Energy and Economic growth
In explaining how the economy is tied to energy, with the leveraging impact of cheap energy creating growth, the American commentator on energy Gail Tverberg states that “In order for economic growth to occur, the wages of workers need to go farther and farther in buying goods and services. Low- priced energy products are far more effective in producing this situation than high-priced energy products. Substituting high-priced energy products for low- priced energy products can be expected to lead to lower economic growth.”
This echoes the views of the Victorian economist Stanley Jevons who, when commenting on the consumption and cost of coal in manufacturing, wrote in his book “The Coal Question – An Inquiry Concerning the Progress of the Nation…”, 1865, “It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth.”
This he explained is because “new modes of economy will lead to an increase of consumption ”.… “It is the very economy of its use which leads to its extensive consumption.”
Jevons concern was on the consumption and cost of coal in manufacturing “Whatever, therefore, conduces to increase the efficiency of coal, and to diminish the cost of its use, directly tends to augment the value of the steam- engine, and to enlarge the field of its operations.”
Bringing this up to date, whatever diminishes the cost of energy in manufacturing will generate growth of the economy. The converse is also true: increasing use of more expensive energies will damage economic growth.
To the extent that the consumption of coal and fossil fuels is now being discouraged with fears over future climate change and the more immediate harm to human health, some are turning to the intermittent renewable energies of wind and solar power rather than nuclear power. Future economic growth will depend on the extent of use and relative costs of these energies.
Those economies that increasingly rely on the relatively expensive renewables, wind and solar power will tend to decline relative to those that adopt more efficient and lower cost nuclear energy. Jevons emphasised the importance of energy cost.
“In less than one hundred years, then, the efficiency of the engine has been increased at least ten-fold; and it need hardly be said that it is the cheapness of the power it affords that allows us to draw rivers from our mines, to drive our coal-pits in spite of floods and quicksands, to drain our towns and lowlands, and to supply with water our highest places; and, finally, to put in motion the great system of our machine labour, which may be said, as far as any comparison is possible, to enable us to do as much as all the other inhabitants of the world with their unaided labours.”
It is interesting that, just as now with nuclear power, the benefits of cheaper energy were not wholly accepted and Jevons complains that: “It is usual with a certain class of writers to depreciate science in regard to the steam-engine, and to treat this as a pure creation of practical sagacity. But just as the origin of the engine may be traced to a scientific work, so it is now theory and experiment in their highest and latest developments, which give us a sure notion how great will be the future improvement of the engine, and through what means it is to be aimed at.”
Jevons also criticized the expectation that increasing efficiency in energy use would lead to a reduction in energy consumption.
No one must suppose that coal thus saved is spared —it is only saved from one use to be employed in others, and the profits gained soon lead to extended employment in many new forms. The several branches of industry are closely interdependent, and the progress of any one leads to the progress of nearly all.
The German decision to phase out its nuclear power plants and to turn to an increasing dependence on renewables is providing a useful confirmation of Jevons. The nuclear share of electricity generation has dropped by 2014 to just under 16% (although this is only slightly less than the 18% of nuclear electricity in the UK). But the output of renewable energies is increasing and these more costly energies now provide nearly 26% of electricity with the intention to increase to 55% by 2030 and 80% by 2050. As the cost of electricity rises there are now signs of a recession, although as an interim measure the consumption of lignite and hard coal has increased and Germany now burns more coal than since 1990. (The damage to public health in Germany and neighbouring countries from air pollution seems to be ignored.)
Blomberg (Oct 2014) reported that “Germany cut its growth outlook, and investor confidence fell to the weakest level in 2 years, as recession concerns mount.” The BBC also commented that in 2014 “the German economy has narrowly avoided recession, growing by 0.1% in the third quarter of the year. With the economy having shrunk 0.1% in the previous quarter, another negative figure would have implied a recession.” This is as expected. As Gail Tverberg said “Substituting high-priced energy products for low-priced energy products can be expected to lead to lower economic growth.”
But the converse is also now being proved; with the sharp fall in the price of oil and gas and fossil fuels in recent months the German economy has shewn some growth. But this may be short-lived and a number of the larger energy intensive German industrial companies are now said to be relocating to other countries.
This should not be a surprise, indeed it might be an intended, if unspoken, consequence of the German energy and economic policy. There is a growing belief, at least in the older industrial economies of Europe, that the accelerating expansion of industrial society is now reaching its limit. At the extreme this is associated with the ‘deep’ ecology movement, following the Norwegian philosopher Arne Naess (1912 – 2002), which fears the detrimental environmental effects of modern industrial technology and calls for a redesign to preserve the ecological and cultural diversity of natural systems. “Without changes in basic values and practices, we will destroy the diversity and beauty of the world, and its ability to support diverse human cultures.” These views are now more widespread.
