Among the many ways in which the energy sources of the Lean Economy will differ in principle from those on which we have depended so far, there is one in particular that will shape the world of the future. Solar energy in its various direct, indirect and related forms, including sun, wind, plant materials and the tides, is - in contrast with the fierce, concentrated power of oil, gas, coal and nuclear - widely dispersed.1 It needs land and sea, both on the surface and at depth; it needs winds, the surfaces of buildings and living systems such as woodlands, harvested fields and the water harvests of plants and algae.

This requirement for landscape and waterscape as a source of energy bears comparison with the requirement for land as a source of food. It also places very large towns and the cities of the modern world at a disadvantage: they have relatively little space in which to capture energy; although they have plenty of roof surface on which to install solar panels, this will not be enough to power the energy services on which cities depend: transport, heating, lighting, water supply, sewage disposal, and the industry and services which form the substance of the urban economy. In other words, cities are poorly endowed with energy resources, and hungry for energy services; the realistic model for the future, however, is in total contrast with this: smaller settlements - social cities, smaller towns and villages - that are rich in land and skilled in their ability to sustain their wants and needs in ways which require little energy. In the Lean Economy, every stretch of land and water, on the surface and at depth, will be a potential source of energy in some form. And to be most useful, that land will need to be local: the high-voltage national grids will become obsolete, and although hydrogen, generated from the electricity produced by, for instance, arrays of marine turbines, can be transported for long distances, the costs of buying and transporting it will place it, in general, beyond the reach of local economies. The implications of this for the physical pattern of land in the Lean Economy will be decisive.

2. PRODUCTION: ENERGY GENERATION AND STORAGE

The defining characteristic of renewable energy is: connections. The production and storage of energy, together with inspiration and ingenuity in finding ways in which energy services are provided and used, are like beads on a string, forming integrated "solar string" energy systems. A solar string is a system which integrates energy- generation, energy-storage, energy-conservation, energy distribution, energy-services and energy-use. No part of the system exists only as a producer or consumer; each part, and each participant, contributes in some way to the functioning and stability of the system as a whole. The relationship between renewables and the solar string is similar to the relationship between organic production and permaculture: organic production is a method of growing, whereas permaculture is a design system; renewables are a method of energy generation, whereas the solar string is an energy design system. As in the case of permaculture, a solar string is conceived and sustained for a specific community and place.

The following tour along the solar string begins with generation and storage, the two key agents of energy production in the Lean Economy.

Generation

When sunlight hits a very pure crystal of semiconductor material, such as silicon or germanium, which is doped with the right quantity of the right chemical, electrons are knocked loose from the atoms to which they are attached, producing an electric current. The efficiency with which photovoltaic cells are now able to convert the energy contained in sunlight into usable energy can be as much as 30% or more, and it is constantly improving. There are some disadvantages: photovoltaics are less effective at higher latitudes and on cloudy days and, of course, they do not work at all at night. And yet, this is a technology with promise. As Janet Ramage writes,

Of all the new energy systems, the solar cell in many ways shows the greatest potential for really widespread use. Countries with plentiful sunshine, who have not yet developed full national power systems, can avoid all the paraphernalia of large power-stations, transmission networks, and the rest by installing clusters of solar cells to supply power as and where it is needed, for a town, a village, a factory or even a single household.2

The technology is still in its early stages; it is at about the same stage today that the internal combustion engine occupied in the 1890s;3 as it develops, the cost falls, roughly halving between 1990 and 2000, with further potential for deep cost reductions.4 It is flexible, capable of being applied on a small scale, providing as little as a single light, and then building up incrementally; it can be attached as cladding on walls and roofs and, per acre of land, photovoltaics produce much more energy than can be obtained from plant material (biomass).5 There is a sense here of informality, of the birth of a small-scale, domesticated technology - like the hand-mills of the middle ages which challenged the authority of the millers. Local energy confers local empowerment.

Heat from the sun (solarthermal).6 Energy leaves the sun as electromagnetic radiation, travelling through space until it reaches the atmosphere and surfaces of the earth, whose molecules it pushes around, producing heat. About a third of this energy is absorbed by the atmosphere before it reaches sea level, but some of what remains can be collected by solar thermal panels and used for purposes such as domestic water heating, or brought to the high temperatures needed to drive a turbine to generate electricity.

