Welcome to Lesson 2!

You are already to Lesson 2: Energy Supply and Demand. These energy supply and demand lessons will explore more about energy resources. Basically, you will be able to appreciate global and national consumption patterns. We will go over what kinds of energy we have been consuming, how much we have been consuming, and how we compare with the rest of the world, etc., over the past few decades. Based on those patterns, we can also deduce some information about how much energy we use to do a job; energy intensity. What kind of energy sources we will be needing, and how much we will be needing based on the past trends?

We will also look at energy reserves. Do we have those? Will we need more renewables, batteries, coal, more oil, or more gas? Can we (sustainably) use any of those resources? If we can, great, if not, what do we do? We will be doing those kinds of energy analysis. So, obviously, you are going to see a lot of numbers and statistics. One of the questions that I always get is: Hey, do I have to remember all these numbers? In 2019, petroleum and natural gas accounted for 69 % of energy consumption in this country, and renewables accounted for 11% of the electricity generated by utility companies.

Do we have to remember these numbers? My advice is, you don’t have to remember everything but you need to get the main message behind these numbers. In other words, you have to know the fact that petroleum and natural gas are the main energy sources. Similarly, over 75% of our oil products or petroleum products are used for transportation. So, we need to know that transportation is basically run by petroleum; petroleum is mostly used for transportation. That is the message. You don’t need to remember the exact numbers. But if there is something that has very insignificant or significant quantities, you should note that. For example, renewable energy sources supply about 10% of our energy source (although the exact number is about 11%). That is the message. You don’t need to worry about whether it is 9.2 or 9.5 or 8.5 or 11.2%. So just to give you a clue, you don’t have to worry about the exact numbers, but the message that is conveyed using these numbers is what you have to concentrate on. And we will also have one numerical type of problem in this lesson. That problem will be predicting the energy needed for the future. The problem follows an exponential function, and we will talk about that, and there will be a few numerical problems for you to practice.

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Questions?

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Energy consumption numbers are always reported a few years behind, so we are always looking into the past before we plan for the future. As of 2021, The world's total primary energy consumption was about 176,000 TWhs (580 Quadrillion Btus).

Table 2.1 below shows various regions and total primary energy consumption history.

From the Table 2.1, it can be seen that the energy consumption is high for the Far East and Oceania. The amount of energy used depends on the economic prosperity of the nation and the population of the country. The North American region includes Canada, the United States, and Mexico. The Far East and Oceania include developed nations such as Japan and Australia, and densely populated developing nations such as China and India. Obviously, due to highly populated countries like China and India, total energy consumption does not reflect the quality of life of the people in those countries. Figure 2.1 shows the energy per capita consumption over the last 30 years. As can be seen from the graph that Far East and Oceania used a lot of energy as a region, but per capita energy consumption is relatively low implying that if each person in that region would consume as much as in North America, that Region's energy consumption would skyrocket.

Per Capita Energy Consumption (MMBTU/person) every ten years.

Credit: Sarma Pisupati @ Penn State is licensed by CC-BY-NC-4.0

The productivity of a country is measured by the total value (dollars) of goods and services, called Gross Domestic Product (GDP), produced by its people. Therefore, the average value of goods and services produced by each person - the GDP per capita of a country - is an indicator of the quality of life.

Energy intensity is the relationship between energy consumption and growth in gross domestic product (GDP), and it is an important factor that affects changes in energy consumption over time.

• In industrialized countries, history shows the link between energy consumption and economic growth to be a relatively weak one, with growth in energy demand lagging behind economic growth.
• In developing countries, however, the link between energy consumption and economic growth have been more closely correlated with energy demand growing in parallel with economic expansion.

