Summary of Lars Schernikau: “The Unpopular Truth..about Electricity & Future of Energy” | Tom Nelson Pod #102

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00:00:00 - 01:00:00

Energy economist and commodity trader Lars Schernikau discusses the challenges facing the world due to energy poverty and increasing demand for energy, particularly in developing countries. Schernikau argues that while renewables like wind and solar are being touted as the solution to energy production, they are far less efficient and more expensive than nuclear or fossil fuels. He points out the limitations of hydrogen as a renewable energy source and emphasizes the need to consider externalities such as emissions from energy production that are often ignored in current policies. Schernikau also stresses the importance of educating policymakers and the general public on the basics of energy to make more informed decisions about energy production.

00:00:00 In this section, Lars Schernikau, an energy economist and commodity trader from Germany, discusses the current state of global energy poverty. He emphasizes that while the number of people without access to electricity has been decreasing for the past 40 years, it has increased in the past two years due to COVID-19. Schernikau explains that people without access to electricity face numerous challenges, including limited access to education, healthcare, and even a shorter life span. He notes that energy poverty is a key challenge facing humanity today along with access to clean food, clean water, and health.
00:05:00 In this section, Lars Schernikau discusses the importance of energy in providing clean water, healthcare, and waste treatment. He explains that the environment is a complex issue, and there are various aspects to consider, including the climate, land, animal and plant life, and pollution. Lars highlights that historically, humans used biomass as the primary source of energy, but eventually, we started using fossil fuels and nuclear energy. Currently, 80% of the world's energy comes from fossil fuels, while four percent comes from renewable energy. He argues that as the demand for energy continuously increases worldwide, we must consider renewable energy as a solution to satisfy that demand, particularly in developing countries like Bangladesh, Pakistan, Thailand, and Nigeria, where energy consumption will increase by 20% per capita.
00:10:00 In this section, Lars Schernikau discusses the projected increase in global population by 25% over the next 27 years, which will significantly increase energy demand. He explains that primary energy, which is used for purposes beyond electricity, is primarily sourced from oil, coal, and gas, with nuclear and renewable energy sources such as wind and solar contributing a smaller percentage. Schernikau argues that unrealistic projections for Net Zero Pathways, such as those from the iea, fail to account for the growth in energy demand as well as the corresponding increase in materials required for energy extraction. He emphasizes that limiting the growth in energy and materials use is crucial for environmental protection.
00:15:00 In this section, the speaker discusses the global investment in power generation and its mismatch with the current energy supply. He explains that wind and solar receive 45% of the investment but contribute only about 10% of the electricity, while coal and gas, which provide almost 40% of electricity, get only 20% of the investment. He further discusses Germany's energy transition from fossil fuels to renewables, where the country invested almost 1 trillion euros in the past 20 years. The fossil fuel capacity has decreased, and wind and solar capacity has skyrocketed, resulting in an extreme, significant cost of price increase. However, wind and solar have managed to replace roughly 30% of fossil fuels.
00:20:00 In this section, Lars Schernikau discusses the issue Germany is facing with its dispatchable power capacity and peak power demand. He explains how Germany used to have 20% reserve margin but now has significantly lowered it, meaning that any slight decrease in power supply can cause blackouts. He also mentions that McKinsey has recommended constructing 30 gigawatts of thermal gas capacity in the next 7-8 years, which is a significant amount compared to the current installed capacity in Germany. Furthermore, Schernikau talks about how Germany's industrial power prices have increased significantly, causing heavy industries to move out of Germany. Finally, he discusses the unrealistic assumptions being made in the current net-zero pathways, with the need to install much more wind and solar than projected.
00:25:00 In this section, Lars Schernikau discusses the concept of URI (energy return on investment) and its importance in measuring the net energy efficiency of energy production. He presents a historical look at energy expenditure, showing the decrease in the percentage of GDP allocated to energy expenditure as a result of the industrial revolution and the discovery of coal. Schernikau points out that nuclear is the most efficient way of generating electricity, followed by hydro and then coal and gas. He also notes that the so-called "green" ways of generating electricity such as biomass, solar, and wind are actually energy inefficient and the most expensive. He argues that to sustain modern civilization, we need a minimum URI of six to ten times and going 100% on wind or biomass would put us below that minimum.
