Future of energy

Editor’s Note: On Nov. 15, 2012, Western News celebrated its 40th anniversary with a special edition asking 40 Western researchers to share the 40 THINGS WE NEED TO KNOW ABOUT THE NEXT 40 YEARS. This is one of those entries. To view the entire anniversary issue, visit the Western News archives.

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Particularly in Canada, we depend on large quantities of cheap reliable energy. So, how will we power our lives over the next 40 years? As Yogi Berra said, “It’s hard to make predictions, especially about the future.”

That’s as true for energy as for any other field. Early 1970s planners significantly over-projected the future demand for electricity when deciding the shape of Ontario’s electricity generation infrastructure. This resulting overbuilt network was a major contributor to the breakup of the Ontario Hydro electricity monopoly and Ontario’s current energy system.

Poor predictions have consequences. But predictions are still fun to consider and I’m going to give you mine.

How will energy consumption patterns change over the next 40 years?

If you go back 40 years you’d find that very little was different, on the surface, about energy use in Ontario. People used electricity for many purposes and hydrocarbons to heat their houses and power their vehicles.

Many of the power plants used to generate electrical power were the same in 1972 as they are today; most of the hydroelectric plants now operating in our province were already operating then, as were several of the coal-fired power stations that have recently been retired from service.

Even on a quantitative basis little has changed. Canadians now consume about 5 per cent less energy per capita than in 1972, counter to the projections of those 1970 planners. The small size of this change points to two important facts.

First, we aren’t interested in energy, but in the services (a cool house, hot shower or moving car) that energy provides. Our homes and cars are much more efficient than their 1970s counterpart. In that case, why only a 5 per cent decrease in energy use?

The answer is termed ‘energy homeostasis.’ If window technology improves, build houses with bigger windows.

Our energy comes from many sources of high and low grades. Heating things is possible with low-grade sources; even a bundle of twigs can heat water to make tea. Doing mechanical or electrical work requires higher grade energy.

The supreme controllability of electricity makes it prized in homes, offices and factories. For transport, fuels that are dense in energy like oil are prized, because they can be carried by the vehicle they fuel. Electricity can itself be generated from a variety of sources including running water, wind and solar and by running a steam turbine heated by nuclear fission or by burning hydrocarbons.

The energy sources we use to power our lives change over time. Houses, once heated with fuel oil, are now heated with natural gas. Most cars are still gasoline powered, but that gasoline now contains some corn ethanol, and propane-powered vehicles and vehicles partly powered with electricity may now be found.

Decreased oil production 40 years hence need not imply energy catastrophe if some tasks currently performed by oil are replaced by other energy sources. This happened between 1972 and today. Low value uses for oil like space heating and electrical generation are now rare. Likely 40 years from now, oil will be used mostly for its highest value uses like aviation, where its high-energy density is at the greatest premium, and less to fuel ground vehicles.

This is not to say that the price of oil will not rise over the next 40 years – such price changes force the displacement of oil to its highest value uses. The prices of various energy sources will continue to fluctuate wildly over the next 40 years, in response to uncertainties about long and short run supply and demand shocks, and in response to scientific and engineering innovations.

Environmental shocks, like the Japanese Fukashima disaster, which will result in the shuttering of nuclear reactors, will continue.

More ongoing environmental concerns – like those causing Ontario to close coal-fired power plants – will continue. Energy changes of that type are possible only if other options are open – the Japanese can shut their nuclear reactors because they can generate the missing power from new generators whose fuel arrives on tankers.

Political disasters are, unfortunately, nearly certain to occur somewhere, sometime over the next 40 years, and may result in exceptionally high oil prices that temporarily reduce our ability to, for instance, fly cheaply, until a technology shift reduces the consumption of oil for tasks which it has substitutes.

The population of the world will continue to increase, mostly in materially poor parts of the world who want energy lifestyles approaching those in the developed world.  Success in this goal, even assuming a modest decrease in per capita energy use, implies a large increase in total energy consumption. That increase will drive price increases, particularly for oil, that change fuel use patterns.

If current anti-nuclear trends continue, immensely more coal will be used, even though much research supports the contention nuclear power, carefully managed and properly sited, is less environmentally damaging than even modern coal-fired power generation technologies.

Wind and solar renewable energies will continue to improve, although their intermittent supply will require the development of energy storage solutions and ‘smart grid’-style demand shifting.

Public transit will increase, even in North America, to cope with higher population densities and to allow transport to be fueled by coal, renewables, and nuclear power.

Prices will change over the next 40 years, technology will develop, and we can hope more of the world’s poor will emerge from poverty, but we won’t live in grass huts, nor will be living in a fusion-powered energy paradise: our consumption of the services provided by energy, if not of the current fuel mix, will remain much as today.

Matt Davison is the Canada Research Chair in Quantitative Finance, and is jointly appointed to the Departments of Applied Mathematics and Statistical & Actuarial Science in the Faculty of Science as well as to Ivey’s Management Science area group and the Ivey Energy Policy and Management Centre.