Why you should read Global Energy Transformation

In Global Energy Transformation I take a look at energy issues from a management and business perspective. This hasn’t, to my knowledge, been done before, and I was surprised by how many novel ideas I could craft, only by changing the perspective.

Energy systems transformation is a major challenge for all of us. No previous work seems to have been done in this area. Instead, most projects focus on the development of renewable energy technologies, most of them in their early stages, and small scale experiments to save energy. We urgently need large scale change. Also, the present focuses of the debate, climate change and related themes, rapidly need to change, almost to its opposite. The biggest problem we are facing, is the issue of Peak Oil, the global peak in oil production. With less energy, already in the near future, the prospects for economic growth are getting bleaker. Economic growth is tied to an increasing supply of cheap energy. It will take a large scale program, similar to the Apollo Program, or the transformation of US industry during the Second World War, to change this.

All of these insights, and many more, occurred to me as I wrote Global Energy Transformation. I tried to make it into both a revealing book about our dependence on fossil fuels, the need for market driven change to be complemented by a large scale planned transformation program, and a handbook for all the managers and participants from business, government, academia, and the general public, who need to participate to make Global Energy Transformation the next global success story!

New book on soft aspects of leadership and change

I’m currently working on a book that emphasizes the softer aspects on leadership and change. It will bring up issues related to the current specialization in society, the need for strong leaders with a global, long-term, perspective and the need of stories and strong images of our collective future.

This book will be optimistic, blaze the trail forward, but it will also contain some deep analysis, of the energy related issues that we will soon be facing.

Truths and myths about Peak Oil

There are many misunderstandings regarding when the global peak in oil production will occur. When I discuss Peak Oil with people from different walks of life they seem to have highly differing ideas about it. I would like to present a few myths and briefly explain why each is a myth.

Myth #1: Global Oil production will peak in thirty years time or later.

Why this is a myth: Nobody knows exactly when global oil production will peak, but it will probably happen within the next decade, possibly in the next few years, or it may already have happened. Since the 1960′s oil companies have made fewer and fewer discoveries, and today they find only one third the amount of oil that we use every year. This is regardless of the fact that prices are increasing. The largest discoveries were made in the 1960′s when oil was very cheap, and they have not risen due to increasing prices.

Myth #2: If oil becomes scarce oil prices will increase, but we can maintain economic growth.

Why this is a myth: In order to maintain and increase economic activity on a global scale we depend on increasing volumes of energy, primarily oil. With less oil we will not be able to produce and transport goods and people around the globe. For transportation we don’t have a readily available alternative to oil. We need to rapidly develop renewable fuels, large scale production and distribution systems for those.

Myth #3: When oil prices increase investors and companies will have the incentives to develop renewables.

Why this is a myth: It takes decades to develop new technologies and implement them on a large scale. In order to sustain a high level of development and investments in new technology over long periods of time we need strong economic growth. After Peak Oil economic growth will probably turn into decline, and it will become increasingly difficult to invest large amounts of money in the development and implementation of renewables.

Myth #4: The market will make sure that economic growth will continue after Peak Oil.

Why this is a myth: The only thing the market does is to determine a price of different commodities and factors of production at certain levels of supply and demand. If demand for oil exceeds supply, prices will increase. The market will not make sure that everyone who demand oil will get a share. Production activity performed by the financially weak will suffer as oil prices increase and it will not easily be replaced by new economic activity.

Myth #5: We will have ample time to develop and implement renewable energy sources when oil prices start to increase.

Why this is a myth: After Peak Oil the available volumes of oil will decrease. This will put strain on the economy, which will start to lean towards recession. It will become increasingly difficult to stimulate economic growth. At this point the situation will get worse until we manage to develop and implement renewable energy sources on a large scale. This will be difficult at this point, given the aspects described above.

Myth #6: Oil importing countries will always be able to buy oil in world markets.

Why this is a myth: As production volumes decline, oil producing countries will need to use an increasing share of its oil for its own needs. The volumes available for export will decline. Oil importing countries will compete over increasingly small export volumes.

Feelings make change possible

People don’t change on a large scale because experts have identified the need in research projects. People change when they feel the need to do it.

Promoting large scale change is more an issue of making people feel good about changing, and by providing clear directions on the exact contents of the change.

The past week I had the idea of writing a book that is easy to read, that explains the emotional aspects of change.

Lomborg in the Washington Post

The Danish statistician Björn Lomborg has an op-ed in today’s issue of The Washington Post. Lomborg’s best-selling book of 2001, “The Skeptical Environmentalist” has many things in common with “Global Energy Transformation”. When it was published, Lomborg had the advantage, of arguing against the very powerful environmental lobby, which he does in the article as well. This head-on attack on the environmentalists created an instant interest in the book.

http://www.washingtonpost.com/wp-dyn/content/article/2009/09/27/AR2009092701444.html?wpisrc=newsletter&wpisrc=newsletter&wpisrc=newsletter

He has now become a household name in the environmental debate. His argument is exclusively about global warming and he doesn’t take Peak Oil into consideration, which would not be expected either. He expresses his strong skepticism to the gravity of the global warming, argues that this has been exaggerated by environmentalists.