The total primary energy consumption of the world in 2015 was 570 Quadrillion Btus and in 2017 it increased to 582.4

Energy Consumption as a Function of Quality of Life in Industrialized Countries

Credit: Sarma Pisupati @ Penn State is licensed by CC-BY-NC-4.0

Energy Consumption as a Function of Quality of Life in Developing Countries

Credit: Sarma Pisupati @ Penn State is licensed by CC-BY-NC-4.0

Global Energy Consumption and GDP per person

In general, as the GDP (Gross Domestic Product) per person of any country increases, the amount of energy that is consumed is also expected to increase.

• For developing nations, the correlation is much stronger.
• For developed nations, the correlation is weak.

For example, Iceland, Finland, the United States, and the Netherlands, with similar GDP per capita, have significant differences in energy consumption per capita. In other words, to produce one dollar's worth of goods and services, the U.S. uses twice the energy of the Netherlands. Similarly, Iceland uses four times the energy of the Netherlands.

Energy Intensity

Credit: Sarma Pisupati @ Penn State is licensed by CC-BY-NC-4.0

Energy Consumption Differences

The differences in energy consumption among countries are the result of:

• efficiency of industrial, transportation, commercial, and residential energy,
• climatic and geographical areas of a country,
• lifestyles (use of more gas guzzling cars and SUVs and bigger sized houses), and
• the nature of the products produced by the nation's industries.

New York City

Credit: Superheros and Villains [2] by Andreas Komodromo [3] is licensed under CC BY-NC 2.0 [4]

Bangladesh

Credit: Signs on the river bank [5] by abrinsky [6] is licensed under BY-NC-SA-2.0 [7]

Click here [8] to see Global Average Change in Energy Production by Fuel and determine production of energy which energy sources decreased over the last 5 decades.

The world energy requirements are projected by several energy companies such as British Petroleum and Exxon Mobil and international agencies like International Energy Agency (IEA) and US Energy Information Administration (EIA). The United States Department of Energy projects strong growth for worldwide energy demand over the 28-year projection period from 2012 to 2040. Although these projections or forecasts are based on the same principles, they differ slightly. They are also often wrong! For example, the rate of renewable adoption is continuously underestimated. Detailed projections of each organization can be seen through the following external links.

• International Energy Agency [9]
• British Petroleum [10]
• Exxon Mobil [11]
• US Energy Information Administration (EIA) [12]

According to International Energy Outlook 2019,

• Manufacturing centers are shifting toward Africa and South Asia, especially India, resulting in energy consumption growth. Most economic growth happens in non-OECD countries, where GDP per person nearly triples from 2018 to 2050.
• The total world energy consumption is likely to increase from 591 quadrillion Btus in 2016 to 910 quadrillion Btus in 2040, an increase of 54%.
• Most economic growth happens in non-OECD countries, where GDP per person nearly triples from 2018 to 2050. Most energy-intensive manufacturing shifts to non-OECD Asia and, increasingly, to India.

The world's GDP (expressed in purchasing power parity [13] terms) rises by 2.4%/year from 2018 to 2040. The fastest rates of growth are projected for the emerging, non-OECD countries, where combined GDP increases by 3.5%/year. In OECD countries, GDP grows at a much slower rate of 1.5%/year over the projection period.

Asia is heavily populated and continues to grow at a rapid pace. As a result, industrial growth has also increased, requiring a need for more energy.

The World’s energy supply sources

Before the global pandemic, the World’s energy supply sources followed long-term trends, with new fuels increasing in share and old fuels losing ground. Below, you can see consumption history for the years 1990 to 2018.

Figure 2.3. Global Energy Supply by Source. ktoe means kiltons of oil equilivents.

Credit: “World total energy supply by source, 1971-2018 [14]”  International Energy Agency. August 27, 2020.

Here we can see the role of renewables and natural gas quickly growing.

Figure 2.3a. Global Energy Supply By Percent.

