Something optimistic about our energy future

 

New Malthusians are wrong: a rich world needs less energy than once feared

An untruth has led us to believe net zero is near impossible

AMBROSE EVANS-PRITCHARD18 April 2024 • 5:57pm

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• Geothermal energy, 
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A cardinal fallacy reigns over the debate on green energy and global decarbonisation. It taps into deep Malthusian instincts and creates near universal confusion.

It causes well-educated people to accept the claim that stabilising greenhouse emissions by mid-century will prove to be a near impossible task. It contaminates economic models and explains why the UK Treasury and other bodies – though not the Energy Institute – cling to exorbitant estimates of what it will cost.

There are, of course, many obstinate fallacies in this controversy. The most common is to conflate “flow” and “stock”, much exploited by those engaged in predatory delay. The constant extraction and shipment of coal, oil, and gas, day after day, to feed the existing energy order is not the same as the one-off demand of mined minerals for a lithium battery that will be recycled. 

A close rival is to conflate “investment” and “cost”. Investment delivers a return, and clean-tech pays for itself with a high multiplier.

These are known fallacies. The larger silent fallacy that subverts all else is the notion of “primary energy demand”, promoted by the International Energy Agency (IEA) during the oil shock of the 1970s. It shaped a generation of academics and energy analysts, and still informs IEA reports. 

In a nutshell, it assumes that we have to replace all the energy extracted from hydrocarbons. It seems an obvious truism, except that we do not need to do any such thing. Two-thirds of fossil energy is currently wasted, mostly in thermal heat lost to the air.

Cutting-edge research suggests that we will require just 40pc to 45pc of today’s total energy supply to replace the old system, and to lift the global South, and to satisfy the voracious demand of data centres, all at the same time. So rejoice.

“The entire decarbonisation challenge is far smaller than is made out by its critics. Primary energy demand, irrespective of how it’s defined, is simply not a matter of any importance,” said Michael Liebreich, global technology guru and founder of Bloomberg New Energy Finance.

If you light your study with a 10-watt LED bulb powered off wind or hydro, you consume 95pc less energy for the same light as a 75-watt incandescent bulb powered by a coal plant working at 37pc thermal efficiency. Real life usually falls between these two theoretical extremes, but you get the picture.

The LED bulb will last 15 or 20 times longer. It will not lose 80pc of its energy in heat. It will not set the lampshade on fire. Bingo.

Mr Liebreich offers a grand summary of the bullish case in Five Superheroes of the Transition, part of his “Cleaning-up” series of energy podcasts. The obstacles are serious, but they loom larger in our minds than they really are.

As we electrify everything that can usefully be electrified, the need for primary energy will fall mechanically. We lose roughly 15pc of the power generated by renewables, factoring in losses from conversion, transmission lines, the grid, etc – a loss rate that keeps thinning with technology.

If you switch from a VW Golf to an electric VW ID3 charged at night off British wind, or charged during the day off Australian solar, you cut primary energy use by 75pc at a stroke.

I hate to mention heat pumps, a peculiar bone of contention in the idiosyncratic British culture war, but when it comes to primary energy, the energy science is unanswerable.

Like them or not, they have a performance coefficient near four. They cut demand for primary energy by almost 80pc, adjusting for the relative variables of upstream losses and furnace efficiency of gas boilers versus grid loss for electrification.

The beauty of ground source heat pumps for office buildings, blocks of flats, or light industry is that the ground itself acts as a giant battery in non-tropical climates. It does half the work of heating in winter and of cooling in summer. 

Some 15pc of the world’s primary energy demand is to extract and refine oil and gas, so that will partly disappear. Fossils account for 40pc of the world’s blue water shipping. That, too, will be slimmed down to residual needs for chemicals or long-haul aviation (perhaps).

“It will be sold for salvage,” said Mr Liebreich. Oil and gas pipelines will be recycled for scrap, lowering iron ore demand.

Will we run out of lithium? An enduring myth has taken hold that just 5pc of lithium batteries are recycled. It tracks back to a report by Friends of the Earth from the early 2010s, which divided newly manufactured EV batteries by the number of old ones collected. It has been repeated uncritically by the press ever since, and even by Nature Energy as recently as April 2019. 

Obviously, there were almost no end-of-life EV batteries to collect a decade ago. The definitive report for the Swedish Energy Agency by Hans Eric Melin estimates that the true recycling rate today is 90pc and heading for 99pc. Minerals in batteries are too valuable to waste.

