Energy Research & Social Science 4 (2014) 42–52

Contents lists available at ScienceDirect

Energy Research & Social Science

journal homepage: www.elsevier.com/locate/erss

Review

Closing the gap between energy research and modelling, the social
sciences, and modern realities
Michael Jefferson ∗
ESCP Europe Business School & Advisory Board Member, RCEM, 527 Finchley Road, London NW3 7BG, UK

a r t i c l e i n f o a b s t r a c t

Article history: Disregard or ignorance of history, the overlooking of energy issues in standard economic growth theory,
Received 31 July 2014 and failure to recognise the role which declining marginal returns on energy exploitation has played in
Accepted 18 August 2014 the decline of earlier complex societies, are evident in academic and more general discourse. Excessive
Available online 22 September 2014
resort to equations, modelling, and standard economic theories, have instead clouded imagination and
focus on reality, while hindering focus on complicating factors as we consider future possibilities. This
Keywords:
paper provides an overview of these issues and their potential implications now and for the future.
Energy transitions
© 2014 Elsevier Ltd. All rights reserved.
Energy modelling
Economic methodologies

Contents

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2. Ignorance of history . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3. Disregard of history . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4. Selectivity in the choice of historical material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5. Perspectives on the Anthropocene Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6. Energy and economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7. Energy and the shortcomings of the first law of thermodynamics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8. Power densities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9. Energy return on energy invested (EROI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10. The challenge of the “peak oil” hypothesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11. New renewable energy prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12. A need for more fundamental change? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13. The need for re-thinking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
14. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

1. Introduction favour of asserting that labour and capital are the only two factors
of production. There is a widespread disregard for the role which
In human actions, academic discourse, and media coverage declining marginal returns on energy production have played in
ignorance of history, disregard of history, selectivity in the choice the decline and collapse of complex societies in the past. Con-
of historical material where used, and failures to check historical cepts fundamental to the usefulness of different forms of energy
facts where possible, have long been apparent. are regularly overlooked. Several core examples are fundamen-
This state of affairs is clearly evidenced in energy research and tally irrefutable, as the works of Ted Trainer, Charles Hall and Kent
policy, and the forces underlying the latter. Mainstream economic Klitgaard, and others have pointed out [1]. The challenges to the
growth theory has tended to overlook energy issues completely in future of the human race embodied in growing world population,
and limited resources, find many in a state of denial.
The exploitation of fossil fuels, and efforts to expand the avail-
∗ Tel.: +44 (0) 1234708285. ability of low carbon energy technologies, are seen by an increasing
E-mail addresses: mjefferson@escpeurope.eu, jeffers@dircon.co.uk number of observers to place the “great acceleration” of economic

http://dx.doi.org/10.1016/j.erss.2014.08.006
2214-6296/© 2014 Elsevier Ltd. All rights reserved.
 M. Jefferson / Energy Research & Social Science 4 (2014) 42–52
growth and material living standards under fundamental pressure.
Some consider that the resulting pressures put what has been called
the Anthropocene Age – variously claimed to have begun with
Francis Bacon, Thomas Newcomen, or simply “the 1800s” – under
terminal threat.
Lying behind the ideas and evidence presented in this paper is
the view that so complex, uncertain and incomplete a set of future
possibilities cannot usefully be handled by seeking to model them.
Modelling specific aspects – the estimated future supply and use
of conventional oil resources, for example – may help assess future
challenges and underpin aspects of the scenarios developed. But
too great a recourse to mathematics, equations and models, is liable
to hamper imagination at the outset of the effort, along the way,
and/or in assessing their results. The economist George Shackle (a
considerable mathematician himself) took the view that:
We cannot build up a general, omni-competent model by fit-
ting together our special models, because it happens in many
cases that one of these special models depends on assump-
tions incompatible with those required by another. Instead, we
have to strive for an insight which fuses informally and, if you
like, non-logically, a number of strands which, in their formal
aspects, mutually repel each other [2].
Such a position is anathema to many mainstream economists,
who have come to believe that only through mathematics, mod-
elling, and the application of over-simplified theories can their
professional status be exemplified. In an interview in 1983 Shackle
was even blunter: “Those economists who are going to give advice,
or who are going to be advisors either to governments or to busi-
ness, should have their training based in economic history, and
they only need as much theory as you find up to the second year
textbook.” [3]
There has been an expansion of the literature reminding us of
catastrophic events in the past – some related to general climatic
events, some to more regional catastrophes, and some to cata-
clysmic events such as asteroids or comets striking the Earth or
voluminous volcanism. The latter lie beyond what it is reasonable to
expect concerns about energy policy to cover. But many of the other
threats to sustainable development just touched upon need to be
considered in developing scenarios, and explaining vulnerabilities,
of the global energy system in the 21st Century and beyond. The
concern that some of us have is that detailed modelling of the myr-
iad of uncertainties and inter-connections which exist lie beyond
useful modelling – the sort that allows third parties to understand
what has occurred during the modelling exercise. Instead, a sim-
pler approach, keeping the mathematics in proportion to needs,
may be more comprehensible and more likely to sway energy pol-
icy in needed directions. At the end of the day, what are required
are precautionary policies, measures, investments and actions by
end-users which are fit for purpose. All too often they fail on that
basic premise.
With the arrival of “Energy Research & Social Science” we
at last see a journal encompassing history, behavioural change,
some fundamental technical issues surrounding energy resource
availability, energy transitions, real economics, potential risks and
externalities, and energy research methodology [4]. This paper
touches on all these, and how they may be better understood and
addressed.
2. Ignorance of history
Joseph Tainter’s “The Collapse of Complex Societies” [5] pro-
vided a rich treasury of examples of how the declining marginal
returns on energy production have resulted in the collapse of
43
earlier societies. Minoan civilisation is just one of 18 cultures which
he considered, and he concluded that complex societies depend on
the production of agricultural, energy and minerals production. He
found that energy and minerals production follows the same pro-
ductivity curve as subsistence agriculture, that fuel resources used
first by a rational human population are those that are most eco-
nomically exploited, and that when it becomes necessary to use less
economical resources then marginal returns automatically decline.
Some have followed the same trail but with more obvious (and to
my mind unfortunate) ideological purpose, and while calling for
“a radical critique of industrial society” from a Marxist perspective
express hostility to the “many ecologists such as H.T. Odum, (who)
make energy the central concept of their analysis of society and
describe social mechanisms in terms of energy flows.” [6, p. xiv] In
fact Howard Odum did make fundamental criticisms of the drive
for economic growth in developed and developing economies on
a wide range of practical grounds – 20 numbered points in one
contribution [7].
Others, and Thomas Piketty offers a good example in his “Capi-
tal in the Twenty-First Century”, get things half right (and therefore
seriously wrong overall). Pilketty states: “To put it bluntly, the dis-
cipline of economics has yet to get over its childish passion for
mathematics and for purely theoretical and often highly ideological
speculation, at the expense of historical research and collaboration
with other social sciences. Economists are all too often preoccupied
with petty mathematical problems of interest only to themselves.”