Credit: International Energy Agency [15]

Three of the world’s largest energy sources

Energy Consumption and Electricity Projections

According to International Energy Outlook 2019, the strongest growth in electricity generation is projected to occur among the developing, non-OECD nations. Increases in non-OECD electricity generation average 2.5%/year from 2012 to 2040, as rising living standards increase demand for home appliances and electronic devices, as well as for commercial services, including hospitals, schools, office buildings, and shopping malls. In the OECD nations, where infrastructures are more mature and population growth is relatively slow or declining, electric power generation increases by an average of 1.2%/year from 2012 to 2040.

Fig 2.5 World energy consumption by type.

Credit: “Primary Energy Consumption by Fuel, World [16].”
US Energy Information Administration, International Energy Agency. 2010.

Projections of Energy consumption by use.

Credit: “Primary Energy Consumption, World and Consumption by Fuel for Power Generation, World [16].”
US Energy Information Administration, International Energy Agency. 2010.

As can be seen from the figures, the role of renewables is expected to change dramatically in the coming years. What a transition!

Nuclear Power

Worldwide, electricity generation from nuclear power is projected to remain largely unchanged into 2040.

According to International Energy Outlook projections by US Department of Energy (US DOE), there is still considerable uncertainty about the future of nuclear power, and a number of issues could slow the development of new nuclear power plants. Issues related to plant safety, radioactive waste disposal, and proliferation of nuclear materials continue to raise public concerns in many countries and may hinder plans for new installations. Although the long-term implications of the disaster at Japan's Fukushima Daiichi nuclear power plant for world nuclear power development are unknown, Germany, Switzerland, and Italy have already announced plans to phase out or cancel all their existing and future reactors. In contrast, developing Asia is poised for a robust expansion of nuclear generation. Most of the increase is by China's addition of 139 gigawatts (GW) of nuclear capacity from 2012 to 2040.

In a nuclear plant, heat is produced by nuclear fission (splitting of an atom's nucleus into many new atoms) inside uranium fuel. As a result of fission, heat energy is released and the steam spins a turbine generator to produce electricity.

Renewables

Sizable growth in the world’s consumption of renewable energy resources is projected over the next 25 years. Much of the projected growth in renewable generation is expected to result from the completion of solar installations all throughout the world. Dramatic reductions in the cost of solar panels has led to this source being one of the cheapest forms of electric power generation as of 2020. In 2020, 90 % of all new electric power generation installations were renewable across the globe.

In hydroelectricity, mechanical energy from the water being pulled downward by gravity is converted to electrical energy. More specifically, a hydroelectric generator directs the flow of water through a turbine, which extracts the kinetic energy from the movement of the water and turns it into electricity through the rotation of electrical generators. Hydropower is the largest single renewable electricity source today, providing 16% of world electricity at competitive prices. It dominates the electricity mix in several countries, developed, emerging, or developing. However, wind and solar are quickly catching up.

For a long time, growth in the world and the U. S. energy consumption as a function of time, follow what is known as exponential function. Now it looks like we have switched to linear growth, but time will tell if this is a permanent change. The exponential increase is characterized as follows. The amount of change (increase in energy consumption) per unit time is proportional to the quantity (or consumption) at that time.

$$\frac{\Delta N}{\Delta t}\propto N$$

or

$$\frac{\Delta N}{\Delta t}=\lambda N$$

Where Greek letter Δ(delta) is the change or increment of the variable and λ (lambda) is the growth rate. After some mathematical methods, it can be shown that the equation changes to the form

$$N=N_0{e}^{\lambda t}$$
where e is a constant = 2.71

We can determine how long it takes for N0 to become 2N0 (twice its original number or double). That time period is called doubling time. After some mathematical steps it can be written as:

Until so far that the energy requirement is going to increase in the future and also that the U.S. and the rest of the world will depend to some extent on fossil fuels. These fossil fuels are non-renewable fuels with a finite lifetime. So, the question is: Will we have enough supply for future energy requirements?

The answer to this question depends on the quantity of fossil fuels we have in the ground. Energy sources that have been discovered but not produced cannot be easily measured. Trapped several feet below the surface, they cannot be measured with precision. There are several terms used to report the estimates of the energy resources. The most commonly used terms are “reserves” and “resources.”