When you combine recycling rates at such levels with gains in battery technology – solid state batteries with three times the energy density may be hitting the market by 2030, or soon after – you reach perfect circularity. You have all the lithium you will ever need, and the same logic applies to copper. As for cobalt and nickel, the new LFP batteries conquering China need neither. 

Do we really need to keep 30,000 dairy cows locked up in single hangars in China, never seeing pasture or daylight, feeding on Brazilian soy to produce milk when we can make bio-identical milk, with no antibiotics or steroids, in precision fermentation vats using a fraction of the lifecycle energy, 96pc less water, and emitting no methane? No, we do not. Nor will once cellular agricultural costs fall below griddle parity.

Without straying too far into exotica, the latest semiconductors using graphene or silicon carbide cut electricity use of certain processes by orders of magnitude. Breakthroughs in gallium nitride promise to replicate the LED lighting revolution, this time in power electronics, cutting losses from solar inverters by 40pc, and cutting energy use for EV charging by 70pc.

Superconductors are coming of age. Scientists at MIT have developed a nanoscopic diode that aims to slash the energy needed to cool data centres, currently projected to gobble up 20pc of the world’s power by the end of this decade if nothing is done. Something is being done.

We can talk ourselves into paralysis, but once we grasp that the twin concepts of primary energy demand and exponential mineral demand are both false, the obstacles fall away. We will not need nearly as much of either as we once thought.

Take the time to read this, both in the context of economics and your futures

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MATTHEW SYED

Mindless ‘compassion’ is leading us towards the end of our civilisation

Rishi Sunak is right to say we can’t afford our ‘sick note culture’ — but we can’t afford tax loopholes either

Matthew Syed

Sunday April 21 2024, 12.00am, The Sunday Times

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Compassion is the basis of morality, said Arthur Schopenhauer, and I suspect most of us would agree. Humans are perhaps unique in feeling the pain of others (philosophers call this “theory of mind”), which is why we often feel a powerful instinct to help one another. This is a beautiful thing — and I don’t wish to diminish it.

But compassion is — I’m sure you’ll agree — a subtle concept. As parents, for example, we notice a tension between the short and long term. When a son or daughter asks to withdraw from the school play, anxious about messing up in front of everyone, we feel a strong urge to protect them. Then we realise that if they do not confront their fear, they will never develop the courage to embrace the adventure we call life. And so we coax them, even prod them, unwillingly onto the stage. We are cruel to be kind.

Another subtlety, less often discussed, is the tension between compassion — particularly in the public sphere — and cost. After all, it costs money to fund welfare programmes and social benefits. This tension was well known to the subsistence societies in which our species spent most of the past 10,000 years: communities that were at almost constant war with neighbours. A tribal leader who proposed a shorter working week and generous social entitlements would not have seemed compassionate but positively dangerous. The society would not have survived.

• The Times view on Rishi Sunak’s sick note plan: National Malady

Today, of course, we live in a different world: we in the UK have enjoyed three centuries of growth and, over the past few decades, unprecedented peace. This has recalibrated our conception of what it means to live in a “compassionate society” — the costs we are willing to incur to help one another. A visitor from the time of the agricultural revolution would be astonished by our wondrous technology but perhaps even more so by triple-locked pensions for all. It is affluence that has permitted this expansion of “compassion”, rather than a shift in moral sentiments.

But this shift extends well beyond politics. You see it in the human rights decisions by judges whose rulings are shaped by tacit assumptions of affordability even if they are largely unaware of it. It costs money, you see, to demand that the Swiss government move rapidly to net zero even though its actions will have a negligible influence on climate change. It costs money to book hotel rooms for asylum seekers who come to the UK in small boats. I make no comment on the legitimacy of any given judgment; I merely note that it incurs financial burdens that must be met by the wider society without which human rights would not exist, nor courts, nor judges.

Or take mental health. Since 1952 the number of conditions that can be diagnosed by doctors has grown from 106 to more than 400, while thresholds for existing disorders have lowered (the psychologist Nick Haslam calls this “horizontal and vertical expansion”). In many ways this has been a hugely positive thing, bringing relief to sufferers who might otherwise have been stigmatised. But as conditions expand, and more psychiatrists are needed to offer subsidised diagnoses and treatment, and sick notes are issued for ailments that trigger benefit payments, costs accumulate. These costs were tolerable — indeed scarcely noticed — in the age of economic expansion (the rate of growth of the British economy has often outpaced the growth of diagnosable conditions). Today, however, during an age of lower growth, we are noticing quite a lot.