An end to growth
One examination of this end of growth is in a recently published book: with its less dramatic but more informative subtitle “An Environmental History of the Twentieth-Century World” – Something New Under the Sun by J. R. McNeill declares that “In environmental history, the twentieth century qualifies as a peculiar century because of the screeching acceleration of so many processes that bring ecological change. Most of these processes are not new: we have cut timber, mined ores, generated wastes, grown crops, and hunted animals for a long time. In modern times we have generally done more of these things than ever before, and since 1945, in most cases, far more. Although there are a few kinds of environmental change that are genuinely new in the twentieth century, such as human-induced thinning of the ozone layer, for the most part the ecological peculiarity of the twentieth century is a matter of scale and intensity”.
A table of world GDP shows this increasing from 823 in 1900, to 2238 by 1950, 6693 by 1973 and then accelerating to 11664 by 1992. It has now doubled again. The change began with the industrial revolution: whereas it had taken all of human history until around 1800 for world population to reach one billion; the second billion was achieved in only 130 years (1930); the third billion in less than 30 years (1959); the fourth billion in 15 years (1974); and the fifth billion in only 13 years (1987).
This increasing population – now 7.28 billion people (January 2015) is a factor in driving economic growth, but McNeil asserts that we will not keep the twentieth-century rate of growth up for long. “We are in the final stages of the second great surge in human population history. Demographers expect at most one more doubling to come.” But this growth has only been made possible by the growth in the availability of energy. The worldwide energy harvest increased about fivefold in the nineteenth century under the impact of steam and coal, but then by another sixteenfold in the twentieth century with oil, and (after 1950) natural gas, and, less importantly, nuclear power.
No other century—no millennium—in human history can compare with the twentieth for its growth in energy use. We have probably deployed more energy since 1900 than in all of human history before 1900. My very rough calculation suggests that the world in the twentieth century used 10 times as much energy as in the thousand years before 1900 A.D. In the 100 centuries between the dawn of agriculture and 1900, people used only about two-thirds as much energy as in the twentieth century.
But arguing against his own “screeching acceleration”, and with his somewhat
disparaging dismissal of nuclear power, McNeill is prepared to contemplate the
continuing consumption of fossils fuels
The exhaustion of fossil fuels on the global scale is not imminent. Predictions of dearth have proved false since the 1860s. Indeed, quantities of proven reserves of coal, oil, and natural gas tended to grow faster than production in the twentieth century. Current predictions, which will be revised, imply several decades before oil or gas should run out, and several centuries before coal might. We can continue to live off the accumulated geological capital of the eons for some time to come—if we can manage or accept the pollution caused by fossil fuels.
This last proviso is the key. As the following item shows there are no simple or obvious means of dealing with the longer term consequences of air pollution – future climate change and the immediate damage to public health – caused by burning ever-more fossil fuels. For a clean, secure and consistent electricity supply an expanding world must, increasingly, turn to nuclear power. The alternative will be a continuing planned reduction in economic and, almost certainly, population growth.
Stop burning coal
The Conservative’s David Cameron, Labour’s Ed Miliband and the Liberal Democrat’s Nick Clegg have announced that they have agreed to work towards a legally-binding global climate deal, to agree new UK emissions-cutting goals and to phase out unabated coal-fired power. To this end they will accelerate the transition to a competitive, energy efficient low-carbon economy and end the use of unabated coal for power generation.
In this fine sounding declaration the weasel word “unabated” means that
nothing much will happen to reduce the harm which is now caused by burning
coal. The abatement measures listed by the Department of Energy include
combined heat and power, supercritical in place of subcritical plants, biomass
co-firing, and carbon capture and storage. Of these the first two will only
reduce emissions, not eliminate them; biomass co-firing will more probably
increase them, while the future of CCS is extremely doubtful. The ‘abated’
plants will still continue to emit some carbon dioxide and other toxic
While some attention is now being focused on the effects of increasing carbon emissions from burning fossil fuels the more pressing and immediate concern should be with the health effects of burning coal. A report from the Health and Environment Alliance – The Unpaid Health Bill: How coal plants make us sick (March 2013) – asserts that coal-fired power plants in the UK were responsible for 1,600 premature deaths per year, 68,000 additional days of medication and up to 2600 lost working days at an annual cost of between £1 and £3 billion.
It is quite extraordinary that these actual, horrendous, and continuing, consequences of burning coal should still be tolerated while a theoretical nuclear accident (which has never happened in the UK in our 60years of generating nuclear power) should be so greatly feared. Many lives could be saved by replacing our coal stations with nuclear power plants.
Proposals to remove carbon dioxide (CO2) from the atmosphere so as to reduce the impacts of ocean acidification and anthropogenic climate – Negative Emissions Technologies (NETs) – are dismissed in the report from the Stranded Assets Programme of the Smith School of Enterprise and the Environment.
