Energy usage vs UN Human Development Index, 1997
How much energy do we need? In traditional economics, this question is meaningless, as humanity simply consumes the amount of energy demanded at the market-clearing price. But in a resource-constrained world, this question becomes pertinent. Can the world’s energy supplies power a future in which all of mankind uses the same amount of energy as the average American? What level of energy usage is possible, and as fossil fuel sources run short, what kind of renewable energy investment will be required? Let’s examine some scenarios:
Scenario 1: The World at American Standards
The United States consumes 100 quadrillion btu of energy annually. If the world’s population stabilizes around 9 billion, bringing the entire world up to US energy consumption would require 6000 quadrillion btu per year. This is more than twelve times current energy production, a figure that even optimistic forecasters doubt possible. If solar panels cost 50 cents per watt installed (90% cheaper than today and cheaper than coal), an investment of $500 Trillion would be required to provide this amount of energy.
Scenario 2: The World at European Standards
The graph above shows that the US could cut per capita energy consumption by 70% without a significant drop in quality of life. Achieving this standard worldwide would require total energy production of 1800 quadrillion btu per year, still more than triple today’s capabilities. An investment of $150 Trillion would provide enough solar energy to power the world at these standards, a number over double current world GDP.
Scenario 3: Current Energy Usage per Capita
The scenarios above assume that the developing world eventually reaches parity with the industrialized world. Assume instead that current energy usage is maintained on a per capita basis, with the world’s population stabilizing at 9 billion. The world would consume 700 quads of energy per year. This level of energy usage would require $60 Trillion in investment, which might be achievable over time.
Unless energy prices drop by 99 percent via nuclear fusion, the world’s economy is likely to be energy-constrained in the future. It’s highly unlikely that the entire world will ever reach an American or even European level of energy consumption, and even current energy consumption levels will require a massive investment to reach sustainability. The calculations above assume that renewable energy will become significantly cheaper than coal, and yet the cost of replacing the world’s energy infrastructure is enormous. But in the long run, it will be necessary!
At 50 cents per Watt installed, what’s the price per kilowatt-hour that I’m assuming? Assume that a 1kW solar system produces 1800 kWh per year, as according to SolarBuzz. Over a 30 year lifetime the system would produce 54000 kWh. If this system costs $500 at 50 cents per watt, then $500 / 54000 kWh = 1 cent per kWh. This is much cheaper than retail delivered electricity generated from coal.
1800 kWh * 3413 btu / kWh = 6143400 btu per $500 system
6000 quadrillion btu / 6143400 btu/system = 976 billion 1kW systems needed
At $500 each, that’s $490 Trillion.
Scenario 2: 1800 is 30% of 6000, so 1800 quadrillion btu would require $147 Trillion in investment.
Scenario 3: 700 is 11.6% of 6000, so 700 quadrillion btu would require $57 Trillion in investment.