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Exergy flows in the economy Ayres IIASA 10 August 2007 Cumulative US crude oil production since 1900 Ayres IIASA 10 August 2007 Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007 Oil production since 2002 approaching saturation

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exergy flows in the economy
Exergy flows in the economy

Ayres IIASA 10 August 2007

cumulative us crude oil production since 1900
Cumulative US crude oil production since 1900

Ayres IIASA 10 August 2007

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

oil production since 2002 approaching saturation
Oil production since 2002 approaching saturation

Ayres IIASA 10 August 2007

Source: http://www.theoildrum.com

world co ngl production projection to 2020
World CO & NGL production projection to 2020

Ayres IIASA 10 August 2007

Source: http://www.theoildrum.com

world oil production projection to 2030 business as usual scenario
World oil production projection to 2030 –”Business as usual” scenario

Source: http://www.theoildrum.com

world oil production projection to 2030 peak oil bottom up scenario
World oil production projection to 2030 – Peak oil, bottom up scenario

Source: http://www.theoildrum.com

world oil production projection to 2030 peak oil curve fitting
World oil production projection to 2030 – Peak oil, curve fitting

Source: http://www.theoildrum.com

world oil production projection to 2040
World oil production projection to 2040

Ayres IIASA 10 August 2007

Source: http://www.theoildrum.com

oil production since 2002 approaching saturation9
Oil production since 2002 approaching saturation

Ayres IIASA 10 August 2007

Source: http://www.theoildrum.com

major oil producing countries 1971 2001
Major Oil-Producing Countries: 1971-2001

Ayres IIASA 10 August 2007

700

United Arab Emirates

US

Iran (Islamic Republic of)

Mexico

Former USSR

China

Canada

Norway

Saudi Arabia

Venezuela

600

500

400

300

200

100

0

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

global oil discoveries minus global oil consumption 1965 2003
Global oil discoveries minus global oil consumption 1965-2003

Ayres IIASA 10 August 2007

50

40

30

20

Gigabarrels annually

10

0

-10

-20

-30

1965

1970

1975

1980

1985

1990

1995

2000

year

Source: Heinberg 2004, "Powerdown", Figure 5 page 43

Until well into the 1970s, new global oil discoveries were more than sufficient to offset production each year.

Since 1981, the amount of new oil discovered each year has been less than the amount extracted and used.

the wrong kind of shortage
The wrong kind of shortage

Ayres IIASA 10 August 2007

1600

proved and probable reserves

proved reserves

1400

1200

1000

Billion barrels

800

600

400

200

0

2004

1980

1984

1988

1992

1996

2000

year

Source: Strahan 2007, "The Last Oil Shock", Figure 13 page 71

Global "proved reserves" (wide bars) give the reassuring appearance of continuing growth, but the more

relevant "proved and probable reserves" (thin bars) have been falling since the mid-1980s.

history of uk coal production
History of UK coal production

Ayres IIASA 10 August 2007

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

history of british coal reserves
History of British Coal Reserves

Ayres IIASA 10 August 2007

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

history of reserve production rp ratio for british coal
History of reserve/production (RP) ratio for British coal

Ayres IIASA 10 August 2007

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

cumulative british coal production
Cumulative British coal production

Ayres IIASA 10 August 2007

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

cumulative us eastern coal production excluding anthracite
Cumulative US Eastern coal production (excluding anthracite)

Ayres IIASA 10 August 2007

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

coal production china 1918 2006
Coal production, China: 1918-2006

Ayres IIASA 10 August 2007

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

coal reserve adjustment
Coal reserve adjustment

Ayres IIASA 10 August 2007

Region

Reserves Gt

Trends Gt

255

235

North America

190

70

East Asia

79

50

Australia and New Zealand

Europe

55

21

Africa

30

10

Former Soviet Union

223

18

111

South Asia

20

Central and South America

World (at 3.6 boe/t)

963 (3.5 Tboe)

435 (1.6 Tboe)

