This document reports the results of a study by Friends of the Earth Canada. It claims to show that "it would be technically feasible and cost-effective to operate the Canadian economy in 2025" with less energy than it requires today, and with that energy derived predominantly from renewable sources.
There is little argument over the technical feasibility. As Samuel Johnson said of "a dog's walking on its hind legs. It is not done well; but you are surprised to find it done at all". Whether the futures prescribed by FoE are desirable, or even acceptable to most Canadians, is another question altogether.
The claim to be cost-effective is based on a very simple trick: assume without justification that the competition will be much more expensive than generally believed, and pick optimistic estimates for your own product.
On page 31 it is stated that "estimates of delivered marginal costs for conventional sources of energy were obtained from an EMR paper". On page 35, however, it is stated that "electricity costing caused more difficulties -- we did not accept EMR's estimates of costs in 1980": EMR's estimates for nuclear electricity are doubled on the strength of one US publication, plus another by the declared anti-nuclear organization Energy Probe. Furthermore, "for electricity real cost increases of 2% per year were assumed for 1981 to 2000, and of 1% per year thereafter" (p32). This is to be contrasted with Ontario Hydro's estimate of a decline in its rates, in real terms, in the 1990s. The result of the FoE assumption is an approximate doubling in its estimate for the cost of electricity between 1980 and 2025.
The FoE study also departed from EMR's estimates for new renewable sources, but in the other direction. It admitted that "cost-effectiveness was hard to estimate for technologies such as solar water heating that are still immature" (p25). According to page 17 of the report "rather than deriving cost figures from government reports, cost projections were developed explicitly for the purposes of this study on the basis of the best available information and such experience as exists". For some, the experience is of dubious relevance, e.g., costs for burning wood in PEI (p64) or peat "delivered to nearby sites" (p65) are not directly applicable to Toronto or Winnipeg. For others, apparently no experience exists, e.g., "costs for wind and photovoltaic systems were each developed in special literature reviews" (p67), which allow the selection of any desired value. For still others, the optimism is astounding, e.g., the costs of solar heating are expected to be halved between 1983 and 1990, despite intensive development having occurred in the 1970s and the absence of any significant market.
The claim for cost effectiveness is further compromised by the admission that the study "attempted to balance cost effectiveness and soft path criteria" (p29), i.e., these two factors were acting in opposite directions. As admitted later, "the choice is made strictly according to existing or projected cost-effectiveness in the Business as Usual scenario and, in some cases and some provinces, on somewhat less stringent criteria in the Consumer Saturation scenario" (p110).
However, even if the scales had not been rigged, it would have made little difference to FoE's recommendations for our energy futures. The report admits that from the start "certain energy supply options, such as Arctic oil and new nuclear power stations, were excluded from the analysis, and other options, such as large-scale coal and hydro projects, were de-emphasized" (pp10/11). This is because these options do not accord with the orthodoxy of "soft energy paths". They are "hard paths", characterized by the sins of "increasing scale, electrification and centralization" (p2). These criteria would exclude many of our institutions, both good and bad, including hospitals, universities, Parliament and the CBC, not to mention FoE.
The structure of soft-path dogma is built on very shaky foundations. According to page 1 of the report, "soft energy technologies are defined by the following five characteristics:"
The FoE correctly attributes the origins of soft thinking to Amory Lovins, the soft-paths guru of the seventies, and admits that his work was "subject to great criticism by industry and government spokesmen, and academics" (p12). The reader is directed to nine publications by Lovins (some listed twice) but the only reference to the "great criticism" is one article, apparently not available in any recognized publication, and issued by a local chapter of FoE. The most effective rebuttal of Lovins, however, is that he is now largely ignored by those whose attention he sought.
The methodology used in the FoE study is open to several criticisms. Most basically, it optimizes for "the minimum amount of energy needed" (p16), and not the maximum benefit to society, i.e., energy becomes the master and not the servant of mankind. It points out, correctly, that "in principle, (the) study should be conducted at the level of tertiary energy use but in practice this could only be done for buildings" (p38), thereby penalizing electricity which enjoys a very high efficiency at the point of end use. It implicitly assumes that the Canadian economy will be essentially the same in 2025 as today; that fishing will predominate in Newfoundland, pulp and paper in New Brunswick, etc. (p17). It admits to "including the assumption of fixed production technology" (p20), and thereby denies the trend towards ever increasing electrification of both the industrial and residential sectors. It relies on this omission to argue that its demand estimates may be too high ("The projection for steel production in Ontario, for example, is likely to be too high given recent trends to other materials and economies in the use of steel itself") and similarly for pulp and paper in British Columbia (p95) but it ignores the energy demand for replacement materials or for the products of new technologies. It further ignores as an export, energy that is embodied in other products, such as wheat (p39), and in uranium, which has an energy content as large as that of Canada's conventional oil production (p81). To estimate energy conservation in the industrial sector, the study simply took goals "that the Task Forces had established for energy conservation to 1985 (and) extended (them) in a relative sense to 2025", i.e., by a factor of seven in time (p45). As a result of this arithmetic assumption, the energy-intensity for producing cement, for instance, is supposed to be reduced to a third of its current value by 2025, without any explanation being offered.
