February 18, 2008 | posted by Michael Baxter in Energy |

Last week we told the story of the new Barclays Capital Equity Gilt Study 2008, which predicted a period of higher inflation and higher interest rates as the combination of growing global demand and reducing supply of natural resources leads to further hikes in the cost of raw materials.

We had an interesting comment placed on our blog site in response from Reg Crowder – “Every day, more than 300,000 times the amount of energy that the earth’s population could possibly use falls upon the earth from the sun. It is free. It is clean,” said Mr Crowder. He added “The problem with solar in its many wonderful forms is that it is difficult to guarantee that all of the profits from solar power will go to the Fortune Global 1000 Corporations. Solar is too-widely distributed to easily control. Too easy to use. Too cheap, too clean.” So, is Mr Crowder right?

According to James Martin, in his book, The Meaning of the 21st Century, ”The world’s reserves of oil, not counting the undiscovered ones, have a value of about 60 trillion USA dollars… coal reserves have a similarly-high value. If humanity set out to save energy, and move to non-carbon forms of energy…much of this vast amount of energy would be abandoned. Both oil-rich countries and petroleum companies want to hang on to their potential wealth.”

So that argument would certainly seem to support the point of view expressed by Mr Crowder.

As a very rough rule of thumb, in somewhere hot – like the Sahara, at midday around 2 kilowatts of energy falls upon one square metre of the Earth. That’s at the day’s peak, so taking into account that it is dark for a few hours, and that at other times of the day the sun is not so intense, it seems reasonable to assume an average of 1 kilowatt per square metre. In an advanced economy such as the UK, the average person uses 1 kilowatts per day, so in other words one square metre of prime desert land should, if fully exploited for solar power, provide enough energy for one person. That translates to around 64 square kilometres for the entire population of the UK. Or around 6,400 square kilometres to supply the entire population of this planet.

But there are problems. For one thing, the energy is not constant – when the sun goes down the power generation stops, and at the moment the technology for storing electricity is still quite primitive.

Wind, of course, does not depend upon the sun being out – but it is not reliable – and at best can only be a partial solution to our energy needs. In any case, the UK just does not have enough sun for us to rely too heavily on solar energy – instead we would have to rely on the import of solar-generated electricity from places such as North Africa – and the Middle East – ironically, the OPEC countries.

All forms of energy that are created from the natural forces are unreliable – which is why finding means of storing energy will be the key to their exploitation.

There are many ideas doing the rounds. James Martin, in the book referred to above, talked about charging up hydrogen – the January issue of Scientific American talked about using compressed air energy storage; another method could be to create hexane, a form of gas which exists in liquid form at room temperature – all these methods are truly exciting – but we are not there, yet.

The Scientific American article laid down a plan for being able to generate 69 per cent of all of the US’s electricity needs, and 35 per cent of its total energy needs by 2050, but at a cost of $400bn.

There is no doubt that creating energy from the sun, wind, or tides, represents an incredibly exciting way forward. The famous DNA biologist Dr J Craig Venter reckons he can create a microbe that can suck carbon dioxide out of thin air, and then create fuel. Perhaps this technology has even-greater promise.

Play it right, then ultimately all our energy needs could be supplied at an incredibly low price – without any damage occurring to the environment.

It is easy to see why some corporations might not in be favour of such a development – but frankly that is not a debate that will have any bearing on the prediction from Barclays that the rising cost of raw material will mean higher inflation and interest rates for the next decade or so.

There is much hope that the Sun and our growing knowledge of DNA will seemingly magic a miracle panacea – but not yet – not in a time horizon that relates to our current house prices.

See the death of deflation