[8, p. 32] Here he reflects the predilection of standard economists
to resort first to equations. Yet elsewhere Pilketty falls into the
same ideological trap he warns against by resorting to a narrow
Marxist agenda. Some of the earlier societies examined by Tain-
ter, Yoffee, Cowgill and others, resorted to territorial expansion to
capture additional resources, but this was never permanently suc-
cessful and in modern societies where population has grown and
energy resources are stored, this is even less feasible (Tainter, pp.
214–215).
Climatic change has been cited as a major factor in explaining
the collapse of some early complex societies, as well as tectonic
changes. Droughts, reflecting climatic change, are favoured as one
of the causes of the collapse of the Mycenaean and Roman civi-
lizations. We do not, therefore, need to go back to early geological
periods for evidence of climatic fluctuations. And as Geoffrey Parker
has recently reminded us, in his: “Global Crisis: War, Climate
Change & Catastrophe in the Seventeenth Century” (2013), the Lit-
tle Ice Age also brought problems with it. There were crop failures,
deforestation, claims of over-population, and other familiar claims,
coming from North America across to China. Studies of the 13th
and 14th centuries also indicate that the beginnings of the Little
Ice Age impacted on agricultural yields and social stability, as did
the bubonic plague, in parts of Western Europe.
3. Disregard of history
The recent financial crisis provides another rich resource of evi-
dence for disregard of history. The vast outpouring of books and
papers which trace its causes to faulty decisions about loans for
housing and automobiles in the USA from the early 1970s, through
what Michael Lewis called “Liar’s Poker” – the 1989 book that
“revealed the truth about London and Wall Street”, to the finan-
cial follies of the UK’s Blair/Gordon “governance” – especially from
2001 tell their own story. Nouriel Roubini and Stephen Mihm have
referred to the “Great Instability” being a better description of
the coming era than the “Great Moderation” (“Crisis Economics:
A Crash Course in the Future of Finance”, 2010, p. 300), but the
issues discussed here go far wider than assets bubbles and busts.
44 M. Jefferson / Energy Research & Social Science 4 (2014) 42–52
Why, for instance, has so much been written about what is now
termed “the Great Recession” after the event, and why did so few
people see it coming?
Two book titles tell the story more succinctly than a thousand
words: “This Time is Different: Eight Centuries of Financial Folly”;
and “Debt: the first 5,000 years” [9].
This is not a unique situation, of course. Forty years ago Friedrich
von Hayek delivered his Nobel Memorial Lecture: “The Pretence
of Knowledge”, where he began by saying: “the economists are at
this moment called upon to say how to extricate the free world
from the serious threat of accelerating inflation which, it must be
admitted, has been brought about by policies which the majority
of economists recommended and even urged governments to pur-
sue.” It was about that time that this author was invited to write a
short book on the history of inflation over the previous 2000 years.
It was also about the time that leading specialists on cartels and
trusts, led by Maurice Adelman, were telling us that OPEC would
quickly collapse because that is what had happened to US trusts.
In fact there was plenty of historical evidence – notably from the
UK and Germany – that cartels could last for scores and (in some
cases, on and off) even hundreds of years.
Whenever one reads statements such as new renewable energy
will provide 50% of the World’s energy needs by 2050, or 100%
by 2100, there should be a natural response of looking back at
the past. Solar photovoltaics, for example, on which Alexandre-
Edward Becquerel was working as long ago as 1839. Or fuel cells,
on which William Grove and Christian Friedman Schonbein were
writing in 1838 – almost 60 years before Henri Becquerel happened
upon spontaneous radioactivity. Then there is Concentrating Solar
Power, and Frank Shuman’s CSP plant at Meadi (just outside Cairo)
which started up in 1912 – part of the rich story of solar energy
told by Ken Butti and John Perlin which so often seems to be over-
looked, and which so far seems too marked by solar PV cells rather
randomly placed on roofs in northerly latitudes in response to sub-
sidies offered rather than to solar irradiation levels, or by pessimism
about the Desertec concept in the wake of the Arab ‘Spring’ [10]. Or,
as Lewis Dartnell has recently reminded us, “electric vehicles were
once common”; “in Chicago, they even dominated the automobile
market”; and in 1912 – that year again – 30,000 glided silently along
the streets of the USA, another 4000 were gliding in Europe, and by
1918 20% of Berlin’s taxis were electric [11]. Indeed, the record of
the 20th Century suggested that except in times of war rapid change
seemed unlikely – the advances in materials and communications
in the run-up to, during, and after the Second World War seem-
ing to point firmly to this. Since then the momentum of change in
such fields as communications and energy have appeared remark-
able, but for energy availability and use a number of fundamental
challenges remain apparent, such as: the declining availability of
conventional oil resources; the additional costs and environmen-
tal impacts of non-conventional oil; the continuing roughly 80%
global dependency on fossil fuels; the 90% global dependency on
oil products for transportation; the uphill struggle in resorting to
“new” renewables, which rising from a small base still only make
a small contribution and continue to raise concerns about their
intermittency in the cases of wind and solar energy.
4. Selectivity in the choice of historical material
Many years ago, looking at the record of climatic change,
a subject that has interested me for nearly 60 years, I came
upon the claim that deforestation had noticeable local climate
effects. Theophrastus, who lived in Athens somewhere around
370–290 B.C. took that view, and having written a nine-volume
work on plants and another six-volume one, I was inclined to
take him seriously [12]. Then I read Oliver Rackham and Jen-
nifer Moody’s: “The making of the Cretan landscape”. There, while
recognising the severe impacts of earthquakes and the eruption of
Santorini during the Bronze Age, they concluded that, contrary to
“the Ruined Landscape” or “Lost Eden” theory, the Cretan landscape
has changed little since the Bronze Age. Since then fluctuations
have occurred within “fairly narrow limits”, and Cretan vegeta-
tion has proved resilient although climatic changes and population
pressures have shifted the balance one way and then another [13].
Subsequently Oliver Rackham returned to this subject when,
with Dick Grove, he concluded that: “in Crete the intensity of land-
use in the late Bronze Age could hardly have been less than it is
now.” The situation appears to have differed from that in Corsica,
Sardinia, and southern Greece [14]. The lessons drawn by these
authors were: avoid over-generalising; be wary of written evidence
if it covers periods when no-one was writing; verify the evidence
and do not rely on other people’s interpretation of it or their inter-
pretation of written texts; and be open about what you do not
know so as to avoid what Rackham and Moody termed “pseudo-
history”. One just needs to consider some recent books covering
early Mediterranean history to be aware of the complexities –
such as Eric Cline’s: “1177 BC: The Year Civilization Collapsed” –
which covers in great detail earlier centuries; also David Abulafia’s:
“The Great Sea: A Human History of the Mediterranean”; and Lin-
coln Paine’s: “The Sea and Civilization”. Both Abulafia, and Richard
Berthold in greater detail for Rhodes during the Hellenistic period,
cover the range of issues – including how neighbouring states
would sometimes pull together to help allies enduring stresses –
such as those which followed major volcanic eruption [15]. Thus the
story is not just one of earthquakes and volcanic eruptions causing
societal collapse, but of invasion and revolt, alliances, drought, and
the cutting of ‘international’ trade routes. Pressures of human pop-
ulation, food and water availability are apparent, as Joseph Tainter’s
work found. This is just for the Mediterranean area, although that
then covered more than one civilization. How much more com-
plex to work through the myriad of critical features of the whole
World, taking account of potentially relevant factors from popula-
tion expansion to climatic change concerns, in considering global
energy challenges of the 21st Century?