Solar-powered turbines can be used in combination to deliver large amounts of power, and they have the advantage that they adapt well to hybrid systems - for instance, switching to a methane-powered system at night. There is still a long way to go in developing the technology; for instance, control systems to keep the sun's energy concentrated on the collector throughout the day are not yet standard. It is, however, already well placed to become one of the prime sources of electric power in the solar economy.7

Wind

Wind energy can deliver a lot of power. A typical wind turbine in 2000 had an output of around 225 kilowatts, producing a theoretical 2 million kilowatt-hours (kWh) per annum, which reduces to about 700,000 kWh after allowing for the inconstancy of wind-speeds. This is enough for all the energy needs of about 30 households (excluding transport) using energy in the inefficient way that was standard in 2000, or about 60 households that had achieved reasonable progress in the efficient use of energy.8 There are good reasons for constructing turbines on a large scale and in places (such as at sea) where there is a lot of wind: the amount of power produced by a turbine is dramatically greater in the case of very large turbines sited in the windiest places, rising with the square of the diameter of the turbine and with the cube of the wind speed.9 And yet that "efficiency" argument is not decisive. If a locality can make good use of wind as part of its range of energy sources, even if only on a small scale and in a not-particularly windy place, the case for one or more wind turbines may still be strong: in the Lean Economy it is appropriateness rather than efficiency that matters.

As installations are developed and costs decline, the limitation of wind will not be the quantity of energy that can be supplied by wind, but its regularity. The wind tends to ease off at sunset every day, and there are days of calm and of storm when wind turbines produce next to nothing. They must therefore be part of a system which can store energy, and which uses a variety of sources, each of them with a particular contribution to make to the local energy network.

Biomass

"Biomass" is a useful catch-all term for wood, kitchen waste, the residue of harvest, sewage from humans and other animals, and the various forms of fuel that are derived from them. It comes in three forms: solid, liquid and gas. The solid form is the most familiar; it is the fuel of log fires; it comes in straw bales, burning smokily in inefficient furnaces at low temperatures, and in compressed straw that burns more cleanly. It is solid biomass that fuels the fires that still boil cooking-pots, with an efficiency of some ten percent or less, in many communities in the less developed world, and the 40% efficient cooking stoves that are being promoted to replace them.10 Solid biomass is important in that it is widely distributed, it works without clever technology, and it provides a friendly fireside. And yet, the potential of biomass is seriously developed only when it is converted into liquid or gas.

The liquid form consists of ethanol, aka alcohol. A miscellany of biomass - apples, potatoes, corn, wood, sugar-cane waste and suitably sorted domestic rubbish - can be fermented, breaking down into a concentrated fuel. With cellulose fibres such as wheat straw, corn leaves and wood, the presence of a tough natural tar called lignin effectively protects the starches and prevents them from breaking down but this is being overcome with the use of enzymes. The fuel that is derived from fermentation is used "neat" in suitably adapted engines or, in normal car engines, in a mixture with petrol called "gasohol". 11

Then there is biomass in the form of gas - equivalent to the coal gas that was standard in the cities of the developed world until the 1960s. Steam, together with air or oxygen is passed over burning solid fuel, producing a hybrid gas consisting of hydrogen, carbon monoxide and methane, together with some carbon dioxide and nitrogen. Any biomass mixture that happens to be available locally can be treated in a simple gasifier, providing an impure gas which will at least burn more cleanly than the original solids. An improvement on this is a sophisticated gasifier which can produce a gas nine-tenths of which consists of hydrogen and carbon monoxide, a highly reactive mixture capable of running a turbine.12 Alternatively, there is the gas derived from the decomposition of wet biomass in a digester in the absence of air - mainly methane (natural gas), together with the bonus of a nitrogen-rich fertiliser. And a further variant is the somewhat impure methane that is produced by the diverse mixture of biomass contained in rubbish dumps.

Biomass, though not a particularly efficient way of harnessing solar energy (it captures only around one percent of the energy that is available to it), has some powerful advantages. First, it is easy to store in any of its three forms, particularly as a liquid or gas. Secondly, anaerobic digesters do a good job of waste-disposal, producing fertiliser along with the methane. Thirdly, biomass does not monopolise the land on which it is grown. Solar thermal systems, in effect, take over the land, covering the surface and leaving little or no space for biological life - which is the reason why most of the largescale solar systems so far have been built in deserts. Biomass fuel, such as fast-growing poplar and willow, along with, say, fruit trees, sustains a living landscape, and can at the same time be a provider of lubricants, plastics, paper and construction materials; fuel is derived from the bits that are not wanted, using waste in a way which, in the end, is very efficient.