The final paragraph is unequivocal
Finally, it is clear that attaining negative emissions is in no sense an easier option than reducing current emissions. To remove CO2 on a comparable scale to the rate it is being emitted inevitably requires effort and infrastructure on a comparable scale to global energy or agricultural systems. Combined with the potentially high costs and energy requirements of several technologies, and the global effort needed to approach the technical potentials discussed previously, it is clear that very large-scale negative emissions deployment, if it were possible, is not in any sense preferable to timely decarbonisation of the energy and agricultural systems.
The report argues that a significant effect could only be achieved through the creation of major, new global industries to capture and sequester carbon. But even if this were to occur successfully, the scale of potential deployment would still not avoid the need for deep emission reductions. And there is also the danger that once a ‘tipping point’ had been exceeded the system may not return to where it originally started, even if CO2 concentrations were then reduced.
If this view is accepted the only means of reducing ever-increasing emissions of carbon dioxide from burning fossil fuels is to reduce the consumption of these fuels. With a world set on ever-increasing economic growth and a growth in energy consumption there seem to be few solutions that could be contemplated within the next decades other than an expansion of nuclear power.
The IEA-NEA Nuclear energy road map (2015)
This is clearly the view of the IEA-NEA which reports that Nuclear power is the largest source of low-carbon electricity in OECD countries and second at global level. Nuclear can play a key role in lowering emissions from the power sector, while improving security of energy supply, supporting fuel diversity and providing large-scale electricity at stable production costs.
In one scenario, global installed capacity would increase from current levels
of 396 GW to reach 930 GW in 2050, when nuclear power would represent 17% of
global electricity production. Already a total of 72 reactors were
under construction at the beginning of 2014, the highest number in 25 years.
Among the actions it foresees within the next ten years are the optimization of Gen III designs, and “the accelerated development of small modular reactors with the benefits of factory construction.”
In addition to building new nuclear stations there are plans to extend the
operating lifetimes of existing stations. EDF has announced that Dungeness B
nuclear power station has been granted a 10 year life extension. This means
that the station which began operating in 1985 and had been scheduled for
closure in 2018 will now continue in service until 2028. The extra cost this
will require is put at £15 million per year. But even with a closure date of
2028 Dungeness B would only have been operating for 45 years and the
possibility of further life extensions of up to 2055 could be considered.
EDF points out that this would enable the existing AGRs to hand over to new nuclear stations without the need for more fossil generation.
Life extensions for nuclear plant are also being considered in most other
For an energy utility company, reactor plant life extension is much more economically attractive compared with the financial cost of new nuclear build. Life extension is financially worthwhile when the projected extra income from wholesale electricity sales exceeds the increased operating and maintenance costs from running the reactor for longer. Older reactors are highly cash- generative because interest from construction debt is already paid-off, whereas newer reactors do not become significantly profitable until after they have reached a 17 year capital payback date.
New Nuclear Watch Europe
This new organisation, launched by TimYeo (now stepping down as an MP), as its chairman, has been formed with the purpose of encouraging the growth of nuclear power in Europe.
In this it has usefully determined through a ComRes public opinion poll that in the UK 58% now support the use of nuclear power to provide energy including 21% who strongly support it, with only 22% opposed. In a further significant sign of its growing acceptance, the polling also showed that nuclear (23%) has overtaken renewable energy sources such as solar (18%) and wind power (15%) as well as fracking (7%) and coal (3%) as the favourate single energy source in which British adults would like the UK and Europe to invest.
Three years ago similar polling for the British Science Festival showed 19%
support for nuclear compared to 25% for solar and 20% for wind. The NNWE
research also shows that nuclear is seen as a potential solution to climate
change issues, with 62% of respondents willing to accept nuclear power if it
helps to tackle climate change.
The prime purpose of NNWE however seems to be as an industry lobby group. It aims to ensure “that everything possible should be done to ensure that partners from across the supply chain are drawn from within the EU and where possible, from the country where the power station is sited.” and that “contracts for new nuclear power stations are awarded in a way which delivers the greatest benefit in the fairest manner to local communities, as well as to consumers and national governments … and that as large as possible a proportion of the manufacturing and supply chain work involved in the construction of any new nuclear power stations should be located within the EU in order to maximize the opportunities for the employment, training and skills development of EU citizens.”
These aims were supported by opinion polls which established the importance of encouraging a domestic nuclear industry with the creation of jobs being second in importance, after safety considerations. Of those polled 82% said that this is a factor when thinking about supporting or opposing a new nuclear power station close to their home and 68% believe that it should be mandatory for non-EU companies to have a track record of safe commercial use in its country of origin before being permitted to build in Europe -(indeed who could think otherwise!). In addition 76% of those polled put the creation of jobs as second only in importance to safety considerations.
Former U.S. Energy Secretary Steven Chu weighed in on Nov 16 telling the Guardian newspaper that the UK should not build multiple reactors from different vendors. He said that the differences would be a “financial drain” on the UK ratepayers, and made reference to Areva’s troubles in Finland and France with the EPRs already under construction. Chu said the UK should adopt South Korea’s model which is to build at least 10 nuclear reactors based on the same design. He said the 10th plant would cost just 60% of the first one.