5. Perspectives on the Anthropocene Age
The challenges of rising human population, pressures on food
and water availability, and the declining marginal returns on
energy have caused growing concern about whether demands for
increased material living standards and the continuation of mod-
ern consumption aspirations can be met as the 21st Century passes.
Instead of referring to the Holocene Period, which in geological
terms began around 10,000 years ago, it is suggested that the
present phase of the Earth’s evolution is termed the Anthropocene
on account of the enormity of the impacts of the human race upon it.
The suggestion is alternatively based upon the notion that humans
now dominate biological, chemical and geological processes on
Earth, with the dubious implication that the human race is in con-
trol of its destiny in a favourable sense [16].
Setting aside the arguments about who started using the term
“Anthropocene” first (the biologist Eugene F. Stoermer is one
claimant, while Andrew Revkon referred to the “Anthrocene” Age
back in 1992), and whether humans actually do and will continue
to dominate the Earth’s key processes – which is clearly open to
doubt, it is clear that the increasing exploitation and use of fos-
sil fuels, rising population, and new technologies have caused a
“Great Acceleration”. Some date this back as far as Francis Bacon
in the 17th Century; others to Thomas Newcomen and some other
 M. Jefferson / Energy Research & Social Science 4 (2014) 42–52
technology innovators in the early 18th Century; and others more
loosely to “since the 1800s” [17].
The implications of this “Great Acceleration” have been worked
over by many people in recent years. One of the most compre-
hensive is “Global Change and the Earth System: A Planet Under
Pressure”, by Will Steffen and others, which also contained a chap-
ter headed: “The Anthropocene Era: How Humans are Changing the
Earth System”, first published in 2004 [18]. There has been a revival
of the idea of “voluntary simplicity” – a term first introduced in the
1930s, of a rural existence resonant of space and relative silence,
among those with the opportunity and means of achieving these.
Fewer are inclined to ridicule “The Limits to Growth” as they were
in the early years after its first publication in 1972, or its 30-year
update published in 2005. Ugo Bardi has recently written “The Lim-
its to Growth Revisited”, where he ends by suggesting that “mind
sized models” may help understanding and overcome biases, but it
is essential to avoid the trap of over-exploitation – a point to which
I will return in concluding [19].
The discussion of the “Great Acceleration” has followed many
different paths. Some have seen a need to turn away from “a market
utopia” towards “the reality of society” (as Karl Polanyi put it in
“The Great Transformation”, 1944), but for most of us who have
observed fascism and socialism at work neither has great appeal
as both – despite the pretensions of the latter – fail to safeguard
freedom. Instead, the rest of this paper will focus more closely on
energy – its supply and uses, as what we seek from energy are the
numerous services it can provide.
6. Energy and economics
Since there are some concluding comments on modelling
these energy challenges, and as many ‘standard’ or ‘neo-classical’
economists enjoy excessive dabbling in mathematics, dubious the-
orising, and modelling, a brief survey of the relevance of standard
economic growth theory to energy issues seems appropriate here.
Such a survey inevitably highlights the failures of much economics
and many economists.
In a Special Issue of “Energy Policy” on “Oil and Gas Perspectives
in the 21st Century” Robert Ayres and Vlasios Voudouris authored
the first paper – on the economic growth enigma [20]. Bob Ayres
focussed on three matters of great importance: the failure of neo-
classical economic growth theory to take due account of energy
and other natural resources; the failure to take into account the
shortcomings of the first law of thermodynamics; and the failure
to take due account of the implications of the concept of “useful
energy”.
Robert Solow’s famous paper on the theory of economic growth
appeared almost 50 years ago [21]. For those with little interest
in, and less understanding of, its mathematics his final two para-
graphs probably struck a chord. He admitted his analysis was highly
abstract, and that he had “been deliberately as neo-classical as you
can get” [21, p. 93]. He concluded by stating that no credible theory
of investment can be built on the assumption of perfect foresight
and arbitrage over time. At about the same time there were some
whose belief in any practical relevance of general equilibrium the-
ory or perfect competition justifiably went out of the window as
well.
Many years later, Solow’s: “Growth Theory: An Exposition” (2nd
ed., 2000) claimed there were no really new or interesting ideas
appearing after 1970 until: “What later came to be seen as the
post-1973 worldwide productivity slowdown, an extraordinarily
important event (which) was not recognised – could not be recog-
nised – right away.” [22] This caused amazement in some quarters
because there had been discussions about a likely future “oil crisis”
45
going on since 1970, which was bound to have powerful repercus-
sions across a broad front – and not just on productivity. By May,
1973, “The Rapids” described how Shell’s Group Planning scenario
team considered things were likely to evolve.
Solow may have partly rescued his reputation by admitting in
the Preface to that book that his problem was: “that a model of
genuine endogenous growth seems to be achievable only if every-
thing in the model turns out just so. There is a dangerous lack of
robustness in the assumptions that, so far, underlie every version
of the theory.” [22, p. viii]
But here the greatest weakness of Solow’s growth theory was
that it assumed only two factors of production – labour and capi-
tal. Because energy and other natural resources contributed little
to national accounts in monetary terms and therefore (it was
assumed) very little to the economy, they could be ignored. In
fact, as Bob Ayres and Vlasios Voudouris concluded, growth since
the Industrial Revolution has largely been driven by the increased
stock of capital and the supply of useful energy due to the discov-
ery and exploitation of relatively inexpensive fossil fuels. However,
Ayres also believes there are good prospects for “a clean-energy
future” and a major improvement in the efficiency of energy provi-
sion and use, a view which may be challenged as the 21st Century
evolves [23]. The challenge is likely to arise on two grounds: apart
from solar energy (with ultra-high voltage direct current transmis-
sion) there is little evidence that new renewable forms of energy
will meet future needs – especially not modern biomass/biofuels –
without chronic adverse side-effects; and the “rebound effect” or
“Jevons’ paradox” is likely to undermine efforts to realise the great
potential for efficiency improvements.
It has been suggested that Solow’s neoclassical growth theory
has given way to more practical theories – “evolutionary the-
ory” and “endogenous growth theory” – but others shed doubt
on this. Bob Ayres in recent years has sought to bring together an
endogenous growth theory which is compatible with the laws of
thermodynamics [24]. Others have usefully emphasised the impor-
tance of “biophysical economics”, such as Charles Hall and Howard
Odum [1,5].
7. Energy and the shortcomings of the first law of
thermodynamics
Bob Ayres has also for many years pointed to the shortcomings
of the first law of thermodynamics – the idea that energy can only
be converted, not wasted or destroyed. In the process of transfor-
mation, however, the second law of thermodynamics indicates that
the initial quality is not conserved. Few economists have addressed
the resulting issues. Bob, as a physicist as well as an economist, has
done so.
The result of the exposure of the weakness of the first law, and
implications of the second law, is that there arises the need to
provide an effective measure of energy use – the minimum energy
required under ideal conditions to perform the energy tasks desired
– and one which can take account of the whole energy system and
its streams. The term “exergy” arose to describe this, and it was
apparent that a very high proportion of energy inputs are wasted
against the theoretical ideal as a result of numerous practical limits.