Biomass is therefore complementary with the other renewable energy sources, illustrating the solar-string principle: it maintains the connections and variety intrinsic to the energy systems of the Lean Economy. That diversity is taken further still with the other energy sources discussed below; none of them are major sources in their own right but, taken all together, the renewables come together to form a realistic solar economy.

Other energy sources

Solar architecture can make such effective use of solar energy that no other power sources are needed whether for heating buildings in winter and cooling in summer.13 There is energy from wave power, tides and marine currents.14 There are micro-hydro systems, driven by small dams and by run-of-the river turbines, and mediumsized hydroelectric schemes, now well-established throughout the world;15 large hydroelectric systems, despite their profoundly destructive environmental and human consequences, will be an inheritance which it would be reasonable for the solar economy to continue to use during the few decades of their remaining useful life. Ocean thermal energy may be a possibility in the lower latitudes.16

And nuclear fusion energy is still not ruled out: the theory that very large amounts of energy are released when two deuterium nuclei fuse together is sound enough; the only problem is to persuade them to do so. Hot fusion continues its long and difficult research programme and could be within sight of building a functioning prototype;17 the search for ways to make fusion occur without initial recourse to high temperatures has some enthusiastic supporters, but there is no sign yet that any of the fusion alternatives will be providing energy in reliable high volume in less than the fifty-year time horizon for renewables as a whole.18 And geothermal energy can make virtually inexhaustible supplies of heat available locally as a source of energy, but the possibility of doing so is in practice distributed unevenly: the Philippines, Iceland and New Zealand have the advantage.19 Finally, there are small but useful quantities of methane or be extracted from coalmines.20

Storage

Almost all the renewable energy sources produce an irregular flow of energy - and some of them switch off entirely for some of the time - so storage is essential. Some forms of energy can be easily stored. Coal and biomass, in all their forms - solid, liquid and gas - are excellent storage media. Heat itself can be stored - for instance, in a well-insulated house, or in the classic ceramic stove which, for an hour or so, burns wood fiercely and completely, and then continues to heat the house for the rest of the day.21 Although electricity cannot be stored, the energy it contains can be held on stand-by in other forms. Some of them have evident limitations: fly-wheels, compressed air and supercapacitors, for example, are better for smoothing out fluctuations than for storing energy over long periods;22 batteries store energy chemically, but they are heavy, expensive, and a wastedisposal problem; pumped storage lifts water uphill and then releases it to drive a turbine, but it is limited by the existence of suitable highlevel reservoirs. There is, however, one storage systems that is particularly interesting and has the fewest drawbacks - hydrogen.

Hydrogen can be produced by electrolysis or by direct solar action on water;23 it can then be stored and transported to be used in fuel cells in which it recombines with oxygen, releasing energy. Fuel cells are pollution free (their waste product is water); they are efficient, recovering between 35 and 65 percent of the energy potential provided by the hydrogen; they can work on any scale between a large conventional power plant and a small box fitted into a car; and the technology is improving, while the price is falling.24 Hydrogen is not a primary fuel; it is a storage medium; it is unlikely to be distributed in the same comprehensive quantity, still less at the same price, as natural gas in its prime, but it will be of critical importance as a storage and transmission medium in the solar economy. And there are signs that very recent technologies, such as the use of liquid nitrogen as an energy source, may be able to expand the range of technologies with neat portability of the fuel cell.25

3. SERVICE: THE APPLICATION OF ENERGY

The five main types of energy service are spaceheating; process heat (that is, heat above 1000C, used for all purposes from domestic cooking to industrial chemistry); electric drives for equipment including lighting; transport, which will be considered later; and the energy embodied in materials. Strictly speaking, this last "energy service" is covered by the other four, but it is useful to think of it separately. It refers to the energy that was required to mine or cultivate the materials, to transport, refine and process them. The reason why it is useful to think of this separately is that the quantity of material and the quantity of energy are decisively linked: a reduction in the material input per unit of service (MIPS) leads to a more-orless corresponding reduction in the amount of energy required.26

All five energy services will take advantage of the technologies and inventions of the industrial era. Here are some illustrations of the ways in which, respectively, households, industry and services, agriculture and transport, will in the future be able to get the services they need from the reduced flow of energy available to the Lean Economy.