• "Reserves" represent that portion of demonstrated resources that can be recovered economically with the application of extraction technology available currently or in the foreseeable future. Reserves include only recoverable energy.
• “Resources” represent that portion of the energy that is known to exist or even suspected to exist, irrespective of technical or economic viability. So reserves are a subset of resources.

As of 2016, total world proved recoverable reserves of coal were estimated at 948 billion short tons.

Five countries have nearly 73% of the world's coal reserves:

• United States—28%
• Russia—18%
• China—13%
• Australia—9%
• India—7%

Based on data from OPEC (Oil Producing and Exporting Countries), the highest proved oil reserves including non-conventional oil deposits are shown in the graphic below.

OPEC share of world crude oil reserves, 2018

Source: Opec [17]

Based on data from BP (British Petroleum), proved gas reserves were dominated by three countries: Iran, Russia, and Qatar, which together held nearly half the world's proven reserves. According to the US CIA The World Factbook, the US has the 5th largest reserves of natural gas. Due to constant updates about the shale gas estimates, these are difficult to say with certainty.

How Long Will the Reserves Last?

How long these reserves do last depends on the rate at which we consume these reserves. For example, let’s assume that we have $100,000 in the bank (reserves) and if we draw 10,000 dollars every year (consumption) the reserve will last for 10 years (\$100,000/\$10,000 per year). However, in this case, we are assuming that we do not add any money to our deposit, and we do not increase our withdrawal.

This is generally not true in the case of life of an energy reserve. We may find new reserves, and our energy consumption or production can also increase. In the case of energy reserve, although we know that we might find new resources, we do not know how much we could find. But the consumption can be predicted with some accuracy based on the past rates.

Lifetime of current reserves at constant consumption

We can calculate the life of current petroleum reserves by dividing the current reserves by current consumption.

• At the current rate of consumption, the approximate lifetime of the world’s petroleum, natural gas, and coal reserves is 50 years, 52.8 years, and 153 years, respectively. (BP Statistical Review of World Energy) [18]
• At the current rate of consumption, the current U. S. petroleum, natural gas, and coal reserves will last approximately for 4.88 years, 12.2 years, and 258 years, respectively.

It is important to note that the entire U.S. petroleum consumption is not coming from the U.S. reserves because we import more than one half of the consumption. Because we import more than one half of the consumption, the petroleum reserves at the current rate will last about 11 years. If the consumption increases in the future, the life will be less. However, there is also a chance of adding more reserves with more exploration and discoveries. The increase in consumption can change depending on the price of petroleum and other alternative fuels. Likewise, us moving to electric cars and harnessing unconventional oil reserves can extend the lifetime of these reserves.

Therefore, these lifetimes are not carved in stone. It can be debated whether the U.S. reserves will last for 6 years or 10 years or even 20 years, or we may never run out! But there is increasing consensus that we must change our lifestyle. Even if we won't run out, the environmental consequences of continued use are pushing us to change anyway, but more on that later...

The R/P ratio can change from year to year, similar to our bank balance. We can add more if we make more or consume more. That changes the time we can draw on the balance.

The following figures illustrate that these ratios changed.

Fig Variation of R/P ratio Over Time for Oil

Credit: Data from BP Statistical Review of World Energy [18]

Therefore, we must conserve, innovate (get more with less), or learn to live without these resources.

US Energy Supply and Demand

When focusing on the energy supply and demand, it can be helpful to see where the energy is going. Which of our daily activities consume the most energy? Several agencies track this very closely.

The 2019 energy flow chart released by Lawrence Livermore National Laboratory details the sources of energy production, how Americans are using energy and how much waste exists.

Source for a clearer image: Lawrence Livermore National Laboratory (LLNL) [19]

Globally, many interesting transitions are occurring. While the U.S. was once the top consumer of energy, China claimed this title in 2009.