Note: IPCC assumed 18 Tboe available

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

hubbert linearization world oil gas output 1960 2006
Hubbert linearization: World oil & gas output 1960-2006

Ayres IIASA 10 August 2007

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

future fossil fuel extraction cumulative trends
Future fossil fuel extraction, cumulative trends

Ayres IIASA 10 August 2007

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

future temperature increases
Future Temperature Increases

Ayres IIASA 10 August 2007

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

future co 2 concentrations
Future CO2 concentrations

Ayres IIASA 10 August 2007

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

ipcc scenarios producer limited case
IPCC scenarios + producer-limited case

Ayres IIASA 10 August 2007

Source: Dave Rutledge, The coal question and climate change : http://www.theoildrum.com 6/20/2007

production consumption systems
Production-consumption systems

Ayres IIASA 10 August 2007

A. CLOSED STATIC PRODUCTION CONSUMPTION SYSTEM

Production of

Purchases

Consumption

Goods and

of Final Goods

Wages, Rents

and Services

Services

B. CLOSED DYNAMIC PRODUCTION CONSUMPTION SYSTEM

Production of

Consumption

Purchases

of Final Goods

Goods and

Wages, Rents

and Services

Services

Purchases of

capital goods

Invested

Savings

Capital

Capital

depreciation

C. OPEN STATIC PRODUCTION CONSUMPTION SYSTEM

Production of

Consumption

Purchases

of Final Goods

Goods and

Wages, Rents

and Services

Services

Consumption

"Raw"

wastes

materials

Production wastes

Waste

Extraction

Disposal

Recycled materials

Treatment

economic production functions i
Economic production functions: I

Ayres IIASA 10 August 2007

Common practice

(

)

=

Y

Q

A

,

H

,

G

L

,

F

R

,

K

t

t

t

t

t

t

t

t

(

)

(

)

(

)

a

b

g

=

Y

A

H

G

L

F

R

K

t

t

t

t

t

t

t

t

is output at time

given by Q a function of,

Y

t,

t

inputs of

and

K

, L

,

R

capital, labor

natural

t

t

t

.

resource services

a

g

b

+

= 1,

, +

(constant returns to scale assumption)

is

A

total factor productivity

t

and

coefficients of

H

,

G

F

factor quality

t

t

t

gdp and factors of production us 1900 2005
GDP and factors of production, US 1900-2005

Ayres IIASA 10 August 2007

Index (1900=1)

50

40

GDP

Capital

30

Labor

Exergy

Useful Work

20

10

0

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

year

us gdp 1900 200 actual vs 3 factor cobb douglas function l 0 70 k 0 26 e 0 04
US GDP 1900-200; Actual vs. 3-factor Cobb Douglas function L(0.70), K(0.26), E(0.04)

Ayres IIASA 10 August 2007

GDP Index (1900=1)

25

20

US GDP

15

10

SOLOW RESIDUAL

(TFP)

5

Cobb-Douglas

1940

1960

1980

2000

1900

1920

year

technological progress function and solow residual usa 1900 2005
Technological Progress Function and Solow Residual USA: 1900 - 2005

Ayres IIASA 10 August 2007

Index (1900=1)

5.5

5

4.5

TPF (1.6% per annum)

unexplained Solow residual

4

3.5

3

2.5

2

1.5

1

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

year

exergy flows in the economy31
Exergy flows in the economy

Ayres IIASA 10 August 2007

exergy types
EXERGY TYPES

Ayres IIASA 10 August 2007

  • 1. FOSSIL FUELS
    • (Coal, Petroleum, Natural Gas, Nuclear)
  • 2. BIOMASS
    • (Wood, Agricultural Products)
  • 3. OTHER RENEWABLES
    • (Hydro, Wind)

4. METALS

5. OTHER MINERALS

cost of power per hour as multiple of hourly wage
Cost of power per hour as multiple of hourly wage