Households

The uses of energy that matter most to households are cooking, heating and appliances. Improvements in energy efficiency are relatively hard to achieve in the case of cooking, but opportunities exist. Pressure cookers and microwaves, both long-established technologies, can deliver substantial savings when they are routinely used; there are improvements to be made in the design of cookers and their temperature control; cookers based on induction (magnetic fields) will offer energy savings in the future; and solar cookers make good use of free energy on sunny days. Even these modestsounding improvements are expected, over fifty years, to multiply up to a doubling of energyefficiency, and a doubling (factor 2 improvement) is the baseline from which household appliances start: refrigerators are expected to require some 85 percent less energy per unit of output in 2050; freezers and lighting are on course to reduce their energy requirement by 80 percent, and washing machines by 70 percent (factors of roughly 7, 5 and 3).27

The really substantial potential for domestic energy efficiency, however, lies in domestic heating. The case is presented persuasively by the environmental scientists, Amory Lovins and Hunter Lovins, in collaboration with the busi- nessman Paul Hawken, in their book, Natural Capitalism.28 The key is to recognise that, even in cold winters, houses can often be expected to receive enough solar energy to maintain a comfortable temperature so that, in theory at least, the central task is to turn the solar energy that falls on the house into useful heat, and then to stop that heat escaping. Before beginning to think about this up-beat solution, it is advisable to be aware of its limitations: the potential for solar energy in buildings is reduced in those cases where a house is shaded by, for instance, tall neighbouring buildings; large houses with upper floors have the disadvantage of a lot of interior space to be heated, relative to the surface area exposed to the sun. There are also practical snags in imposing on an old house, built in the age of coal or wood, the new sleek technologies of the solar age. Energy saving strategies that may seem quite reasonable in principle have to cope (as Vaclav Smil reminds us, in a review of Natural Capitalism) with "technical glitches, social inertia, basic human consistency, and personal priorities and preoccupations". 29

But the means are available. The leading technology is the "superwindow", a simple idea that starts with the "greenhouse" properties of glass, and takes them as far as they can go. The glazing is coated with insulation film, sealed and filled with heavy gas such as krypton or a silica foam. The result is a window that provides intensely effective insulation, trapping heat inside the house. It only remains to apply an equivalent ingenuity to - well, some twenty other efficiency measures ranging from draftproofing and wall insulation to window-frames insulated to the same standard as the glass, and heat-exchangers (ventilators which use the heat contained in stale air to warm incoming fresh air). Here, then, we have a house which banks its energy, rather than losing it, and when all this is combined with solar panels on the roof - which generate electricity, which is used to pro duce hydrogen, which drives the fuel cells which supply the energy to do the cooking - so much energy is saved that the house may end up with a surplus to sell to the local grid.

The theory is undoubtedly heart-warming. There has to be a suspicion that it is all too good to be true, and yet houses exist which do indeed match the ideal. The best response is to acknowledge that the energy-efficiency of houses can be taken a long way at a reasonable cost. A 75 percent reduction in the use of energy in the typical households of today is consistent with the needs of a bearable, liveable home.

Industry and services

The industry and services of the Lean Economy have an advantage over those of the market economy, in that they will naturally comply with the standards of "lean thinking".30 Local, small-scale industry will naturally respond to that central concept of lean thinking - pull: it will produce things when they are wanted: it will be responsive to local needs, rather than burdened with an organisational agenda of its own. On this small scale, the management of a closed system becomes realistic, opening up the prospect of saving energy by saving materials. Energy is saved by recycling materials (e.g. a 90 percent saving in the case of aluminium); but far more is saved by making things to last. Both of these options are possible on a large scale, but are much easier when the task is done at close-range, at a level which manageable, detail-friendly and less transport-dependent, and which explicitly confers on users the responsibility and incentive to make the system work. In the market economy, one of the primary uses of energy is to simplify life: it reduces the need to plan ahead, to find ways to avoid journeys, to make do and mend. The reduced energy available to the Lean Economy, in constrast, will require it to grapple with detail, and to stay within a scale that makes that possible.