And this, let me suggest, is the fundamental political fact of our age. Rishi Sunak sought to articulate this on Friday in relation to what he called “sick note culture”. He noted that 2.8 million people are now economically inactive because of long-term sickness, and that total spending on working-age disability and ill-health benefits has increased by almost two thirds from £42.3 billion to £69 billion over recent years. We spend more on these benefits than on running schools or on policing, which is — he rightly notes — unsustainable.

But that is merely one symptom of a wider problem; one that often afflicts civilisations towards the end of a wave of affluence. We might put it this way: social entitlements have a tendency to become uncoupled from the material conditions required to finance them. In ancient Rome, it was during the age of stagnation that the dole for citizens was expanded (not just bread but wine and olive oil) and the money supply inflated. It was almost as if they were attempting to convince themselves that the wave would never end — until the moment the empire collapsed.

And are we not travelling a similar path? Look at how life expectancy is increasing while retirement ages are not rising anything like commensurately; at how working weeks are shortening even as our adversaries are working harder and longer. Look, too, at the Office for Budget Responsibility’s most recent Fiscal Risks and Sustainability report, which shows that without a fundamental change in spending commitments, public debt will rise to 300 per cent of GDP by 2070 (in other words, we will be bankrupt). Successive waves of quantitative easing reveal the same truth in monetary form — while the first episode was, to my mind, eminently justified, later expansions represent the familiar attempts to evade reality of a society whose growth rate has declined.

This may come across as a rather right-wing column, but this isn’t a debate between right and left but between realism and denial. Besides, the imperative of cutting back on unaffordable entitlements applies as much to the rich as anyone else. The hard-working taxpayer can no longer afford to subsidise the tax loopholes enjoyed by the mobile wealthy, the capture of regulators and politicians by corporations and the VIP lanes for chums and cronies. Indeed, the rich and powerful are often the most dangerously entitled of all.

This problem isn’t unique to the UK; it afflicts much of the western world. The last time the collective public debt of the advanced economies reached such elevated levels was in the aftermath of the Second World War. The difference then was that we had just been in a battle for our existence. Today, after decades of peace (during which European nations have scarcely spent a penny on defence), we are back in the same place — with debts inexorably rising and little prospect of resurgent growth to save us during a transition from high to low-density energy sources.

This is why what we really need is a moral recalibration, particularly in an age of rising military conflict. We need to rethink what we mean by compassion. We need to rethink what we mean by “essential” services. We need to rethink foreign aid when we are giving money to nations with space programmes. We need to rethink human rights and, perhaps even more importantly, individual responsibilities. We need to rethink smaller things, too, such as whether individuals can fail to turn up to GP appointments without incurring a penalty.

In short, we need to cut our moral coat to the cloth of the age or, to put it another way, embrace realism. Our future as a civilisation depends on it.

All sorts in here - strategic industries, environmentalism, government support:

Europe restarts magnesium mining to counter reliance on China 

US-backed Verde to invest $1bn in disused Romanian mine and begin production in 2027 

Europe will restart magnesium mining for the first time in more than a decade, as the EU attempts to reduce its reliance on Chinese imports of critical raw materials. 

 EU member Romania on Friday awarded a mining concession to Verde Magnesium, a Bucharest-based company backed by US private equity investor Amerocap. Verde intends to invest $1bn in a disused magnesium mine near the city of Oradea and build processing facilities that would use renewable power and also recycle aluminium. 

 More than 90 per cent of the bloc’s magnesium — crucial for making lightweight aluminium alloys used in cars and packaging — is imported from China. Europe’s aluminium industry in 2022 was severely disrupted when Chinese production temporarily shut down because of high energy prices, triggering warnings of plant closures in the bloc.

 Bernd Martens, chair of Verde Magnesium and former Audi director, told the Financial Times the mine and plant in Romania would help Brussels fulfil its goal of greater independence for vital metals needed for the green transition.  

 “The European industrial sector has an acute need for a reliable supply of critical and strategic metals, especially those with a lower carbon footprint than current imports which can support Europe’s transition towards a carbon neutral economy,” Martens said. 

 Verde will use the site of a magnesium mine that was shut in 2014 — at the time the last one operating in Europe. It intends to start production by late 2027 and reach 90,000 tonnes a year, half of EU supply, and 9 per cent of global production. 

 The company is likely to apply to EU funding mechanisms, after it was named as a key investment by the European Raw Materials Alliance — an industry network backed by the European Commission. 

 About 87 per cent of the global supply of magnesium, and 95 per cent of European consumption, comes from China, which has cut output drastically to save power as prices rise. 