Closing the gap between the theoretical optimum and the perfor-
mance in practice is the measure of energy efficiency improvement,
but the extent to which the gap will be closed in the future will
remain uncertain.
Probably the best known recent effort to set out global energy
flows from primary resource input to final uses is by Jonathan
Cullen and Julian Allwood, first published in “Energy Policy” (2010)
and reproduced in IIASA’s “Global Energy Assessment” (2012). They
46 M. Jefferson / Energy Research & Social Science 4 (2014) 42–52
concluded that there is an over 70% loss in transportation; 62%
loss in industry; and a 60% loss in the residential and commer-
cial sector [25]. In 2005 it was estimated that the overall average
efficiency of converting final energy forms into useful energy was
about 34%. (IIASA: [25], p.117). These figures are inevitably “best
estimates”. They also fall far short of the theoretical optimum under
the concept of exergy, or “useful energy”.
The only other economist who wrote at length on these matters
was Nicholas Georgescu-Roegen. In Part I of “Analytic Economics:
Issues and Problems” (1966) he drew attention to the fact that he
believed that “economists have failed to pay attention to this law,
the most economic of physical laws.” [26] He criticised the gen-
eral practice among economists of representing the material side
of the economic process by a closed system (his italics), that is a
mathematical model in which the continuous inflow of low entropy
(low availability of a system’s thermal energy for conversion into
mechanical work – relating to the second law of thermodynamics)
from the environment is completely ignored. His central concern
was that, as has been recognised from Sadi Carnot in 1824 onwards,
“all known forms of energy move in a unique direction, from a
higher to a lower level”, and there is a continuous “qualitative
degradation of energy” [26, p. 68]. He could recall only one previous
reference to energy in economics (T.C. Koopmans contribution to a
book published in 1951 – [26, p. 96]. Georgescu-Roegen then pro-
vided a critique of “standard economics” and modelling. He wrote:
“we must deplore the exaggerated fondness for mathematics which
causes many to use that tool even when a simple diagram would
suffice.” [26, p. 115] He later explained that an economic model is
merely a simile, a guide only for the initiated who have acquired the
necessary insight “through some laborious training”, and cannot
dispense with “delicacy and sensitivity of touch” – art, particularly
the art of simple, good writing. He also wrote that “the widespread
view that the economist’s role is to analyse alternative policies,
whereas their adoption is the art of statesmanship, is no excuse.
An artless analysis cannot subserve an art.” [26, p. 117]
Georgescu-Roegen’s other conclusion worth highlighting here
was his discussion of the “conflict” between standard economics
and all other schools of economic thought. Standard economists,
he asserted, have an inability to understand “obscurantist” ideas,
while their critics reject an idea which reduces the economic pro-
cess to a “mechanical analogue”. He considered that: “The much
better faring of standard economics notwithstanding, it is the
position of the historical school that is fundamentally the cor-
rect one. The point seems to be winning the consent, however
tacit, of an increasing number of economists.” [26, pp. 124,125]
This first sentence is self-evidently correct; the second remains an
aspiration despite the impact of Herman Daly’s call for “replacing
the economic norm of quantitative expansion (growth) with that
of qualitative improvement (development) as the path of future
progress.” [27, p. 1] Supportive of the latter view, Charles Hall
and Kent Klitgaard have commented that “economics as a disci-
pline rumbles onward year after year with little real change in the
way that our young people are indoctrinated. This point of view
– that much of what is taught in economics is quite divorced from
biophysical reality – is apparent to most of our students.” [1, p. 303]
In “The Entropy Law and the Economic Process”, 1971,
Georgescu-Roegen returned to many of his earlier themes, with
a clear progression from theoretical science to “the economic sci-
ence” [28]. He concluded that it would be absurd to rely upon
ordinary logic alone whenever a mathematical tool can be used,
but he castigated economists who claimed that it is irrelevant to
point out the inaccuracy of economic models. He compared and
contrasted models in physics, which must be accurate “in rela-
tion to the sharpest measuring instrument existing at the time.
If not, the model is discarded.” In the social sciences there is no
such objective standard of accuracy. Thus there is no acid test for
the validity of an economic model. No economic model proper can
serve as a guide for automatic action to either the uninitiated or
even “a consummate economist”. Before repeating what he had
written in his earlier book, Georgescu-Roegen pointed out: “Every-
one is familiar with the dissatisfaction the average board member
voices after each conference where some economist has presented
his ‘silly theory’.” [28, p. 333]
8. Power densities
There are two further, basic, concepts which those considering
global energy challenges in the 21st Century need to consider. The
first is power densities, a subject covered fully and well over the
years by Vaclav Smil. Vaclav has written many relevant books – on
energy in history, the links of energy to the biosphere, uncertainties
concerning the future, and on oil. In his most recent four books, and
in a “primer”, he has written on power densities [29].
The importance of the power density concept (W/m2 of horizon-
tal area of land and water surface) is that it measures energy flux.
Those for the fossil fuels are much higher than those for renew-
able energy. This has various serious implications for the ultimate
technical potential of energy from “new” renewables; for overall
electricity supply; for the reliability of electricity supply (for exam-
ple, the issue of intermittency and its implications); for land use
and water availability; for transmission; and for biodiversity (for
example, the impacts of modern biomass and biofuels), wind tur-
bines (especially where sited in locations where mean wind speeds
are low); large hydro schemes; and estuarine barrages.
Smil has found that the power density of natural gas is
1000–2000; of coal 100–1000; of oil 150–1000; of thermal power
plants 120–800; of geothermal 10–20; of tidal power 10–12; of
solar PV 4–50; of solar “parks” 4–11; of solar thermal (CSP) 6–10; of
hydro 0.5–15; of wind 0.5–1.5; and of biomass 0.5–0.6. Obviously,
for solar, wind and biomass location is extremely important (for
example, levels of direct and indirect solar irradiation; mean wind
speeds; and agricultural fertility). Although these figures are broad
estimates, they are indicative both of the general energy challenges
that confront the World in the 21st Century, and the particular
hurdles confronting “new” renewable energy.
9. Energy return on energy invested (EROI)
Another important concept is that of energy return on energy
invested – or, more broadly, energy returned to society over energy
required for obtaining that energy. This concept originated as net
energy analysis in the works and teaching of Howard Odum [5,30].
His student Charles Hall, from the late 1970s, began to develop
the EROI concept and its wider implications, including its high-
lighting of the weaknesses of standard economics. One of the key
books is Charles Hall, Cutler Cleveland and Robert Kaufmann’s:
“Energy and Resource Quality: The Ecology of the Economic Pro-
cess” [31]. Among the purposes the authors had in writing the
book stemmed: “in large part from our considerable dissatisfac-
tion with much of modern economic theory, and with the policies
that are based on that body of theory. In our opinion, there has
been little or no sophisticated treatment of the physical attributes
of the resource base in much of modern economic theory or in the
standard economics textbooks even though those resources are the
basis for economic productivity and virtually all wealth.” [31, p. xii]
The authors remind us, having adversely criticised Robert Solow’s
growth theory, that another Nobel laureate in economics – Wassily
Leontief – lamented “the fact that modern economics has empha-
sised increasingly highly theoretical analyses that often have little
 M. Jefferson / Energy Research & Social Science 4 (2014) 42–52
bearing on what is going on in the real world.” [31, p. xi] Leontieff,
it may be recalled, wrote for quite a wide audience in such publi-
cations as “Science” and “Scientific American”. Although a highly
quantitative economist, and one who had attempted to formulate
a general equilibrium theory capable of empirical implementation,
Leontieff railed against moving from more or less plausible assump-
tions to elegantly demonstrated, but irrelevant, conclusions.