Ayres IIASA 10 August 2007

10.0

10 kW

reciprocating

steam

10 kW Otto cycle gas engine

100 kW

reciprocating

steam

10 hp Otto cycle

1 mW=

1000 kW

steam turbine

100 hp Diesel

Envelop; mobile

prime movers

1.0

Diesel

10 mW

steam turbine

1000 hp gas turbine

10000 hp aero

gas turbine

100 mW

steam turbine

1000 hp

Diesel

Diesel

Envelop;

stationary

prime movers

(electric power)

0.1

aero

derivative

gas turbine

(stationary)

0

1860

1880

1900

1920

1940

1960

1980

2000

feedback loop simple salter cycle
Feedback loop (simple Salter cycle)

Ayres IIASA 10 August 2007

Lower Unit

Prices

Increased Consumer

Increasing

Lower Unit

Demand (Price

Experience

Costs

Elasticity)

Increased

Scale of

Production

the first industrial revolution
The first industrial revolution

Ayres IIASA 10 August 2007

Coal replaces charcoal in iron-making

Price of iron falls

Price of coal falls

demand for coal grows

Iron replaces wood in carts, etc.

Invention of steam engine for pumping (Newcomen)

production & sales of coal grow

Production of iron grows

Need for pumping

Steam power replaces horses, wind, etc.

Deeper mines, flooding

Labor productivity grows

economic production functions ii
Economic production functions: II

Ayres IIASA 10 August 2007

The production function can be either CD, or LINEX

ì

ü

æ

ö

+

L

U

L

æ

ö

æ

ö

=

-

+

-

ç

÷

Y

U

a

ab

exp

2

1

ç

÷

ç

÷

í

ý

ç

÷

K

U

t

è

ø

è

ø

è

ø

î

þ

For the USA, a = 0.12, b = 3.4 (2.7 for Japan)

Corresponds to Y = K

L

U

0.38

0.08

0.56

At , \'total factor productivity\', is REMOVED

Resources (Energy & Materials) replaced by WORK

Ft = energy-to-work conversion efficiency

Factors ARE MUTUALLY DEPENDENT

Empirical elasticities DO NOT EQUAL COST SHARE

exergy e austria japan uk us 1900 2005
Exergy (E) Austria, Japan, UK & US: 1900-2005

Ayres IIASA 10 August 2007

exajoules

140

120

100

80

USA

Japan

UK

Austria

60

40

20

0

1900

1920

1940

1960

1980

2000

exergy e austria japan uk us 1900 2005 1900 1
Exergy (E) Austria, Japan, UK & US: 1900-2005 (1900=1)

Ayres IIASA 10 August 2007

index

18

USA

Japan

UK

Austria

16

14

12

10

8

6

4

2

0

1900

1920

1940

1960

1980

2000

useful work u austria japan uk us 1900 2005
Useful Work (U) Austria, Japan, UK & US: 1900-2005

Ayres IIASA 10 August 2007

exajoules

18

16

14

12

10

USA

Japan

UK

8

Austria

6

4

2

0

1900

1920

1940

1960

1980

2000

useful work u austria japan uk us 1900 2005 1900 1
Useful Work (U) Austria, Japan, UK & US:1900-2005 (1900 = 1)

Ayres IIASA 10 August 2007

index

90

80

USA

Japan

UK

Austria

70

60

50

40

30

20

10

0

1900

1920

1940

1960

1980

2000

aggregate efficiency u e austria japan uk us 1900 2005
Aggregate efficiency (U/E) Austria, Japan, UK & US: 1900-2005

Ayres IIASA 10 August 2007

percent

22%

20%

USA

Japan

18%

UK

Austria

16%

14%

12%

10%

8%

6%

4%

2%

0%

1900

1920

1940

1960

1980

2000

empirical and estimated gdp us 1900 2000 excluding 1941 1948
Empirical and estimated GDP US 1900-2000 excluding 1941-1948

Ayres IIASA 10 August 2007

US GDP (1900=1)