 The EU has set ambitious goals under the Critical Raw Materials Act. It wants to mine 10 per cent of the EU’s critical mineral consumption, process 40 per cent of it and recycle 15 per cent of it by 2030. 

 The act also makes permitting easier and prioritises strategic projects for funding, but has been criticised for falling behind the US in terms of giving financial support to projects. 

 Martens expressed confidence that magnesium mining would restart, despite local opposition and environmental challenges that have plagued previous projects. Last month, Romania won an international arbitration case waged by Canadian-listed mining group Gabriel Resources, which was seeking $4.4bn of compensation over a planned gold mine in the country that was successfully blocked by environmental groups.

Meanwhile apprenticeship numbers are falling

 

UK apprenticeships are on the decline — what went wrong?

The number of people starting workplace training has plunged amid mounting worries about youth employment. Too much of the funding, it is argued, is going to the wrong age groups

ILLUSTRATION BY TONY BELL

Jill Treanor

Saturday April 06 2024, 6.00pm, The Sunday Times

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When Lucy Shepherd turned up to a job interview on an industrial estate on the edge of Crawley, near Gatwick airport, she had more than nerves to worry about.

One of the thousands of 16-year-olds whose GCSE exams were cancelled during the 2020 lockdowns, Shepherd had ended up without any passes after it was left to schools to award grades. Now 20, she admitted that her time at school, in Redhill, Surrey, had not been productive: “I was not the greatest… I was more funny than smart. But I wasn’t badly behaved.”

However, she convinced the interviewer that, despite her poor academic record, she had the drive to work and, in November, she started as an apprentice trade supplier at CCF, the home insulation arm of Travis Perkins. Proudly kitted out in CCF’s all-black uniform, Shepherd said she had been given a second chance in winning a place as an apprentice.

She is one of the lucky ones. Even though politicians have been promising for years to increase the number of school leavers going into apprenticeships, in reality, the amount of schemes on offer has plunged. At a time when Britain is grappling with a rise in the proportion of 16 to 24-year-old “Neets” — those not in education, employment or training — the fall is causing serious concerns.

The number of people starting out on apprenticeships in England has fallen — from 500,000 in 2015 to just 337,000 last year.

The slide is particularly striking since it comes despite a bold government scheme announced by then-chancellor George Osborne in 2015, and launched in 2017, to get “Britain’s great businesses training up the next generation”. Called the apprenticeship levy, it requires big businesses to put 0.5 per cent of their payroll towards the on-the-job training.

So, what has gone wrong?

Lucy Shepherd, 20, is an apprentice at CCF, part of Travis Perkins

PETER TARRY FOR THE SUNDAY TIMES

For some, the problems start with the perceived vagueness about what problem the levy was meant to solve. Did the government want to use apprenticeships to train those leaving school who were not destined for academic learning? Or was the plan to boost the level of qualifications and skills for older workers through apprenticeships?

“What’s the levy for? Everyone’s got a different answer,” said Matthew Percival, head of work at employers’ body the CBI.

Anyone who thinks the apprenticeship levy should be aimed at training young people just entering the world of work will be disappointed. The number of apprenticeships started by under-19s fell from about 131,000 in 2015-16 to 77,000 in 2022-23. For those aged 19-24, it dropped from 153,000 to 98,000.

For those who argue that the aim of the levy should be to improve the skills of the existing workforce, the data paints a brighter picture: there was a fivefold increase in apprenticeships above A-levels and for those studying for management training qualifications similar to MBAs.

This week, a report by the Association of Colleges, whose members are among those offering the classroom training involved in apprenticeships, will argue that the current system is letting down the young. David Hughes, chief executive, said: “A programme that used to be really important in helping young people get a start in life — particularly those who haven’t done so well at school — has gone in the wrong direction.”

For centuries, apprenticeships have been used to provide the skills that employers have wanted from young people. Even as recently as the 1950s, nearly all teenage boys who did not go into further education became apprentices serving Britain’s manufacturing employers.

A levy is not a new idea either. There was a payroll tax in the 1960s before Margaret Thatcher phased most of those workplace training levies out. It was back on the agenda in the mid-2010s when a paper by the academic Baroness (Alison) Wolf, a professor at King’s College London, highlighted a “broken” apprenticeship system. She found that apprenticeships were operated by central government and produced poor-quality training in lower-level skills. In countries such as France and Germany, Wolf said, the push was for higher-quality, higher-level training.

