Energy

Earlier this month, I mentioned that going forward, we can expect liquified natural gas and uranium to be coveted as energy sources. I received a good number of messages asking me to elaborate, so here is a brief overview of the world's most important sources of energy and what we can expect to unfold in the energy markets in the years ahead:

First, a quick look at primary types of energy consumed by humans since 1800:

Even with the relatively recent move toward renewable sources like solar panels and wind turbines, this graph shows that on a global basis, we are still largely dependent on hydrocarbons for energy, primarily natural gas, oil, coal, and lastly wood, which is the largest source of biomass energy that we use.

Going from highest to lowest yield of energy, these hydrocarbons can be ordered as follows:

Natural Gas
Oil
Coal
Wood

Burn any of these hydrocarbons and we create energy plus carbon dioxide. Of the four sources, natural gas has the most embedded energy, while wood offers the least amount of energy relative to the amount that is burned.

Natural gas is the cleanest of the four to burn for energy.

Oil is advantageous in that it is easily transported across land and sea in liquid form.

Coal is relatively inexpensive to obtain from the earth, but has the most impurities of the 4 hydrocarbons, and after being burned for energy, leaves coal ash that contains heavy metals that pollute the environment.

Wood offers the lowest yield in energy, and is made directly from sunlight, carbon dioxide, and water.

As societies become wealthier, they move up this list of hydrocarbons in their preferred sources of everyday energy - for obvious reasons, the vast majority of people in developed nations use natural gas for energy over, say, coal or wood.

There are many other hydrocarbons, of course, including ethane. Industrial giants convert ethane to ethylene, which is then polymerized to form polyethylene, which humans use in countless forms - examples include garbage bags, saran wrap, zip lock bags, and every plastic container and basin you can think of, including personal care products, food packaging, and jugs used for milk, juice, and other beverages.

These other hydrocarbons and derivatives like polyethylene that have become essential to everyday life for billions come from the gas and oil industry - they are harvested from unwanted byproducts of gas and oil production.

This ultra-simplified breakdown is meant to point out the following: The world as we know it cannot sustain anything close to its everyday needs without enormous quantities of gas, oil, and coal. Hydro, wind, solar, and other renewables are generating roughly 20% of the total terawatt hours being used globally, but these sources cannot be created or sustained without the input of massive amounts of hydrocarbons.

A few years ago, I was on board with the move toward mass electrification of vehicles and shift away from using hydrocarbons to meet our energy needs. In looking deeper into global energy production and the mining that is required by different industries, my current view is that some of the narrative behind the movement to "green" energy is somewhat misguided.

Much of the shift to using forms of energy that are deemed cleaner than traditional hydrocarbons requires enormous volumes of environment-destroying mining of rare earth minerals, lithium, cobalt, nickel, copper, and graphite.

Mining of these minerals requires processing of solid ores, leading to massive amounts of waste, somewhere around 100 billion tonnes per year. The process of purifying 1 tonne of rare earth minerals uses at least 200 cubic meters of water which becomes polluted with heavy metals, sulphuric acid, and nitric acid.

The bottom line is that the work that is required to produce solar panels, wind turbines, and the batteries that run cars and phones cause massive harm to the environment and to people who have little choice but to take these positions to make a living - these tangible costs should be brought into the calculus when establishing energy policies.

History tells us that humans will always strive to come up with innovative solutions that are truly better for the world rather than dogmatically adhere to measures that are more about optics than actually improving quality of life for all.

All of the above is why my view is that in the years ahead, the world will need more gas and oil, not less. Countries will also need to create more nuclear energy plants, which is why uranium will be in high demand.

Many of us living in developed countries have little to no idea of how hard it is merely to survive on this planet. Above all else, life requires energy - food and fuel. And the mathematics of generating renewable energy are such that we're nowhere near ready to continue to exist without hydrocarbons and nuclear energy.