appendices and references. It cannot be summed up here in a thousand words. The video (above) is 19 minutes long, however, I recommend taking a little longer to read the full article if you’re interested in energy production and costs.
I’ll try to give you an idea of it through a few of its charts:
“Germany has achieved a wind/solar market share in total electricity generation of ~28%. However, the main share of wind and solar energy (Note 2) is still only 5%. To achieve this “transition”, Germany’s installed electrical capacity must double (Figure 2). [ above ]. As a result, the renewable energy sector underperforms real energy investments, and German electricity prices hit the highest level in the G20. ”
When Schernikau et al. consider the Full Cost of Electricity (FCOE), here’s what they mean:
Policymakers today often only use LCOE – Cost of Energy Equivalence – when they consider the cost of electricity from different sources. The LCOE is shown in the chart above in the upper left corner and excludes other costs in the left column.
eROI – Energy Return on Energy Invested
“The authors argue that energy efficiency for the environment is more complex than greenhouse gas emissions. In particular, energy return on invested energy, or energy return on investment – eROI, input materials, lifespan and recycling efficiency need to be considered as they determine environmental and economic factors. Very important supplement to evaluate power production. ”
“eROI measures the energy efficiency of an energy collection system. Higher EROI means lower environmental and economic costs, hence lower prices and higher utilities. Lower EROI results in higher environmental and economic costs, hence higher prices and lower utilities. As we use less input energy to produce the same output, our system becomes more economically and environmentally viable. When we use relatively more energy input for each unit of energy output, we run the risk of being called “energy hungry” (see the Energy Shortage Appendix). At an eROI of 1 or less, we are operating our system at a power deficit. “
The eROI concept is illustrated with this image:
The red arrows at the top of the column represent Coal and Gas representing the loss of efficiency due to CCUS – Carbon Capture Use and Storage. Similarly, red arrows for Wind, Solar, Biomass are losses due to excess or unused renewable electricity use to produce “green hydrogen”.
“… As illustrated in Figure 10, global primary energy consumption could increase up to 50% by 2050 (population growth of ~25% and PE/per capita increase of ~20%, respectively). the increase in PE demand is ~50%). Energy demand growth is driven by developing countries in Asia, Africa and South America. Developed nations are expected to consume less energy in the coming decades, due to population reduction/stagnation and increased efficiency. Historically, however, improvements in energy efficiency have consistently increased energy demand (see Jevons’ paradox, Polimeni et al., 2015). ”
In summary, Schernikau et al. presented Figure 12, illustrating their view that renewable sources of energy do not fulfill the actual goals of energy policy – creating the basis for healthy living and social growth – fail tests for energy security, affordability and even fail all but one important aspect of environmental protection.
Conclude:
“Investing in – not divesting – fossil fuels is the logical conclusion not only to eradicating poverty (energy), improving the economic and environmental performance of fossil fuel installed capacity (whether be it transportation, heating or electricity generation), but also to avoid a protracted energy crisis that begins in the second half of 2021”.
Readers seriously interested in the ongoing but often misguided effort to shift the world to renewable energy and away from fossil fuels and nuclear will find that the time and effort to read the full article is a good investment.
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Author’s comment:
Lars Schernikau, Bill Hayden Smith and Rosemary Falcon have done a great job arguing that the rush to switch to intermittent renewables is premature and will directly lead to electricity costs. higher for consumers and potentially lead to prolonged energy shortages.
Note that the article was written prior to The outbreak of the Russo-Ukrainian conflict put additional strain on Europe’s energy systems, especially in Germany. Even if the conflict is resolved before the end of 2022, there will still be major problems keeping homes in Western Europe warm next winter. Billions of dollars spent on wind farms and solar farms would be seen as recklessly spent.
The real cause of this disaster is that politicians allow themselves to panic buy renewable energy without taking into account the full real cost.
Do not know The full cost of a thing pre-purchase has led many families into budget disaster. And today, many countries are falling into the same trap on the energy front.
Schernikau et al. will collective try to answer Ask your questions in the comments, but be aware that they’re scientists working across time zones.
Thanks for reading.
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