The energy efficiency of the Lean Economy's industry can be expected to stay on the long-established course of improvements at the rate of about 1.2 percent per year, giving a 30 percent improvement in industry in a generation (25 years).31 This is Vaclav Smil's estimate for the future advance of energy efficiency, and it may be an underestimate, since the coming shock in the price and availability of oil and gas will provide a powerful incentive for improvement, and the small-scale organisation of the Lean Economy will provide new opportunities for saving. Indeed, the authors of Natural Capitalism encourage their readers to expect a tenfold improvement in energy efficiency within a generation. On the other hand, the disruption of the coming transition and the dearth of capital available for investment could slow the rate of advance; there is no reason, therefore, to dissent from Smil's estimate, which is not inconsistent with the LTI-Research Group's careful estimate of a 60 percent improvement in the energy efficiency of industry by 2050,32 and with the 50 percent improvement required by the Lean Economy by 2035.

Somewhere along that path, probably well into the period of a settled Lean Economy, there are certainly some remarkable technologies to be developed. One is "biomimicry" - which uses biological processes to produce tough materials, with no more energy than, say, the dappled sunlight, cool water and inconsiderable seafood available to a barnacle. This is discussed elsewhere;33 meanwhile, it is enough to note that there is, in the longer term, more potential for energy efficiency in the Lean Economy's industry than appears at present to be possible. We might hear, in this matter, the voice of Walt Whitman's "little captain", above the noise of the guns, when his ship had been shot to bits by the enemy, and as prelude to turning things around: "We have not struck", he composedly cries, "we have just begun our part of the fighting." 34

Agriculture

Energy savings in agriculture will flow directly from the transition to organic agriculture. The main use of energy in conventional agriculture is the manufacture and transport of fertilisers and pesticides. Fertilisers are made from anhydrous ammonia, derived from natural gas; pesticides are derived from ethylene and propylene, which are obtained by catalytic cracking of oil, or from the methane derived from natural gas. In the future, with the rising cost and declining supply of gas, organic systems will be the only reliable and affordable option.35 Food production in the Lean Economy will become less dependent on energy in other ways, too. There are already many farming tasks, such as transport, fruit harvesting, logging and even some cultivation, for which machinery offers no cost benefit, relative to the alternative such as the horse. For instance, it may take the farmer less time to use the horse than to pay for the capital, fuel and maintenance of a tractor for the same tasks. On the smallscale farms in the fuel-scarce Lean Economy, the advantages of horses will be recognised: they are likely to be a routine form of traction, with tractors and heavy machinery used for special purposes when they and their fuel are available, and their costs can be justified.36

And then, there are substantial energy-savings opportunities for farming in the technologies of the future. Greenhouses fitted with superwindows will not need to be heated; grain driers can be wind-powered; electrical machinery will benefit from advances in technical efficiency comparable to those of industry. Lean water management37 will reduce the energy cost of irrigation pumping. If all these advances in energy efficiency are counted, the prospect of a transformation in the energy-efficiency of agriculture become real.38

Transport

The idea of cars that run on solar power is not quite the fantasy it seems. This is how they would work. The solar power (that is, all the solar string energy sources, including sun, wind and water) generates electricity, which in turn produces hydrogen from water by electrolysis. The hydrogen is then used in a fuel cell in a car to deliver electricity that drives an electric motor to turn the wheels. There is also a small battery in the car that allows the fuel cell to operate at constant power; when the car needs to accelerate, it draws on its battery power - and the battery is recharged when the car is cruising or at rest. The car is built to a lightweight design, with a carbon fibre body and a small motor, allowing the heavy steel engineering of conventional cars to be drastically reduced or eliminated; this in turn allows the motor and the supporting structures to be made lighter still, and the material savings more than compensate for the high cost of the carbon fibre. This sequence of positive interactions between the many ways of reducing weight and reducing power requirements is known as "mass decomposition", and it is an illustration of the principle of "whole system design" advocated by Amory Lovins and his colleagues at the Rocky Mountain Institute (RMI). They now have prototypes of the car that can run at conventional speeds with a fuel efficiency equivalent to around 200 miles per gallon, and they have called it the "Hypercar™". 39