As a result of innovations in oil and gas extraction, U.S. imports have dropped considerably. 

US Energy Imports between 1950 and 2019

Credit: EIA Energy Explained [20]

Looking at the U.S. Energy Profile, It can be seen from the imports profile that the US Crude oil imports have significantly reduced between 2005 and 2019 from a peak of 25 Quadrillion BTUs. Another significant change that can be noted is that the US is now exporting natural gas (below zero on the y axis) instead of importing it. Although crude oil is imported, US exports finished petroleum products resulting in less net imports. As a matter of fact, US total energy exports exceeded the imports in 2019 since 1950.

The top five countries (sources) of US total petroleum in 2019 were Canada (49%), Mexico (7%), Saudi Arabia (6%), Russia (6%) and Columbia (4%).

The U.S. also ranks:

• first in worldwide reserves of coal;
• sixth in worldwide reserves of natural gas;
• eleventh in worldwide reserves of oil.

US Energy Consumption by Source and the chart of the US Energy consumption by source and user sector shows each energy source and the amount of energy it supplies in British thermal units (BTU). Petroleum is the leading source of energy in the US in 2019 with 36.72 quadrillion BTUs. Next is natural gas with 32.10 quadrillion BTUs. Coal supplies 11.31 quadrillion BTUs of energy. Renewable energy and nuclear power are responsible for 11.46 and 8.46 quadrillion BTUs respectively. Of the total petroleum consumption, 72% is used for transportation and another 23% is used by the industrial sector. Similarly, 35% of the natural gas (largest fraction) is used for power generation. On the other hand, 76% of the residential and commercial energy needs are met by natural gas. The actual percentages are not required to be memorized but answers to the questions such as: Which fuel is most used by power plants for power generation? Which sector uses petroleum the most? Approximately what fraction of the electricity is generated by renewable energy? (10, 25, 50 or 90) What is the primary purpose of coal use? etc. need to be answered.

US Energy Consumption by Source and Sector

The graph shows how dependent the U.S. is on our petroleum supply, as it accounts for almost 37% of our energy. Our next two highest sources of energy, like petroleum, are non-renewable and include natural gas and coal. Only about 11% of our energy comes from renewable energy sources such as wood and water (hydroelectricity). According to Energy Information Administration, US renewable energy consumption surpassed coal for the first time in over 130 years in 2019. Of the 4.12 trillion kWh of electricity generated in the US, 38% was from natural gas, coal accounted for about 23% and nuclear adding another 20%. Renewable sources contributed to 17% of the total electricity generated.

Graph of US Energy Consumption by Source and use by End Sectors

Credit: Energy Review Monthly, May 2020 [21] by EIA

In 2019, fossil fuels made up 81% of total U.S. energy consumption, the lowest fossil fuel share in the past century. According to EIA projections, the percentage declines to 76.6% by 2040. Policy changes or technology breakthroughs that go beyond the trend improvements could significantly change that projection. In 2019, the renewable share of energy consumption in the United States was its largest since the 1930s at nearly 11.7%. The greatest growth in renewables over the past decade has been in solar and wind electricity generation. Liquid biofuels have also increased in recent years, contributing to the growing renewable share of total energy consumption. 2020 was the first year that renewables surpassed coal consumption in the U.S.

US Energy Consumption Over Time

US Primary Energy Consumption History in Quadrillion BTUs

Credit: US EIA, Energy Monthly Review Jan. 2021 [22]

The most significant decline in recent years has been coal: U.S. coal consumption fell by 41% since 2009 in a decade, from 997 million tons to 587 million tons. Biomass, which includes wood as well as liquid biofuels like ethanol and biodiesel, remain relatively flat, as wood use declines and biofuel use increases slightly. In contrast, wind and solar are among the fastest-growing energy sources [23] in the projection, ultimately surpassing biomass and nuclear.