Charles Hall had provided some estimates of EROI from the liter-
ature in Hall and Klitgaard (1, p. 313), and contributed with Jessica
Lambert and Steven Balogh on this topic to the January, 2014, Spe-
cial Issue published in “Energy Policy”. In Table 1 of the Special
Issue (supra p. 145), they provided nearly 40 published EROI val-
ues. It was clear from these that the EROIs of the fossil fuels had
been declining since 1970, but remain well above those for “new”
renewables, especially biomass, solar and wind. Like the evidence
on power densities, the precise numbers are elusive. Just to take a
simple example: wind turbines. In the January, 2014, “Energy Pol-
icy” paper wind turbines are given a mean EROI of 18:1 (quoting
Kubiszewski and Cleveland, 2007), the same figure and source as
appeared in Hall and Klitgaard. But in England’s Cumbria there are
two wind energy developments 2.3 km apart – Lowca and Siddick.
At Lowca the rolling annual average capacity factor achieved since
the development started up in 2002 is 29.6%; at Siddick, which
started up at the same time, the rolling average is 19.6%. Or take
the Companion Guide to the UK’s renewable energy planning guid-
ance (PPS 22) that operated for several years from 2004 and still
has some influence. There it was claimed that the capacity factors
for wind energy developments in the UK ranged from 20% to 50%,
and averaged 30%, per annum. Yet in 2010 nearly 60% of England’s
onshore wind energy developments failed even to reach a capacity
factor of 20%. The general picture of generally low modern renew-
able energy EROIs is clear – and disturbing for those considering
the energy challenges of the 21st Century.
The January, 2014, Special Issue also provided the opportunity
to draw on the EROI concept to offer enlightenment at the soci-
etal level, and in particular a new composite energy index (the
Lambert Energy Index), a subject about which a book is shortly to
appear (Lambert, J. and G.: “Life, Liberty, and the Pursuit of Energy:
Understanding the Psychology of Depleting Oil Resources”).
10. The challenge of the “peak oil” hypothesis
Those of us who were directly involved in the oil industry in
the 1970s (and were anticipating an oil “crisis” from at least 1971)
would converse frequently about the “oil mountain” – or, as is
now standard terminology, the Hubbert “bell curve”, not that Mar-
ion King Hubbert ever claimed the pattern of oil extraction and
depletion would be a neat bell curve. For anyone who does not
believe this is a very old story, they are invited to read a paper
by Hans DuMoulin and John Eyre: “Energy Scenarios: A Learning
Process”, Energy Economics, April, 1979, pp. 76–86. What is now
debated under the heading “peak oil” has aroused much contro-
versy in recent years. Contributors to the January, 2014, Special
Issue included Charles Hall and Kjell Aleklett, who have provided
very useful input over the years. John Hallock, Charles Hall, Wu
Wei and this author have had papers published in this field [32].
Ian Chapman covered this topic in the Special Issue previously men-
tioned, referencing over 100 books and papers – merely a selection
of what is available.
There has been a great deal of controversy over the “peak oil”
issue, for reasons that remain difficult to comprehend since the
pattern is very clear for most producing countries [32]. The issue
concerns “proved” reserves of conventional oil – not any other sort
of oil – and whether these are sufficiently substantial to ensure
47
availability for many years to come, and adequate to avoid serious
upward price movements.
The standard sources (Oil & Gas Journal, BP Statistical Review,
IEA, US-EIA and CIA, and OPEC) all nowadays quote roughly the
same figure – 1688 billion barrels at end-2013 (BP Statistical
Review of World Energy, 2014). But this figure includes Venezuelan
heavy oil (which explains an increase of some 275 billion barrels
in the overall figure), which is not conventional oil. The total also
includes Canadian tar sands, which explain a further increase of
some 166 billion barrels, and again is not conventional oil. Finally,
in response to OPEC production quota figures introduced by OPEC
in the face of declining oil prices in the early 1980s, most OPEC
Member States changed the basis of their calculation of proved
conventional oil reserves from a 90% probability (P90 or P1) to
a 50% probability (P50 or P2). Previously “proved” conventional
oil reserves had meant a 90% probability of existence and extrac-
tion, whereas 50% reflected “proved plus probable”. As a result
five Middle East producers increased their claimed proved reserves
by nearly 450 billion barrels, of which Iraq accounted for 120 bil-
lion barrels; Iran for 99 billion barrels; Saudi Arabia for 98 billion
barrels; the UAE for 67 billion barrels; Kuwait for 33 billion bar-
rels; and Libya for 19 billion barrels. Thus the standard estimate of
proved conventional oil has arguably been expanded by some 880
billion barrels, whereas under the proper definition the total global
volume is slightly under half of what is now claimed.
Of course, consideration needs to be given to how much con-
ventional oil in situ can be extracted by more advanced technology,
and the existence of non-conventional oil and the potential contrib-
utions of conventional and non-conventional natural gas. But there
has been little evidence of significant new finds of conventional oil
in the OPEC Member States for many years (although there could
be significant potential in Iraq/Kurdistan), and resources elsewhere
(mostly offshore) are not considered to revolutionise availability.
Parallel with these developments within the past decade have been
the frequent references to fracking gas and oil, accompanied by
large swings in expectations.
This situation is of great importance both in terms of percep-
tions and reality. First, previous periods of rapid oil price rises
(even where they have fallen back again) have been a major cause
of economic recession over the past 40 years in numerous indus-
trial nations as James Hamilton has shown [33]. Secondly, although
there have been several forces operating on oil prices (the low price
elasticity of demand, strong growth of demand in many industrial-
ising countries led by China, demand growth due partly to ongoing
subsidies in the Middle East and elsewhere, temporary ‘boom’ con-
ditions in some leading industrial nations, and failure of global
production to expand in line with demand) scarcity rent is likely
to play an increasingly important role in oil prices. Other concerns
have been expressed, such as structural issues which could impact
on both oil supply and demand. For example, there is great uncer-
tainty over whether technical developments in the transportation
sector (oil products continue to supply some 90% of the world’s
transportation requirements) will result in global demand for oil
in the transportation sector declining significantly. Much of that
uncertainty arises from questions about the sources of electricity
required for electric or hybrid vehicles (coal, natural gas?), and the
loss of interest in fuel-celled vehicles apparent over the past decade
or so – which may be about to reverse. Conventional oil price rises
are therefore increasingly likely to snuff out incipient economic
expansion or halt an economic boom in oil-importing countries.
This is what has been termed “the global curse of black gold” [33].
Although non-conventional oil resources appear huge, it has
been estimated that only about 300 billion barrels (25% of the
estimated resource base) are recoverable; a similar quantity of tar
sands are estimated to be recoverable (about 12.5% of the estimated
48 M. Jefferson / Energy Research & Social Science 4 (2014) 42–52
resource base), and about 600 billion barrels of oil shale (about 15%
of the estimated resource base). The recovery of the various non-
conventional oil resources will involve considerable quantities of
energy, water, and chemical inputs, driving their EROI down even
further and their costs even higher.