Realistic? Well, there is no chance within the foreseeable future, if ever, of deriving enough power from solar energy sources to drive the world's road transport on its present scale, in addition to all the other things for which renewable energy will be required in the future. RMI therefore proposes that, if only as a transitional solution, the Hypercar should run on hydrogen derived from natural gas; the authors are confident that there are "abundant sources - at least two centuries worth" of gas, adding that oil, too, is so abundant that it "will eventually be good mainly for holding up the ground."40 However, RMI is wrong about this. As Colin Campbell's paper in this book shows, we are already in the midst of the early stages of oil depletion, to be followed swiftly by turbulence and regional depletion in the supply of gas. The gas that RMI has in mind as a replacement for petrol does not exist. There are also some practical limitations to the concept of the Hypercar; the central principle of weight reduction becomes more elusive in the case of goods vehicles and heavily loaded cars, and there may be some safety concerns with respect to the stability of very lightweight vehicles in crosswinds.41

For these reasons, the Hypercar can be ruled out as the car which will replace the conventional steel-built, petrol-driven car of the present: there will be no replacement, for there will not be the fuel to drive it. However, the Hypercar will be able to make a contribution to the reduced transport needs of the Lean Economy. Hawken and his co-authors themselves argue for "sensible land use over actual physical mobility - a symptom of being in the wrong place" - precisely the case which is developed extensively in the study of which this paper forms a part. The pattern of land-use developed and sustained by the Lean Economy is designed to be consistent with a reduction in transport on the scale of as much as 90 percent - and the 10 percent that remains will not include the rivers of long-distance traffic for which it is necessary and economic to maintain motorways. That 10 percent remainder, using the undoubtedly excellent technology of Hypercars (modified as necessary for freight) will have a fuel efficiency of the order of four times that of the present day. On these assumptions, the energy needed to fuel transport will be around 97 percent less than that of the present - and fuel for this could indeed be supplied from local solar string sources. 42

 Click to read panel on the value of Natural Capitalism.

4. USE: SHOCKS AND CONNECTIONS

The effective use of energy will have two profoundly significant properties. The first is that the reduction in energy supply that is in prospect does not hold out the promise of sustained economic growth in the conventional sense of the word. The conventional sense of "growth" - which measures the money value of consumption, without regard to whether that consumption may actually be desired or even desirable - though very widely criticised, is in fact a very important meaning which we ignore at our peril, for it is growth in this simple sense which ultimately determines such fundamental matters as whether we have jobs and whether we have the money to buy bread. There is no prospect of the reduced energy supply of the future being consistent with growth in that sense, and the economic consequences of this are as serious and as threatening to economic and social order as any other environmental or political issue in the modern world. There are familiar arguments that claim to contradict this; for instance, it is suggested that the renewable energy systems of the future will be a job-creation opportunity, prelude to a new wave of growth. However, the case against this (also argued elsewhere44) is strong, particularly if the decline in the availability of oil and gas, and their rise in price, occurs turbulently, with periods of interruptions of supply, rather than down a smooth decline path, with plenty of warning, and untroubled by any other problems occurring at the same time.

That is to say, it is the way in which energy, and energy services, are used - the way in which society accommodates itself to a drastically reduced supply - that is the critically difficult issue, far more testing than the technical fixes of energy efficiency that we have just briefly reviewed. The big energy issue raised, but not answered, in this paper is how society might accommodate itself to this shock - a shock of a different kind, since this one has no evident end-point. This is when the technical fixes are taken as far as they can go - and it is not enough.45

The second issue raised by use is marginally simpler and more manageable. The multiple shocks of the future, arising in part from the energy deficit but a consequence also of disrup- tions in the supply of all the primary goods, including food, water and materials, will require a response in the form of transition to local economies, smaller in scale than those of the present day, but more complex, more robust, richer in diverse talent and resources. And this will be reflected in energy systems in the form of networks without a centre, whose participants both contribute to them and receive from them, and having more in common with the internet than with the present format of large producers of energy providing a one-way service to numerous consumers. In terms so simplified as to illustrate no more than the bare principles, the following discussion shows how the use of energy services connects up positively with all other parts of the local energy economy in the "minigrid".

5. THE SOLAR STRING: THE ENERGY NETWORK

The technology of small-scale local energy generation will require local storage systems and grids based on devolution and detail. The solar string energy sources have two well-defined characteristics. First, most of them are intrinsically small in scale, providing energy close to where it is needed. The main exceptions are large-scale wind-power and hydro-power, both of which are in the main outside local control, requiring long-distance transmission over a grid designed for much higher loads, and for these reasons alone they may have only a minor contribution to make in the future. Secondly, about half the solar-string energy sources are intermittent: wind, photovoltaics and the solar thermal systems depend on weather and the time of day. Those two qualities shape the design of the solar economy. It requires ways of storing energy; and it must be connected in minigrids that share out the task of providing and conserving energy across all producers and consumers within a locality. Energy will not be the reliable service supplied by a benign but remote big business; it will be a matter of local responsibility, creative intelligence and an engagement with the detail.

