Global recession and Climate Change have a common root

K. C. Somaratna

Global recession which started in 2008 in USA has not yet seen a definite end; on the other hand different countries in the European Union also seem to be getting engulfed in this recessionary trend. It was in April, 2009 we first published our SCL Number as one which could be used to predict the onset of a recession as well as to getting out of one. We improved on this number and made it public again in September 2010 at a time when US billionaire Warren Buffet and the National Bureau of Economic Research in USA were arguing whether recession had ended or not. SCL number has three components Speed, Contribution and Linkage and is defined as NCSL = Speed into Contribution and divide by Linkage is a measure of the speed at which the largest companies in the economy grow, Contribution is a measure of the contribution the medium sized companies make towards the economy and Linkage indicates how well the largest companies are linked to the other companies in the economy. Value of Linkage is calculated as the Linkage =1-Imports divide by CDP and when SCL number exceeds a certain fixed value dependent on the particular economy, recession will set in. As such when imports grow with no corresponding increase in GDP the economy will move towards recessions, unless the larger companies in the country adjust accordingly.

One component which contributes towards increase in imports is the import bill due to oil. If one were to plot crude oil related data for Sri Lanka for the period 2000 to 2009 one would see that while the actual import volume has had an overall decrease, the import value of crude and trade deficit has closely followed the trend in the crude oil price while the foreign debt has followed the same and gone up, even when the crude oil price came down in 2008.

Even if you look at the EU countries which are having debt repayment problems, they are mainly countries with high per capita oil import values which has not been able to enforce Kyoto Protocol targets.

Oil price hikes

According to ‘Report on the risks and impacts of a potential future decline in oil production’ released by the Department of Energy and Climate Change of United Kingdom in June, 2009, a research study by International Energy Agency in 2004 has estimated that as a rule of thumb, a sustained $10 per barrel increase in international crude oil prices would cut average GDP by around 0.3 percent in OECD countries and by about 0.5 percent in non-OECD countries as a whole. So it is no wonder that those countries which were importing large tonnages of oil per capita had to face recessions in the aftermath of these oil price hikes. As such, one could say that high consumption of oil for transportation is the root cause of global recession. When you consider the fact that oil price increased from $ 39/barrel in January 2009 to where it is to-day, - an increase of about $ 60/barrel - it is no surprise that so many developed countries are engulfed in recessions.

On the other hand if one looks at climate change, one could see that road vehicular transportation is one sector which contributes the most to climate change. This is so because, road vehicular transportation is one sector where the fossil fuel - gasolene - is combusted with the lowest efficiency. If we go by figures quoted in Massachusetts Institute of Technology publication ‘On the road in 2035’ this efficiency is about 20 percent which means that (i) when you burn Rs. 100 worth of gasolene, you are actually using only Rs. 20 worth of gasolene, (ii) in the whole world, (in 2004) the total energy wasted from gasolene driven vehicles (62.4EJ) was more than the total electrical energy delivered to all the other sectors - i.e., industries, buildings - both commercial and residential (60.9 EJ) and also (iii) in 2009 in USA, the total waste heat from gasolene driven vehicles 13.5QnBtu was more than the total delivered electrical energy to the industries, commercial buildings and residential building sectors -12.9QnBtu in the same year.

As a result of this very low energy conversion efficiency, it is the road vehicular transportation which emits the maximum quantities of both carbon dioxide and water vapour, - which again is a greenhouse gas - and waste heat for a given quantity of energy actually used. In other words 80 percent of the imported oil is just burnt to emit waste heat, carbon dioxide and new water vapour and warm the climate.

Road transportation

If one considers all the four factors which contribute towards climate change due to industrialization/development, i.e. (a) absorption of incoming solar radiation by the areas subjected to the sector and reemission of the same as long wave radiation thus leading to climate change, (b) emission of waste heat due to the combustion of fossil fuels in the sector, (c) emission of carbon dioxide due to combustion of fossil fuels in the sector and (d) emission of water vapour due to combustion of fossil fuels in the sector, road transportation is a very significant sector, if not the most significant sector. Furthermore, road transportation also offers some serious challenges in reducing this impact on climate due to the following characteristics.

(i) Very high number of usage locations (ii) These usage locations themselves are moving (iii) Energy need to be stored for usage (iv) Rate of usage varies almost all time.

As a result transportation sector is one sector for which identifying a suitable solution to limit climate change arising therefrom has become a challenging task.

All this points to the fact that climate change also has a significant contribution arising from very high consumption of fossil fuels in transportation.

So we can see that Climate Change and Global Recession do have a common root cause and scientists and economists all over the world have been looking for a suitable solution for this high consumption of fossil fuels. It is not only the scientists and economists who have been looking for a suitable solution; but also the consultancy firms, business analyst firms like Price Waterhouse Coopers, Bloomberg, etc. They too have been studying this problem of climate change and worked out approximate costs of solving climate change although none of them have come out with a specific solution.