Each of these resources is unlikely to supply today’s global
demand for more than 20 years, and their quality is inferior to
conventional sources, generally more costly to exploit, and more
likely to be associated with adverse environmental impacts. As
Colin Campbell and Jean Laherrere pointed out, when ending their
famous article in the March, 1998, issue of “Scientific American”
(“The End of Cheap Oil”): “The world is not running out of oil – at
least not yet. What our society does face, and soon, is the end of
abundant and cheap oil on which all industrial nations depend.”
That is a strong reminder of what Joseph Tainter and others previ-
ously referred to in this paper have warned about.
Recoverable resources of conventional and non-conventional
natural gas are also huge, but again finite (with concerns about
the availability post-2035 rising despite recent shale gas develop-
ments – in the USA large initial output in some areas appears to have
faltered), and their cost of recovery is likely to increase consider-
ably. The history of exploiting the most readily available, and least
costly, energy resources confirmed once more. The exploitation of
coal, hampered in most countries by concerns about carbon emis-
sions, is also constrained by the limits on the stable sequestration
of the resulting carbon.
11. New renewable energy prospects
Concern for the prospects for the fossil fuels, partly due to avail-
ability (including fears of supply disruption) and partly due to the
associated carbon emissions, has promoted greater interest in and
support for new renewable energy sources. Much of this interest
has been rather uncritical, and much of the support encouraged by
the subsidies that have been made available.
The promotion of modern biomass and biofuels has had adverse
impacts on food and water availability, and on ecosystems and bio-
diversity, as the IPCC Working Group II’s Fifth Assessment makes
clear. This has been widely remarked upon, not least by those
considering the causes of food and food price riots in 47 countries in
2008. What is therefore most surprising is that, although the IPCC’s
Working Group II Fifth Assessment Report made clear in its Techni-
cal Summary that these negative effects had already occurred and
were likely to intensify unless reversed (TS pps. 33, 35, 43 and 56,
for example), and reflected views expressed in supporting chapters
(notably Chapter 9, pp. 3, 17, 31, and 33; but also and especially
Chapter 19, pp. 17, 21), not a word of these concerns appeared in
the Summary for Policymakers. This seems very strange, and was
presumably a deliberate decision made on political grounds [34].
By contrast the Summary for Policymakers of Working Group
III’s AR5 Report (approved on April 12th, 2014) mentions other
“new” renewable forms of energy on page 23, but not modern
biomass or biofuels, in a positive manner. On page 28, however,
there are warnings of issues to be considered with bioenergy,
namely: emissions from land, food security, water resources, biodi-
versity considerations, and livelihoods. There is a need for heavily
reliance on efficient biomass-to-bioenergy systems and sustain-
able land-use management and governance – criteria which have
already been found wanting.
Quite apart from the knock-on effects of the massive switch of
corn and soya bean production to biofuels in the USA, which has
had many negative global impacts, there have been many strange
more local decisions. Among these is the decision-making of UK
Planning Inspectors who have, for example, given permission for
developers to build electricity-generating plants for a “preferred
feedstock” of palm oil – notwithstanding evidence (from, inter alia,
the World Resources Institute), that on average 33 tonnes of car-
bon dioxide are emitted for every tonne of palm oil produced in
Indonesia – so before transhipment to point of combustion – and
also with severely adverse effects on forestation, wildlife habitats,
and species’ survival [35].
Concerns about wind and solar energy are widely based. Their
use of “rare earth” materials such as neodymium, dysprosium,
terbium, europium, and yttrium – all relatively scarce and energy-
intensive, and also used in electric vehicles, car batteries, and
energy-efficient lamps. Other “critical”, though not “rare earth”,
materials used for solar PV are indium and tellium, which are
exceptionally scarce. In some cases their use involves widespread
ground and water pollution and, for instance with the melting of
silicon rock for solar panels, heating up to 3000 degrees Fahrenheit
– much of it by burning coal.
China currently accounts for some 97% of the global production
of “rare earth” metals, but recently began cutting back its exports,
claiming this was required to protect its environment (in some
places the local land and water pollution is extremely severe). As a
result the prices of “rare earth” metals: “have skyrocketed, and the
clean energy industry is in turmoil.” Those economies where the
demand for these “rare earth” and “critical” materials is greatest –
the USA, EU and Japan – have begun to take the first steps towards
reducing their dependency on Chinese supplies [36].
Wind energy is having a major impact on bird mortality, as birds
collide with turbines; and can affect human health as a result of
amplitude modulation from wind turbine blades affecting sleep-
ing patterns for some local residents, as well as worries about
reductions in nearby residential property values. Dam failures, with
resultant human fatalities, can result from hydropower. Estuarine
barrages can destroy the local ecology, and adversely affect migra-
tory and over-wintering birds in particular. Residential property
values can be reduced, and for many rural dwellers visual intru-
sion, especially in attractive landscapes and close to historic assets,
are serious issues. Solar parks can also result in visual intrusion
as well as reducing agricultural land otherwise available for food
production.
For many urban dwellers (who now represent over 50% of the
world’s population, and this percentage will grow steadily), local
rural issues no longer influence them greatly – a “Great Discon-
nect” has occurred. Vocal rural minorities have sprung up, scarcely
understood by either urban dwellers or developers, but whose con-
cerns are not merely opposition to anything in their backyard (the
contentious NIMBY labelling). Here again there are dangers in over-
generalisation. There appear to be significant differences between
countries when it comes to rural countryside protection concerns.
In England they appear to be stronger than in The Netherlands or
Germany [37]. More generally, it may be the case that our knowl-
edge of, and level of interest in, the economics of ecosystems and
biodiversity remain at a rather primitive level and need to be raised
[38].
Perhaps an over-riding concern is that as human activities
appear to have contributed to a modest increase in near-surface
global warming during much of the 20th Century of around 0.8 ◦ C
(and it is highly likely that the increase in atmospheric concen-
tration of certain gases is the result of human activities) then
sound adaptation and mitigation policies, measures, and schemes
are required. This is not to form a judgement about future near-
surface temperature changes given the imperfections of climate
models; the possible impact of solar variations; the carbon emis-
sions’ absorptive capacity of the oceans; and the roles of water
vapour and clouds. Some consider that the climate models, their
results, and the manner in which they are presented, tend to
 M. Jefferson / Energy Research & Social Science 4 (2014) 42–52
exaggerate the warming outlook [39]. What seems rather obvious,
even to some of those with many years of involvement with the
IPCC, is that neither the “climate sceptics” with what may appear
to be their root-and-branch opposition to mitigation, nor those
who proclaim the coming consequences of anthropogenic climatic
change with almost religious conviction, are necessarily correct.
These are very complex matters where we simply do not know
enough to comprehend what the future may hold. Thus sound pre-
cautionary measures seem the rational way forward.
That does not mean massive modern biomass or biofuel devel-
opments which wreck ecosystems and biodiversity, or food and
water availability. It does not mean placing wind turbines where
mean wind speeds are low and the environs are sensitive to humans
and wildlife. It does not mean placing solar “parks” or PV panels
where neither direct nor indirect solar irradiation is dense.