She suggested a levy that should be paid for by all employers — big and small — and used to create a pool of funding for all businesses to put to use.

Osborne did not adopt the idea entirely, announcing a levy aimed at only the top 2 per cent of employers with a payroll above £3 million. They had to put 0.5 per cent of their wage bill into a pot to train apprentices; if they did not use the funds within two years, the money went to the Treasury. Firms that do not pay the levy contribute 5 per cent towards their training costs.

The apprenticeships would have to last at least a year and be based 80 per cent in the workplace, 20 per cent in the classroom.

According to Tom Richmond at EDSK, the education and skills think tank, the structure of the levy is at the root of the current problem. He argued that it has encouraged the levy-paying employers to use up their contribution by sending existing and senior workers on expensive apprenticeships for management skills, so as to use it up within the two years. Hence the large numbers using the levy for professional development courses.

This appears to be borne out by the data. Level 2 apprenticeships — typically, people leaving school at 16 without formal qualifications and aiming for a specialist skill such as joinery or painting — dropped from about 291,000 apprenticeship starts before the levy to just 76,300 last year. For level 3, an A-level equivalent, the numbers fell from 190,900 to 147,900. Higher apprenticeships — levels 4 to 7, from foundation degree to master’s level — increased from 27,200 to 112,900.

This is “nothing to do with helping inexperienced young people who are trying to get on the career ladder,” Richmond said.

There are many who applaud how higher-level apprenticeships have helped them in their careers and meant that they avoided the average £50,000 debt run up by graduates. At car maker JLR, Suleman Ahmed has just started out on his degree apprenticeship after leaving school with four A*s in physics, maths, further maths and chemistry. He could have gone to Cambridge but decided on the apprenticeship. “When I graduate, I will have four years’ work experience with a top global engineering firm,” said Ahmed, 19.

There are plenty who contend that apprentice schemes should not only be the preserve of the young starter. Lyndsay Casey, 42, started working at recruitment business Adecco when she was 20. Despite leaving school in Yorkshire without maths or English GCSEs, she worked her way up the ranks to become head of operations, and two years ago she did a level 7 apprenticeship — in essence, an MBA.

Lyndsay Casey, 42, at the recruiter Adecco, did a level 7 scheme

ADECCO

She said the course had made her a better, more productive manager: “It’s changed my approach. I’m more considered, I’ll seek more opinions and support, and I don’t feel I need to do everything on my own.”

But for many employers paying the levy, the view is that the system needs a complete overhaul.

Nathan Kennaugh, managing director at the hi-fi and TV retail chain Richer Sounds, said the system was not “nimble” enough, pointing out that his company wanted to send staff on one-week courses to learn, say, about using Excel — not one-year apprenticeships to acquire such skills. He also said that when he had considered using the levy to pay for a high-level management apprenticeship, he discovered it would be faster and more cost-effective to use a traditional training course.

For the hospitality industry, the strict requirement to spend 80 per cent of the time working and 20 per cent studying is not practical when so much of its work is seasonal in nature. One idea is to adopt a more flexible approach so that the learning could be placed in chunks away from the busy periods. “The rules are quite inflexible,” said Kate Nicholls, chief executive of UKHospitality.

John Roberts, the chief executive of cookers to freezers chain AO World, wants to set up a new working group with other big employers to find a better scheme. “We can take all the learnings from that and incorporate them into the rules of the levy for every other business to benefit from,” he said.

Labour has put changes to the levy on the agenda in the run-up to the election, promising to turn it into a “growth and skills” levy, allowing 50 per cent of the funds to be used for other training. The aim appears to be to encourage firms to reduce spending on higher-level apprenticeships and focus more on younger people.

The government insisted that under-25s were making up “over half of all apprenticeship starts”.

A government spokesman said: “Since 2010 [when the Conservative-Liberal Democrats coalition came to power], almost 5.8 million people have started apprenticeships, which are now more rigorous, provide more training and better reflect the needs of employers.”

While some employers detest the levy and see it as little more than a tax, others have embraced it. Defence giant BAE Systems has a vast college site on the edge of Preston where it trains apprentices on its fighter jet programmes, and has another in Cumbria for submarines. It has bolstered its number of apprentices from 567 in the year the levy started to a record 1,417 this year.

Back in Crawley, Shepherd reflected on how her apprenticeship is boosting her career hopes and self-confidence after she left school without qualifications. “I can see what it looks like on paper, but I’ve got a brain up there,” she said. In six months, she should have a piece of paper with her level 2 apprenticeship — and is already considering what qualification she will start next.

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