There is no aspect of lean production that illustrates more decisively the transition from the obsolescent structures of "capture and concentration" to the devolution and detail of the complex political economy than the coming transformation in the provision of energy. The guiding principle is that of "soft energy" - the use of local systems of renewable energy and conservation, first outlined in 1977 by Amory Lovins.46 Here is Janet Ramage's more recent description of the principle:

The typical modern power station has an output in the gigawatt range, sufficient for [the electricity consumption of] a million households. It is seen as large, distant, and controlled by a large, distant organisation. The soft energy version would be different.Agricultural and urban wastes, energy crops, wind-farms, small-scale hydroelectricity, and photovoltaics would provide the power, and combined heat and power [which uses power stations' waste hot water to heat homes] would maximise the efficiency with which the fuels were used. Instead of competition between large organisations, each committed to encouraging the use of one form of energy, local control of the full range of available supplies would promote the best use of all resources.47

The Lean Economy would adopt that principle, but it would take it much further, down to the local level of the parish and neighbourhood. The key to the concept of "minigrids" is intelligence, directed to four functions in an integrated system: capture, use, provision (production and storage) and service - and the acronym "CUPS" accordingly stresses the principle of holding local energy in place and in an accessible form. Intelligence is also central in that minigrids will depend on machines that can think - switching between generation, storage and use in response to variations in demand and supply. Seth Dunn and Christopher Flavin put this into context:

... a more decentralised, dispersed control may provide far more resilience than a centralised, hierarchical system. Such a system could evolve along the lines of resilient biological systems - such as ecosystems or the human body - that decentralise control among numerous feedback loops rather than relying on a centralised hierarchy. Just as the brain does not need to track every bodily process for the system to function, power networks need not have a central point through which all information flows.48

This concluding discussion of energy will trace a pathway along which society could travel to reduce its demand for fossil fuels in line with what will actually be available in the future. The critical need is for a wholehearted, collective, cooperative programme to which citizens are fully committed, and which is robust to the shocks that have to be expected in the coming two decades.

There is a convergence of objectives if we have both to reduce carbon emissions to limit climate change and find an equitable way of sharing the declining supply of oil and gas. As discussed above, a suggested target for all fossil fuel use (essentially coal) by 2035 is 10% of turn-ofthe- century consumption. The descent of this steep path will not be accomplished without profound turbulence unless society develops a sense of collective purpose - which can be said to exist where the individual is able to fulfil his own designs and purposes most effectively by participating in actions that promote the public good. The conditions that achieve a synthesis of private and collective advantage do not usually happen by accident. The connection needs to be explicitly made - and one way in which it can be made to happen is by an equitable system of rationing such as domestic tradable quotas, DTQs.

There are two main approaches to the task of reducing the demand for fossil fuels. Taxation is the most obvious and widely canvassed one but there are some problems with it. It causes a great deal of resentment, as Britain discovered when protestors against fuel tax brought the country virtually to a halt in September 2000. It is practically impossible to set a rate of tax that changes the behaviour of higher-income groups without causing unacceptable hardship for people on a lower income. And, as the price of oil and gas rises as a result of scarcity, taxation would only raise it higher still, making a bad situation worse. The other solution is rationing, but in a form which is very different to the coupons-and-scissors memories of the past. In the fair and flexible rationing schemes of the future, a strict upper limit to the quantity of fossil fuels available for the economy as a whole over a specified period will be set and rations based on it distributed electronically among consumers who will then be free to trade their share.

Various tradable rationing schemes have been devised. Those which apply to companies (chiefly relating to sulphur-dioxide emissions) have been developed a long way, and some are being applied in practice. Several "domestic" schemes, which would include consumers as well as firms in the rationing process, have also been suggested. One such scheme, DTQs, has been developed.52

DTQs are intended for use within an economy. They are complementary with international permits for trading between nations. It is accepted that the only fair framework for international action has to be one of "contraction and convergence", which would both reduce carbon dioxide emissions, and converge towards a point at which each nation's "right to pollute" is calculated on the basis of their populations.53 DTQs make it possible for ambitious international targets to be carried out within nations, by giving governments control of the rate at which fossil fuel consumption is reduced, while sharing out the available supply of fossil fuels fairly, and maintaining flexibility in prices so that the market works efficiently.