25

GDP estimate LINEX

20

GDP estimate Cobb-Douglas

Empirical GDP

15

10

POST-WAR COBB DOUGLAS

alpha=0.51

beta=0.34

gamma=0.15

PRE-WAR COBB DOUGLAS

alpha=0.37

beta=0.44

gamma=0.19

5

0

1900

1920

1940

1960

1980

2000

year

Empirical GDP from Groningen GGDC Total Economy Growth Accounting Database: Marcel P. Timmer, Gerard Ypma and Bart van Ark (2003), IT in the European Union: Driving Productivity Divergence?, GGDC Research Memorandum GD-67 (October 2003), University of Groningen, Appendix Tables, updated June 2005

empirical and estimated gdp japan 1900 2000 excluding 1941 1948
Empirical and estimated GDP Japan 1900-2000 excluding 1941-1948

Ayres IIASA 10 August 2007

GDP Japan (1900=1)

50

GDP estimate LINEX

40

GDP estimate Cobb-Douglas

Empirical GDP

30

20

POST-WAR COBB DOUGLAS

alpha=0.78

beta=-0.03

gamma=0.25

PRE-WAR COBB DOUGLAS

alpha=0.33

beta=0.31

gamma=0.35

10

0

1900

1920

1940

1960

1980

2000

year

Empirical GDP from Groningen GGDC Total Economy Growth Accounting Database: Marcel P. Timmer, Gerard Ypma and Bart van Ark (2003), IT in the European Union: Driving Productivity Divergence?, GGDC Research Memorandum GD-67 (October 2003), University of Groningen, Appendix Tables, updated June 2005

empirical estimated gdp uk 1900 2005 1900 1
Empirical & estimated GDP, UK 1900-2005 (1900=1)

Ayres IIASA 10 August 2007

indexed 1990 Gheary-Khamis $

7

GDP estimate LINEX

6

GDP estimate Cobb-Douglas

5

Empirical GDP

4

3

COBB DOUGLAS

alpha=0.42

beta=0.24

gamma=0.34

2

1

0

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

year

Empirical GDP from Groningen GGDC Total Economy Growth Accounting Database: Marcel P. Timmer, Gerard Ypma and Bart van Ark (2003), IT in the European Union: Driving Productivity Divergence?, GGDC Research Memorandum GD-67 (October 2003), University of Groningen, Appendix Tables, updated June 2005

empirical estimated gdp austria 1950 2005 1950 1
Empirical & estimated GDP, Austria 1950-2005 (1950=1)

Ayres IIASA 10 August 2007

indexed 1990 Gheary-Khamis $

7

GDP estimate LINEX

6

GDP estimate Cobb-Douglas

5

Empirical GDP

4

3

POST-WAR COBB DOUGLAS

alpha=0.56

beta=0.20

gamma=0.24

2

1

0

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

Empirical GDP from Groningen GGDC Total Economy Growth Accounting Database: Marcel P. Timmer, Gerard Ypma and Bart van Ark (2003), IT in the European Union: Driving Productivity Divergence?, GGDC Research Memorandum GD-67 (October 2003), University of Groningen, Appendix Tables, updated June 2005

rexs model forecast of us gdp 2000 2050
REXS model forecast of US GDP 2000-2050

Ayres IIASA 10 August 2007

Simulation results using

45

the plausible trajectories of

technical efficiency growth

HIGH

as a function of cumulative

Initial ~3% growth rate, for 130%

33.75

primary exergy production

target increase in technical

efficiency.

22.5

MID

Initial 1.5% growth rate for target

120% improvement in efficiency.

11.25

LOW

Shrinking economy at rate of

2 - 2.5% after 2010 if the target

0

technical efficiency is only 115%

1900

1918

1936

1954

1972

1990

2008

2026

2044

year

GDP (1900=1)

greater than the current.

empirical

low

mid

high

Source: "The MEET-REXS model". Ayres & Warr 2006

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