The Intergovernmental Panel for Climate Change Technical Assessment Report 4 and World Energy Council’s (WEC) document ‘Transport Scenarios upto 2050’ considers the many solutions forwarded for this climate change due to transportation. WEC’s document contains the outcome of 3A’s (Accessibility, Availability and Acceptability) study carried out on these alternative solutions and shows that the Battery Electric Vehicle is the most Acceptable alternative in 2035. It also computes the cost of putting up an infrastructure to support hydrogen fuel cell vehicle, the other alternative scoring high in respect of Acceptability in 2035, and says that with an investment of about US $ 1 trillion in hydrogen infrastructure during the period upto 2050 will accommodate a conversion of 5 percent of the vehicular population to hydrogen fuel cell vehicles by 2050.

Energy system

But hydrogen fuel cell vehicles will still need hydrogen to be made either by steam reforming of methane or by electrolysis of water and this electricity will have its origin in a fossil fuel. It is only a mad man who would plan to use electricity from main grid or otherwise (or even of fossil fuel origin or renewable origin) to generate hydrogen and use a hydrogen fuel cell vehicle, as the efficiency of electrolysis of water is only about 80 percent and the efficiency of the HFCV is only about 60 percent leading to an overall efficiency of 48 percent only while he can use that electricity to directly drive a battery electric vehicle. On the other hand Battery Electric Vehicles are also powered to-day by main grid electricity again having its origin in a fossil fuel. For main grid electricity to support 5 percent of vehicular transportation in 2030, the total additional power required will be 65GW which if to be provided by PV solar alone would involve about 5,600 km2 of land area. This is based on some estimates made by Dr. Mark Deluchchi of University of California at Davis and Dr. Mark Jacobson of Stanford University as published in Energy Policy.

In July, 2011 UNEPA released their document titled ‘Green Economy’ where it is mentioned that we need to spend US $ 1.3 trillion a year in order to avert a climate change disaster. Out of this, US $ 194 billion/yr need to be spent in respect of transportation and another US $ 362 billion/yr in respect of energy. The severity of the issue and its significance can be gauged from the following first paragraph of International Energy Agency’s document ‘Energy Outlook 2009’.

“The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable - environmentally, economically, socially. But that can - and must - be altered; there’s still time to change the road we’re on. It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy and effecting a rapid transformation to a low-carbon efficient and environmentally benign system of energy supply. What is needed is nothing short of an energy revolution.”

Our research into these aspects and related issues and calculations helped us to come out with a solution which will help solve both global recessions and climate change and also establish a New World Economic Order. This solution will eliminate or reduce the above mentioned four factors (a), (b), (c) and (d) contributing towards climate change due to industrialization/development and it also caters to the above mentioned four characteristics (i), (ii), (iii) and (iv) of road vehicular transportation. It also makes use of the most abundantly available, most equitably distributed source of energy - solar energy - of which IPCC TAR 4 says 450,000 TWhrs/year is globally available to be collected using Photo Voltaic technology, but limited by the below mentioned disadvantages of solar energy - distributed nature, need of large land area, need to store energy and high investment. It also goes on to say that at US $ 3-4 per Watt PV Panel cost, US $ 6-7 per Watt system cost we could generate 1MW hr for $ 250 which would imply that we could move a Toyota Camry type battery electric vehicle 10 kilometers at a cost of US $ 0.36. This implies that a litre of gasoline equivalent of energy could be generated for about US $ 0.36 using PV Solar energy.

This is what we at Somaratna Consultants did. We married PV solar technology as a source of energy with the battery electric vehicle as the alternative vehicle to develop a solution, which (i) eliminates/reduces/climate change due to all the four factors contributing to climate change, (ii) caters to all the characteristics of transportation and (iii) converts the disadvantages of PV solar energy to be real strengths and (iv) makes PV solar energy marketable at a significant profit and lead to an Economic and Energy Revolution. What we propose as our solution for Climate Change is a ‘Dedicated Infrastructure for Transportation’ based on PV solar panels erected above and along the roadways and the electricity thus generated be led to battery charging stations (similar to gasolene stations of today). At these battery charging stations, this energy is used to charge spare batteries of battery electric vehicles and a battery electric vehicle driving into these stations will have their spent batteries replaced by charged batteries. A computerised system will measure the charges on the spent battery and the recharged battery and prepare a bill for settlement.

Recessionary trends

It furthermore fulfils all the requirements cited by IEA as desirable in a new source of energy - i.e. reliability, affordability, environmentally benign, low carbon - intensity and ability to transform rapidly. If all PV Solar panels manufactured till 2030 in the currently existing plants are used as per this solution we would be catering to about 100 million battery electric vehicles in 2030. It will move countries - both developed and developing - away from their oil dependency and also away from recessionary trends. What will come into being will truly be a New World Economic Order.

It will be fascinating to see how with one single stroke of mindful coordination of two available technologies at reasonably high levels of advancement coming from the two most influential industrial sectors in the list of Fortune 500 companies, one could relieve at least partially, but to the highest degree so far realized, the entire spectrum of travails associated with climate change, global warming, energy security, recessionary trends, sustainability of development and energy scarcity. And most importantly, all of a sudden, the world has become a really leveled playing field with energy been available in nearly the same ratio as the extent of land occupied.

This article is based on three years of intense research carried out by the writer with the assistance of his colleagues at Somaratna Consultants (Pvt) Ltd.