The proposal is that DTQs should in fact be implemented immediately, taking full advantage of stability and financial resources while they are still available. Some adjustments to the model may be required under post-market conditions.

How Domestic Tradable Quotas work

The scheme works like this. Users are given rations, or quotas, and allowed to buy and sell them, so that if any user cannot cope within his ration, he can top it up, and users who are most successful in keeping their fuel consumption low can sell as much of their ration they can spare.

At the heart of the scheme is the "Carbon Budget" which gives notice of gradual reductions in the upper limit for carbon emissions. The "carbon units" making up this budget are issued to adults and organisations. All adults receive an equal and unconditional Entitlement of units; organisations acquire the units they need from a Tender, a form of auction based on issue of government debt. There is a national market on which low users can sell their surplus, and higher users can buy more.

DTQs are a hands-off scheme, with virtually all transactions being carried out electronically, using the technologies and systems already in place for direct debit systems and credit cards. It has been designed to function efficiently not only for people who participate in it, but also for those who do not - e.g. for overseas visitors, for the infirm and for those who refuse to cooperate.

 Click to read panel on carbon units and sequestration.

How the quota market works

The numeraire of the model is the "carbon unit", defined as one kilogram of carbon dioxide. Nitrous oxide, methane and other global warming gases would be rated in "CO2-equivalents" - the number of kilograms of CO2 that would produce the same amount of global warming as one kilogram of nitrous oxide, methane, etc). Estimates of the carbon units ratings of the main fuels and electricity are set out in the Box.

TRANSLATING EMISSIONS INTO FUEL Estimates of the global warming potential (GWP) of gases released by the production and combustion of fuels.54 1 kg carbon dioxide = 1 carbon unit. The GWP of methane and nitrous oxide is measured as carbon dioxide equivalents.
Fuel	Carbon units
Natural gas	0.2 per kWh
Petrol	2.3 per litre
Diesel	2.4 per litre
Coal	2.9 per kg
Grid electricity (night)	0.6 per kWh
Grid electricity (day)	0.7 per kWh

The domestic market (Figure 2D3) works as a sequence. At the start, there is the Register (called QuotaCo); this is a computer database that holds individual carbon accounts for all participants in the scheme, like the accounts that are held for credit cards and collective investments.

Carbon units are issued on an annual basis - with an initial issue for one year, topped up each week - and they are placed on the market in two ways. First, there is the Entitlement for all adults: households' consumption of fuel and energy in various forms accounts for about 45% of all emissions in the UK. Carbon units representing this share (45%) of all carbon emissions are therefore issued to adults on an equal per capita basis. (Children's carbon usage is provided for in the existing system of child allowances.) The remaining share (55%) is issued through the Tender to commercial and industrial companies and to the public sector. It is distributed by the banks to organisations using direct credit (for the units) and direct debit systems (for the payments).

When anyone (consumers, firms or the government itself) makes purchases of fuel or energy, they surrender quota to the energy retailer, accessing their quota account by (for instance) using their QuotaCard or direct debit. The retailer then surrenders carbon units when buying energy from the wholesaler. Finally, the primary energy provider surrenders units back to the Register (QuotaCo) when the company pumps, mines or imports fuel. This closes the loop.

Some purchasers will not have any carbon units to offer at point of sale - for example, foreign visitors, people who have forgotten their card55 or who have used, or cashed-in, all their quota, and small firms and traders that do not bother to make regular purchases of units through their banks.All these must buy quota at the time of purchase, in order to surrender it, but they will pay a cost penalty for this: they have to buy them at the market's offer price and surrender them at the (lower) bid price; the difference between these two prices is the cost of non-participation. Carbon units can be bought and sold on the secondary market. People who use less than their entitlement can earn a revenue from the sale of their surplus, and people who use more must buy the extra.

The government receives revenue from the tender, and trading revenues are earned by the market-makers who quote bid and offer prices. Purchases and sales of carbon units are made on-line through home computers, through automatic teller machines (ATMs), over the counter of banks and post offices and energy retailers, and by direct debit with energy suppliers.

THE CARBON BUDGET