What may be required is a Promethean Leap to another level
of energy provision (such as, it is claimed in Ancient Greek legend,
occurred when Prometheus stole the gift of fire from Olympus for
the benefit of humanity), and thus of its nature unknowable, to
a low carbon energy form that could be supplied in the required
quantities. The IPCC Working Group III AR5 Report suggests that
nuclear power could make an increasing contribution, although it
recognises that its share in global electricity production has been
declining since 1993 and a number of well-known barriers con-
tinue to exist (heightened by what many consider the unreasonable
panic and foolish responses of some governments following the
Fukushima incident). Whether a move from uranium to thorium,
as a precursor to the long and hitherto elusive search for nuclear
fusion, will provide the way forward is one speculative possibility,
though with prospects recently damaged by the finding that 96 kg
of thorium appear to have disappeared in the USA [40].
12. A need for more fundamental change?
Ted Trainer (who contributed the final paper in the January,
2014, Special Issue of “Energy Policy” under the heading “Some
Inconvenient Theses”) has argued that renewable energy cannot
sustain a consumer society built upon the ever greater acquisition
of consumer goods and services that “modern” societies claim to
require. The costs are simply too great [41]. Instead, he argues that
there is no alternative (TINA) than to shift to The Simpler Way
(TSW) of living [42]. Ted believes that the practical strategy to
achieve this is local co-operative development – ideally through
gardens and workshops, especially in towns and cities [42, p. 302
ff.]. Others, considering that there are limits to the problem-solving
capacity of human beings, sceptical of the belief in technological
optimism for finding a route out of the challenges increasingly
facing human society in the 21st Century, accept Garrett Hardin’s
work on “the tragedy of the Commons” and have a profoundly pes-
simistic outlook [43]. For example, although Smith and Positano
recognise there may be benefits to be derived from the Transitional
Towns Movement, they believe all such movements require the
existence of socially co-operative communities, and they consider
these do not exist because of the dictates of consumer society and
the increasing diversity of urban populations [43, p. 98]. They con-
clude by stating that “the iceberg of ecological scarcity lies ahead
and the crash of our world . . . now is inevitable. A new, savage Dark
Age is coming.” [43, p. 134]
Given that the majority of the world’s population is already
urbanised, and this trend is expected to continue to the point that
around 80% of the world’s population is urbanised before 2100, it is
difficult to believe that large-scale co-operative endeavours to meet
basic needs will spring up on a large scale in urban communities.
For many rural dwellers it seems obvious that there is a Growing
49
Disconnect between the city and the countryside, and increasing
impositions by urban communities on rural ones in the areas of
food, water and energy matters. This brings us back to “The Limits
of Growth” and the earlier history of declining marginal returns on
energy investment.
It is not even that one can place faith in international insti-
tutions to make significant contributions in this field. The eight
Millennium Goals produced by the UN, which ran to 32 para-
graphs over nine pages, failed to mention the word energy once.
The Rio Declaration itself subsumed energy matters under the
heading protection of the atmosphere. Rio + 20 did little bet-
ter, and although there have been spasmodic efforts to promote
access to modern energy services little has been achieved via the
UN system. The diversity of national governments’ interests and
policies offer no more encouragement, with even those which
claim to be addressing the key issues – energy, food, water avail-
ability – engaged in activities having unintended consequences
[44].
13. The need for re-thinking
So in conclusion we return to the question posed in the title of
this paper: how much of this can be expressed through mathemat-
ics, through the equations and theories expounded so frequently
by standard economists, and by modelling so many variables
requiring imagination and careful thought? What has been written
here is quite simple and, hopefully, expressed in simple English.
How much of it can be successfully modelled? How many vari-
ables are there? Can the attempt to model the totality of future
global energy prospects be done in such a way as to avoid hin-
dering imaginative reflection on future possibilities? The values
of models would appear to be two-fold: to examine a limited
field of mainly physical properties – such as the availability of a
seemingly fixed volume of energy resources against alternative
future demand possibilities; and to test the logic of particular
aspects of forward projections, including those covered in alter-
native scenarios. Both properties have potential benefits. But the
second, where it shows there is an infeasibility or lack of ade-
quate logic in a scenario’s proposition, does not then mean that
the model has provided, or can provide, the correct answer. As
Nicholas Georgescu-Roegen pointed out, the most obvious merit
of an anthropomorphic model is to bring to light important errors
in the works of literary economists who reasoned dialectically. It
is an expedient way of detecting errors in some mental operations.
But if the model reveals no error it does not mean that the dialecti-
cal argument or the mathematical calculation is wholly correct [28,
p. 337].
Already, along the way, sceptics have been quoted – quite a
number of them highly numerate people who have not hesitated
(much at least) to engage in modelling. It will be clear by now that
many experienced people do not think much of the modellers claim
that if we have a thought it is a mental model. For many, a model is
a set of equations wrapped up in mathematical jargon, subsuming
a mass of variables, which results in something rarely compre-
hensible or practical on close examination. In his book “Analytical
Economics” Nicholas Georgescu-Roegen referred approvingly to
Erwin Schrodinger’s “What is Life” (1955), which expressed the
thought that “the difficulty of analysing the process of life does
not reside in the complication of mathematics, but in the fact that
the process is too complicated for mathematics.” [26, p. 415] Tony
Lawson is by no means alone in having concluded that academic
economics is not in a healthy state, is usually unable to forecast or
explain any actual event or situation, and indeed is unlikely ever to
do so [45].
50 M. Jefferson / Energy Research & Social Science 4 (2014) 42–52
We are, in short, in the realm of what the late George Shackle
termed “the unknowable”, where we are hindered by “unfore-
knowledge”. Most modellers appear to be uninterested in the sorts
of historical background and fundamental constraints which have
been touched upon in this paper. There are approaches and tech-
niques which may help to explain and prepare for some of the
uncertainties which lie ahead, particularly the multiple scenario
approach which George Shackle seized upon in the closing years of
his life.
Shackle wrote about economics and uncertainty over a long
period – from 1939 to 1990 – and for much of that time con-
cluded that a lack of knowledge about the future meant it was
impossible to get around the pitfalls created by uncertainty. His
contributions to economic thought have been well covered in a
book of essays published in his memory, but the links to scenario
analysis all too briefly [46]. In particular, although reference is made
in this book to contributions by Brian Loasby and this writer [46,
pp. 26, 311], there is no reference to the important chapter that
George wrote: “To Cope with Time”, which appeared in a book pub-
lished in 1984 [47]. There he discussed Shell’s multiple scenario
approach, which he concluded came very close to his own concept
of “a skein of imagined sequels deemed possible” and by adopt-
ing the notion of possibility rather than probability (except in a
purely subjective sense) matched it completely. His turn of phrase
is often interesting, as in the danger “of (necessarily subjective)
assigning probabilities to supposable aspects of history-to-come.
If such a development is seen as both possible and important (if
it can happen and make a great difference if it did) then it ought
to figure in one of the scenarios.” He was unstinting in his thanks
to Shell for its “incisive audacity of thought and policy” [47, pp.
78,79]. Brian Loasby followed with a short contribution on scenar-
ios and decision-making [47, pp. 80–83]. The two contributions, by
Loasby and the present writer are in [48]. Hitherto unpublished
correspondence between George Shackle and this writer on his
reactions to Shell’s scenarios work have recently been published.