The methodology considers two scenarios, tagged Business as Usual and Consumer Saturation. The latter, which is being pushed in the report, is a New Improved packaging of the Conserver Society of the seventies, that was not selling well in its original form. To get the desired result, it was admitted that in this scenario "somewhat less than fully cost-effective scenarios were incorporated and modest lifestyle changes allowed" (p16), and "strict cost-effectiveness criteria were violated for some options and lifestyle changes were introduced so long as the society was still feasible and recognizable" (p25). The lifestyle changes include "less motorized transportation" (p16), "less living space per household" (p40), and only one in five households could have "non-urban vehicles", as opposed to strictly commuter cars which would be rationed to one per household (p53).
Even without these disadvantages it would be surprising if "once a renewable source could be shown to be competitive with a nonrenewable one, it would start to make inroads into the market" (p62). For the Consumer Saturation scenario it was further assumed that "softer sources could be introduced somewhat more rapidly than indicated by the rough (sic) measures of cost-effectiveness spelled out above" (p62). In practice, consumers have to see a clear economic advantage, not just calculated competitiveness, before switching to an unproven product.
A minor example of the uneven treatment for "soft" and "hard" paths is to be found on page 25. Under the Consumer Saturation scenario, people are expected to grow some of their own vegetables, so the energy required for fertilizer, etc., for this activity is simply deleted from the national account. According to Characteristic 2 of Soft Energy Technologies, "very many individually modest contributions" to energy supply are important, but apparently not to energy demand.
A much more objectionable aspect of the report is its attempt to make the reader believe that by ignoring environmental, cultural, political and social costs it is favouring conventional, centralized forms of energy (pp 31 & 61). To pick a single, but vitally important example, health costs, a very thorough analysis by H. Inhaber, drawing on published work of many others, has shown that soft energy sources would inflict more health harm on society than nuclear energy. When discussing Inhaber's work soft thinkers become completely irrational, arguing that deaths resulting from construction of "soft" hardware, such as solar panels and windmills should be excluded from the account. Their most effective defence is to pretend that Inhaber's study does not exist, as illustrated by this FoE report.
Under social costs should be considered convenience, or rather the lack of it. Canada has an ageing population and seniors are likely to prefer the convenience of electrically controlled appliances to the theology of "soft paths", involving wood furnaces, windmills and clearing snow off roof-top solar panels.
One of the greatest difficulties facing those promoting diffuse and intermittent renewable energy sources is the need to provide costly energy storage or a back-up energy supply. Technically, the simplest solution is to use electricity as a back-up, but this would mean that excess generating capacity would have to be held idle most of the year just to supply this peak demand. Unless the rates were adjusted to be prohibitively high for back-up demand, the result would be that those who pursue the soft path are subsidized by other utility customers. This problem is acknowledged, but not resolved, in the FoE report: "Those units requiring electrical back-up were charged at the same rate as other customers" (p36); "electricity becomes the (back-up) system of choice, provided seasonal peaking problems do not make it too expensive" (p43); "the extra cost for electrical back-up -- is taken as zero" (p64); and similarly on page 68.
The FoE study correctly identified the Liquid Fuel sector as "the most critical for future supply considerations" (p70). It is dwindling oil supplies that have to be conserved, and energy that has to be exploited to help develop the economy. The study recognized the difficulties of finding a soft solution, and the best it could do was suggest some biomass-based alcohol. In the absence of relevant hard experience, methanol is selected as the reference alcohol (p68). However, the practical problems of using methanol as a vehicle fuel are not mentioned.
The study also identified one of the lessons of the study as being "that the energy problem in Canada has a lot to do with regional disparities and with the transportation of energy from energy-rich provinces to energy-poor ones" (p81). Strict adherence to the dogma of soft thinking, however, prevented the authors recognizing that nuclear energy provides a solution to this problem, as to many others. Simply because uranium is such a concentrated source of energy nuclear electricity can be produced at essentially the same cost anywhere in Canada.
It should be noted that under "General Policy Implications" FoE is advocating marginal pricing for energy, a concept of academic economics that is not even suggested for other commodities. Those who advocate marginal pricing often intend siphoning off the excess revenues, a form of new taxation, to implement their ideas for redistribution of wealth. The FoE report, however, is completely silent on this point.
In view of all the reservations raised in this commentary, the FoE's claim under "Conclusions" that the Consumer Saturation scenario is cost-effective (p241) must be regarded as sheer hypocrisy. A subsequent sentence can, however, be endorsed unequivocally: "This study was incomplete and inexact in numerous areas" (p241).
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