my submission to the Energy Strategy / Energy Efficiencies.


Let’s start with this understanding: Work requires energy.

Given that economic activity is underwritten by physical work done extracting/processing/transporting physical resources, then it is entirely reasonable to estimate the amount of economic activity achievable, given the supply of energy.

We can argue ‘efficiencies’, but they follow a law of diminishing returns.

So your talk of ‘Maximising it’s contribution to Economic Growth’, is arrant nonsense unless you can point to an exponentially-increasing supply of energy. The only source which is capable of supplying this is solar (wind and hydro are merely secondary solar). Fossil fuels don’t do it from here.


In terms of supply, the Hubbert Curve seems to have stood the test of time. It applies equally to coal, as to oil. The E.I.A., finally pushed to do a field-by-field survey last year, and came up short.

Please observe the red, hand-pixelled area on their ‘slide 7’, labelled ‘Yet to be found oil’.

This is the only way they could fudge the fact that natural depletion rates indeed have us at Peak now. They are double-counting, the other areas already include forward projection. The actual graph of ‘global oil discoveries’, is easily accessed via google images. Discoveries peaked in 1964. The graph is a face-saver. Even with it, they get to a peak by 2020, and state “We need to find a Saudi Arabia (equivalent) every four years to maintain status-quo”. That rate of discovery hasn’t been achieved since the 1970’s.

You can’t produce what you have haven’t discovered, nor can you bank on it. I would suggest it’s socially reprehensible to do so.


Energy Return on Energy Invested.

Note, this is not energy return on dollars invested – a common mistake made by economists.

This is a measure of the ‘energy profit’. All barrels of oil are not equal. Tar-sand oil, for instance, takes 2 barrels of oil equivalent, to make three – a profit of one. Lignite-to-oil is similarly unproductive. An EROEI of 8:1 (often just called ‘8’) is considered the base-line for supporting Business as Usual, static rate. This means that lignite, for instance, won’t support BAU, even without the further energy loss of Carbon Capture from an open pit.

We have cherry-picked the best/easiest/shallowest, and the last half (we are essentially half-way through the oil resource) is the worst-returning half. This is compounded by the tendency for nett exporting countries to rapidly become nett importing countries, due to increases in internal consumption.

It is important to note that EROEI also overrides the nonsense that all resources are available regardless of dispersal or site.


Despite repetitive mantra-like chanting, “clean coal’ and more precisely “Carbon Capture and Storage”, are figments of imagination. To proceed with ‘developing’ and burning, coal and/or lignite at this point, is unacceptable governance . Indeed, all strategic governance decisions based on yet-to-be-proven (or worse, yet-to-be-invented) technologies, are socially unacceptable. Rhetoric is a poor substitute for fact, and worse when it comes from a Minister of the Crown.


Please do not make the mistake of quoting ‘reserves’ in linear terms (ie 300 years). For instance, peak Australian coal supply rate will probably be reached within 30-40 years, yet only a few years ago, their Minister proudly (and stupidly, in my opinion) clained “300 years of reserves”. A smart addenda would have been: “at

current rate of extraction”.


Unfortunately, you have a problem there. It would appear that ‘the economy’ is still inextricably linked to physical resources, extraction or manipulation thereof. This means that even with increasing energy of good quality (high EROEI) you are still up against the physical limits to growth.

So sorry, the economists were wrong, the Club of Rome right. In hindsight, a Physics unit being made mandatory in an Economics degree, might have helped.

Indeed, quoting the ‘value’ of finite resources, even ex energy requirement, is a nonsense too – globally, the end-game doesn’t work. Actually, the last half doesn’t work – think about it.


Given the fact that fossil fuels are at-or-near peak supply rates, and that demand even in recession is near full-supply rate, the only valid objective is to wean to renewable energy sources, while we still have the time and energy to do so. You rightly note this. If effort is put into enlarging the fossil-fuel-based infrastructure now, it only compounds what is already a major problem. I suggest we won’t even maintain present levels of activity, while managing the transition.