00:30:00 In this section, the speaker discusses the limitations of energy supply on the size of cities before the Industrial Revolution, highlighting that roman cities couldn't grow above one million people due to the incapacity of getting enough energy in the form of food and wood to keep themselves alive. The size of cities started to increase after the Industrial Revolution since they could produce and distribute an adequate amount of energy to meet the growing population's needs. The speaker then discusses the importance of material input and space requirement concerning different energy options. The speaker also points out that producing hydrogen as a means of energy storage is less efficient and would make the production of energy less efficient overall. This inefficiency needs to be taken into consideration while moving towards thermal efficiency. The speaker also sheds some light on the issues related to storing solar energy in batteries concerning California's case study.
00:35:00 In this section, Lars Schernikau discusses the limitations of using hydrogen as a renewable energy source, which is currently being touted as a solution to the intermittency of renewables like wind and solar. He explains how a 60-80% loss of efficiency is incurred in producing hydrogen, which means that 12 to 20 times the current capacity needs to be built to overproduce and compensate for this loss. This makes it unrealistic to rely solely on renewables plus hydrogen as a solution. Schernikau also highlights that wind and solar increase the cost of the total system and should be taxed for their surplus cost. He explains that the press often neglects to account for the cost of backup systems, storage systems, balancing costs, and network integration costs, which increase with the amount of renewable energy in the system. The International Energy Agency has acknowledged that the system value of renewables decreases as their share in the power supply increases.
00:40:00 In this section, energy expert Lars Schernikau points out that the common belief that wind and solar electricity is the cheapest option is not accurate due to the lack of full cost integration. The cost of transmission, storage, backup conditioning, balancing, environmental cost, recycling cost, land cost, material inefficiency, lifetime, net energy efficiency, and other such aspects are not included in the measurement of Levelized Cost of Electricity (LCUE). Schernikau describes the concept of Full Cost of Electricity (FCOE), which offers a more comprehensive and accurate picture of the actual cost of wind and solar electricity, but this has not been measured for any country yet. He also presents Vietnam as an example where the current dispatchable capacity is expected to fall short of peak power demands, just like South Africa, and highlights that externalities such as production, mining, processing, transportation, manufacturing, operation, and recycling need to be considered in the energy supply chain.
00:45:00 In this section, Lars Schernikau discusses the externalities of energy production, such as emissions and their impact on the environment and human health. He points out that current energy policies focus only on counting CO2 emissions, causing distortions and potentially ignoring other significant environmental and human impacts. Schernikau believes that wind and solar energies are not affordable, not material, not energy efficient, and contribute little to mitigating pollution or animal and land impact. He argues that reliable energy needs money, and current policies, such as carbon taxation and divestment from fossil fuels, may not be effective in tackling the environmental and human issues of energy production.
00:50:00 In this section, Lars Schernikau argues for educating politicians, executives, consultants, schools, universities, banks, and funds on the basics of energy. He believes that if this is not done, it may lead to running out of money, which means running out of energy, causing significant consequences not just for the poor but for everyone. Although it may not be popular, the world has become greener than it was 40 years ago. This is despite the Amazon and deforestation, and it's crucial to celebrate and invest in base research sustainably to wean off fossil fuels. Schernikau concludes that divesting is not the solution. Instead, we should invest in existing energy infrastructure to reduce waste generation and poverty, which ultimately helps sustain climatic changes.
00:55:00 In this section, Lars Schernikau talks about his book, "The Unpopular Truth," which discusses the future of energy and the importance of increasing efficiency while reducing emissions in a cleaner way. He has given presentations on the topic around the world, and while people often initially agree with him, they quickly revert to the belief that there is no other choice but to use wind and solar power. Schernikau believes that there will unfortunately be blackouts in some regions due to this belief, but he hopes to minimize the negative impact of current policies. He states that politicians often use energy for political reasons, causing more disputes and social conflicts. Instead, we need to work together and find a sustainable way to reduce our fossil fuel usage that is affordable, logical, and does not harm people in Africa who need electricity. Additionally, Schernikau believes that CO2 is just one of many factors that contribute to climate change, and we need to consider all of these factors when making decisions about the future of energy.

01:00:00 - 01:00:00

Energy economist Lars Schernikau emphasizes the importance of educating oneself on climate change before making decisions involving taxpayers' money, citing the book "Unsettled" by Steven Koonin as a reputable source for a "leveled-headed review" on the topic. Schernikau notes that many people are genuinely concerned about climate change but may not be fully informed on the issue. He also points out that studies have shown that increased knowledge of climate change can lead to decreased concern. Schernikau further emphasizes the need to consider the implications of energy and climate change policies and decisions, noting that an anti-human stance by banks could have severe consequences for the world.