[49]
Brian Loasby did not gloss over the challenges of getting com-
mitment to the multiple scenario approach, nor of the risk that
poorly assessed scenarios having created an illusion of reliability
fail to anticipate discontinuities. Shell’s scenario work has not been
free of the former, as Angela Wilkinson and Roland Kupers’ recently
published history of Shell’s scenario work: “The Essence of Scenar-
ios” indicates, but the process has also encouraged curiosity and
openness [50]. They have raised the important question: “It is not
clear at this point, whether or how such scenarios would address
an ‘elephant in the room’ kind of question like that raised by the
2008 global financial crisis, such as: Has the Anglo-Saxon model of
capitalism reached its sell-by date? What comes after the economic
myth?” [50, p. 73]
It should be clear from what has been written earlier, given
past history and the range of future possibilities, that meaning-
ful scenarios can be developed to cover a reasonable range of
future possibilities – a range which many people may consider very
wide and include some very challenging and pessimistic possibil-
ities. Forty years ago Shell’s scenario team developed the World
of Internal Contradictions scenario, which in its essence has stood
the test of time well. Shell’s medium-term scenario work effec-
tively anticipated the 1973 and 1979 “oil crises”. Shell’s latest
“New Lens” scenarios – “Mountains” and “Oceans”, which were dis-
cussed by Jeremy Bentham, Head of Shell’s Scenarios Team, in the
January Special Issue of “Energy Policy”, are powerful and thought-
provoking [51].
Where scenarios may fail is in exploring vulnerabilities to the
extent policymakers, bureaucrats, and decision-makers would like,
if they care to bend their minds to such issues. Here there is room
for testing ideas and consequences over a carefully declared area
of specific issues relating to energy policy-making. This is not a
suggestion for global models seeking to encompass every possible
factor which might be relevant to energy prospects (covering social,
economic, political, institutional, and environmental aspects) – one
such exercise 40 years ago had some 3200 linear equations and
its first run took over 19 h 50 min of central processing unit time.
The Chief Economist of the organisation concerned had refused to
participate even then on the ground of its impracticality and cost.
Processing speeds have greatly speeded up over recent years, but
the impossibility of finalising a truly meaningful task of such a scale
remains, I believe, beyond us [52].
More circumscribed modelling activity, when in the hands of
those who can do the mathematics, are sufficiently conversant with
the relevant history and particular circumstances of – say – an
industry, and have practical experience which gives some confi-
dence in their ability to assess the current situation and prospects,
may be of use. In the case of Shell this is well demonstrated in its
recent modelling work, initially for its “Scramble” and “Blueprints”
scenarios [53], and then for its most recent and particularly fas-
cinating “New Lens Scenarios” (“Mountains” and “Oceans”) [54].
Martin Haigh has outlined the first model (WEM v1) in “Shell’s
World Energy Model: A model developed for Shell Energy Scenar-
ios to 2050” [55]. This model has been re-built (WEM v2) for the
“New Lens Scenarios”. It is described as a comprehensive model of
the world’s supply and demand for energy at a global level, inte-
grating economic evidence on aggregate demand for energy and
the choices influencing the energy mix. The possible availability,
access and speed of development of different resources and tech-
nologies are also covered. Its purpose is to assess how different
drivers changing over time could affect a transition to a substan-
tially different energy system over the next five decades. The model
was “integral to the development of the scenarios “Scramble” and
“Blueprints”, and provided the detailed quantification underlying
them.”
It is relevant to note for the purposes of the present paper,
however, that the model’s analysis was limited “to the energy sys-
tem itself”, there was no attempt made “to model explicitly wider
interactions with the economy, nor major feedback into changes
in society, politics or ecosystems.” There were also around 40
inputs left to users to quantify – hopefully consistent with the
scenario story being developed. Thus the modelling work carried
out was used to underpin many aspects of the energy system,
globally and for the top 70 countries in energy demand terms,
and would seem to have served a useful purpose in helping to
underpin those aspects of the scenarios’ development. But this is
only part of the work required in developing scenarios – where
imagination, past history, and a literary approach have profound
importance.
Vlasios Voudouris and colleagues who contributed the paper
on “Exploring the production of natural gas through the lenses
of the ACEGES model” have pointed a way [56]. This agent-based
Computational Economics of the Global Energy System (ACEGES)
modelling approach can also help with aspects of general scenario
work and shed light on more specific issues. It recognises that the
process of generating scenarios is primarily a “non-mechanistic
mental process” but the model can help the exploration of plausible
future developments by means of computational experiments in an
interactive way. The emphasis is on historical observations, ‘forces
in the pipeline’, and personal experience. It is believed this contri-
bution by Vlasios and his colleagues is the first time the agent-based
modelling framework has been used “to explore forward-looking
scenarios of natural gas production.” [56, p. 125] This is not far
away from the “mini-models” which Aart Beijdorff introduced into
Shell’s scenario work from the mid-1970s.
 M. Jefferson / Energy Research & Social Science 4 (2014) 42–52
14. Conclusions
From its outset this paper has expressed the need to re-think the
standard approaches to energy research/analysis and appraisals of
energy policy given the challenges for the 21st Century. Fundamen-
tal questions have been raised about the realism of much economic
theory, standard modelling approaches, and the excessive use of
mathematics in approaching energy research and policy issues.
Instead we need to consider practicalities against a background
of what we can usefully draw upon in history, and down-to-earth
assessments of what forces are already in the pipeline and how
they seem likely to impact upon our futures.
Such concerns are not confined to energy research and pol-
icy issues. They are of much wider relevance. Richard Bronk in
“The Romantic Economist” has challenged: “the research prac-
tices and assumptions used by most economists”; the importance
of “Romanticism” in the literary tradition; and the limitations of
economists’ modelling [57]. This paper, while focussed on energy
matters, fits well alongside his work and thinking – including, most
unusually in this day and age, the thinking of George Shackle. It
ends, as does Richard Bronk’s book, by stressing that “in the lan-
guage of Romanticism, all economic models – indeed all paradigms
– are fragments in the search for a unified understanding.” (p. 292)
He also warns that the models we use structure and distort our
vision, and divert our attention away from complicating factors.
It was encouraging to read in the Technical Summary of the
Working Group II Fifth Assessment Report: “Increasing efforts to
mitigate and adapt to climate change imply an increasing complex-
ity of interactions, particularly at the intersections among water,
energy, land use, and biodiversity, but tools to understand and
manage these interactions remain limited (very high confidence)” –
italics in the original [34, supra, p. 33]. But no sooner had this report
been issued than the following newspaper headline appeared:
“Forecasters crack formula to predict long-range weather.” [58]
When will we ever learn?
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Michael Jefferson is Affiliate Professor in Energy & Commodities, ESCP Europe Busi-
ness School, and an Advisory Board Member of ESCP Europe’s Research Centre for
Energy Management; a Visiting Professor at the University of Buckingham; recently
an Editor of the journal “Energy Policy”, and now a member of the journal’s Interna-
tional Advisory Board. He was in Shell’s scenario team in the 1970s when he was the
Royal Dutch/Shell Group’s Chief Economist; then Head of Planning in Shell’s Euro-
pean Organisation; a Director of Oil Supply and Trading in Scandinavia; and Head
of Pricing in Shell International Petroleum’s Supply & Marketing Function. He later
spent ten years as Deputy Secretary-General of the World Energy Council.