A notional target, an irrelevant number of years away, and in percentage terms. Not good enough. This has to be year-on-year, there have to be penalties for missed targets, and it has to incorporate the fact that fossil fuel use has to be displaced in areas not traditionally powered with electricity.

Even starting now, all out, we won’t get there. The relevant time-frame is less than 10 years.


We have to anticipate a panic-stop on carbon emissions, at any time. The bare truth is that they cannot be ‘bought’ away – again the problem with economists vs reality – there isn’t the ‘sink’ available on the planet. Assuming that we are dealing with reality, a real halt may be needed, and certainly will be needed well within the time-lines for continuance with fossil fuels, suggested by the Minister.

An early-completed transition to renewables avoids disruption from this, and avoids the inevitable demand/supply problems at such a juncture.


The grid, as is, is geared to major point generation sources, and long loss-making transmission lines to major centres. Clearly, the loss is something to address – why lose something you’ve already produced?

We will also run into conductor supply issues (copper conforms the Hubbert curve too, it is true it occurs in thin distribution to the point where there is ‘enough’, but the EROEI thing hits here too. Peak copper discoveries were 1996, current rate of supply is 15 million metric tonnes, sequentially cherry-picked, and on that basis, China (for instance) can’t wire herself to our per-head level. I suspect there are some ‘free-marketeer’ types who will read this, and who think raising the dollar offer can extract anything at a certain price, or find a replacement. Sorry, call it RROEI Resource Return on Energy Invested). At sparse ppm, it’s not a matter of economics, it’s a matter of too much energy needed.

So, we should aim to look at the grid in a different way. We should encourage on-site generation (I suggest solar, but no bets are off) and treat the grid as an ‘equaliser’.

There should be incentives to encourage this change – ‘the market’ is retroactive, which in this case will be too late.


While it is part of the mantra, competition is about to become the problem, not a solution. The competition is for the run-out of energy resources, and it won’t make anything cheaper. More efficient for a short time, maybe, but cheaper, no.

This transition has to be completed within less than 10 years, and simply has to be Government-driven. Returns-to-shareholders are irrelevant, in the same way that riches on the Titanic were irrelevant – getting into a lifeboat was imperative, regardless of cost. This matter is of not dissimilar urgency.


This is an entirely legitimate, indeed essential, part of the approach needed.

The house-insulation moves are a good step, but it needs a quantum effort more than that. Sequenced optimisation (ie solar water installations, then retro-fitting of older housing stock – there’s not the lead-time left to replace them – then two-way rail, then…….) will be necessary – good leadership and governance required.


I have an off-grid, all LED house which runs on 2 Amps @ 12 volts. Passive solar, it goes 3-4 days without sun. Contrary to popular opinion, it cost $370 per sq.m (2005, ex-labour).

At that rate, the country could get by on one Benmore penstock. It would leave a lot for transportation, agriculture etc.


This submission is, of course, entirely contra to the ‘growth is good’ mindset. It is an unfortunate fact that exponential growth is unsustainable, and thus a nonsensical goal.

Sustainability – that which can be maintained intergenerationally – is the only valid yardstick.

On that basis, only solar (including secondary solar – wind, hydro) cuts the mustard. We should be moving towards that point, within a ten-year timeframe. If nothing else, that effort should ensure minimal unemployment!

It must be remembered, that energy underwrites ALL economic activity – without it, nothing happens. If global energy supply-rates have peaked, then (efficiencies excepted) so too has the potential for ‘growth’.

It may be that fiscal aspirations/planning have to change to accommodate this fact, and some paradigm-shifting has to take place. It will no doubt be said that fiscal matters are not discussable here, but if energy underwrites the fiat fiscal system, and energy becomes supply-constrained, then the fiscal system will be in overshoot by the amount of debt carried at that point. It would be prudent not to assume that BAU will continue through this phase – another reason for Government leadership, rather than ‘leaving it to the market’.


One Response

  1. Thanks Murray.
    Keep up the good work !

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