While this may be true, we need not only to form a realistic opinion about global warming, we need also to take Peak Oil into serious consideration. Peak Oil adds a strong cost element to doing nothing, or too little, since a future shortfall of oil will cause tremendous cost, especially for the groups that Lomborg argues will be badly hit by the investments in energy systems transformation.

Monday, September 28, 2009 by Mats Larsson

Easy to be green

In his New York Times column of today, Professor Krugman debates the polarization of the climate change debate, in which many participants in the debate still argue that the problem does not exist.

http://www.nytimes.com/2009/09/25/opinion/25krugman.html

He poses the rhetorical question: “Have you been impressed by the civility of the discussion and the intellectual honesty of reform opponents?”

Professor Krugman outlines the idea that the transformation to sustainability represents a cost to society, that many people still think is not worth paying. He does not mention at all the similar debate about Peak Oil, or the risk that an impending shortfall of oil will result in tremendous economic loss to society. According to Peak Oil experts, the cost of starting mitigation activities to reduce our dependence on oil now, is much lower than the future cost of not having enough oil to saturate demand. Is Professor Krugman unaware of the Peak Oil issue or its implications?

If so, it may be a good idea to visit some of the excellent peak oil documentaries on YouTube, that lay down a few essential facts about our economy’s dependence on oil. One of the best is a series by Chris Martenson:

http://www.youtube.com/watch?v=cwNgNyiXPLk&feature=fvst

To paraphrase Krugman: Have you been impressed by the intellectual honesty of sustainability experts and economists in the debate about energy transformation?

None of the videos on YouTube discuss the methods for large scale transformation of global energy systems. Here is the book for people who are interested in this issue:

http://www.amazon.com/Global-Energy-Transformation-Necessary-Success/dp/0230229190/ref=sr_1_1?ie=UTF8&s=books&qid=1246132501&sr=1-1

Friday, September 25, 2009 by Mats Larsson

Energy Savings in Buildings

There is a huge untapped opportunity to save energy on lighting and heating in buildings, and this can largely be financed through market based activities. One electrical installations company in southern Sweden purchased a small office building, that cost 84.000 Kronor (12,000 USD) per year for lighting and heating. By changing lighting installations and installing a heat pump it reduced electricity cost to 42,000 Kronor (6,000 USD) per year. The company had to invest 100,000 Kronor to achieve this, which means a pay-back time of 2.5 years.

The investment in a small scale wind power turbine pays back in 20 years at current energy prices, which in Sweden is half the normal price in Europe. As Swedish price levels for electricity approaches the European levels, pay back approaches ten years. With further increases in electricity prices, pay back times are reduced even more. The big problem is to get a permit to build a wind power turbine in the garden.

Despite the apparent financial benefits, the investments in energy optimization of buildings are slow. The efforts made by installation companies to inform customers of the opportunities and the short pay-back times pay off slowly. Regardless of the fact that we need to reduce energy consumption, and that we need to reduce electricity consumption in order to be able to run cars and trucks on electricity in the near future, very little is happening.

In all probability we are approaching Peak Oil, and we need to speed up activities to reduce our dependence on oil. One important aspect of this will be to reduce electricity demand for existing uses. In order to do this rapidly, we seem to need a managed program for this as well, despite the otherwise favorable circumstances. Such a program may consist of information to companies and households about beneficial opportunities. It may also consist of favorable loans to improve the financial calculation even more. It may also include legislation that forces landlords to replace certain outdated technologies by new ones.

Wednesday, September 23, 2009 by Mats Larsson

Learning from best practices

The debate about energy efficiency and sustainability is full of technical issues and high flown ideas. Many of these will be important, but they need to become included in a plan for how we approach change in practice.

Large companies often have decades of experience from change management in their own organizations and from change together with suppliers and other partners. We need to apply the lessons from these companies in the change management of the energy transformation.

We also need to apply the competence of the most advanced companies and industries in areas such as technology and product development, systems integration and production organization. Many industries are not as advanced as the automotive industry and its suppliers in these fields. Now, as companies with first rate experience from these areas turn their eyes towards energy related issues, competition is likely to increase in many industries. This, however, will become necessary in order to develop technologies, products and systems that are competitive and cost effective.

The book Global Energy Transformation outlines many important change management aspects, and provides tools based on experiences from leading companies and industries in all the above fields:

http://www.amazon.com/Global-Energy-Transformation-Necessary-Success/dp/0230229190/ref=sr_1_1?ie=UTF8&s=books&qid=1246132501&sr=1-1

Friday, September 18, 2009 by Mats Larsson

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