Net U.S. imports of energy declined from 30% of total energy consumption in 2005 to 13% in 2013 and down to 7.6 % in 2017, as a result of strong growth in domestic oil and dry natural gas production from tight formations and slow growth of total energy consumption.

US Energy Consumption History

The plot of US energy consumption shows the relative amounts of each type of energy that was consumed for each year.  The history of the energy consumption profile of the United States indicates that petroleum makes the largest part of the energy demand over the past seven decades. Natural gas has taken the second over the past decade with the production of gas from shale. Coal has been replaced by renewable energy and natural gas for electricity generation. Among the renewable energy sources, biomass has the larger share followed by wind energy. Wind energy and solar energy are the fastest growing energy sources.

Growth of Renewables in the U.S.

Credit: US EIA

U.S. energy consumption projections by source and by sector.

Credit: EIA Annual Energy Outlook 2021 [24]

Answers to the following questions need to be looked for in the material presented above.

• Of all the renewable energy sources, which renewable source is used most?
• Which of the renewable sources is used most for transportation?
• Approximately what fraction of the electricity is generated by nuclear energy? (10, 20, 50 or 90)

US Vehicle Fuel Consumption

The table below shows the vehicle fuel consumption and travel between 1960 and 2018.

Electricity

US electricity generation is expected to grow from 3.7 trillion kilowatthours in 2015 to 4558 trillion kilowatthours in 2035. Visit the webpage US electricity explained - Sources and profiles [25]

Examine for:

• Sources of U,.S electricity generation
• What are the notable changes in the major sources for electricity generation between 1950 and 2019?
• Role of renewable energy in the electricity generation.

Growth in electricity use for computers, office equipment, and electrical appliances in the residential and commercial sectors is partially offset by improved efficiency in these and other, more traditional electrical applications, by the effects of demand-side management programs, and by slower growth in electricity demand for some applications, such as air conditioning.

Most capacity additions over the next 10 years are renewables and natural gas, increasing the natural gas share to 26 percent and lowering the coal share to under 20 percent.  The nuclear generation (about 9 percent of total electricity supply in 2012) is projected to remain at about 9 percent in 2050.

Review

Watch the following 4 minute 50 second video Review for Lesson 2.

Test Yourself

The questions below are your chance to test and practice your understanding of the content covered in this lesson. In other words, you should be able to answer the following questions if you know the material that was just covered! If you have problems with any of the items, feel free to post your question on the unit message board so your classmates, and/or your instructor, can help you out!

1. Why is the energy use per person in the world increasing?
2. The United States, with 5% of the world's population, uses about 25% of the world's energy and contributes 25% of the world's greenhouse gas emissions. Explain.
3. List the reasons why the United States per capita energy consumption is the highest of any other region in the world.
4. List reasons why the United States energy consumption per dollar of GDP is higher than most of the industrialized nations.
5. What is the difference between reserves and resources?
6. List the changes that you would make in your personal lifestyle if you were mandated to reduce your energy consumption by 25%.
7. What variables determine the lifetime of a nonrenewable resource?

Extra Resources

For more information on topics discussed in Lesson 2, see these selected references:

1. Hinrichs, R. A., “Energy,” Saunders College Publishers, Philadelphia, PA, 1992.
2. Aubrecht, G. L., “Energy,” Prentice Hall, Inc., Englewood Cliffs, NJ, 1995.
3. Fay, J.A. and Golomb, D. S., “Energy and the Environment,” Oxford University Press, New York, NY, 2002.
4. Christensen, J. W., “Global Science: Energy Resources Environment”, 4th edition, Kendall/Hunt Publishing Company, Dubuque, IA, 1996.
   Energy Information Administration, Annual Energy Review, U.S. Department of Energy, 2004.
5. Energy Information Administration, Annual Energy Outlook, DOE/EIA 0383 (2004), U.S. Department of Energy, Washington D.C., 2004.
6. Energy Information Administration, International Energy Outlook, DOE/EIA 0484 (2004), U.S. Department of Energy, Washington D.C., 2004.