How much can energy efficiency really improve?

From: Growth Isn’t Possible
Andrew Simms and Victoria Johnson
Schumacher College
January 2010

Pages 102-116

One hundred years ago, electricity production, at best was only 5-10 per cent efficient. For every unit of fuel used, between 0.05 and 0.1 units of electricity were produced. Today, the global average efficiency for electricity generation is approaching 35 per cent and has remained largely unchanged for the past 40 years.344 This may come as a surprise given the often-held view that technology has continued to improve less and will continue to do so in the future. Whilst this is largely due to the current mix of the global energy system, rather than individual technologies, it highlights two problems associated with the assumption that we can expect a steady increase in energy efficiency/decline in carbon intensity of the global economy. First, as a general rule of thumb, in a given technology class, efficiency normally starts low, grows for decades to centuries and levels-off at some fraction of its theoretical peak.345 As described earlier in the report, the second law of thermodynamics, is one of the most fundamental physical laws; it states that energy conversion always involves dissipative losses (an increase in entropy). As such, any conversion can never be 100 per cent efficient.

The results of our analyses have shown, future stabilisation pathways are dependent on assumptions about energy intensity and, therefore, energy efficiency. These assumptions fail to acknowledge, however, that in many cases of ess, engineers have already expended considerable effort to increase the energy efficiency.346

Second, we are built into and are still building ourselves into a centralised energy system. Such systems favour fossil and nuclear fuels over renewable energy, do not exploit the maximum efficiency possible (i.e., do not favour a system where an exergy cascade, such as combined heat and power, can be utilised), and the energy system is subject to large distribution loses. This is likely to continue into the future if energy policies rely heavily on nuclear and CCS schemes. Particularly given that CCS reduces the efficiency of the energy system, and nuclear fission is a mature technology, already approaching its efficiency limit, and is far from being carbon neutral, as is often claimed. If nuclear fusion ever becomes a viable option, it is likely to have the same thermal efficiencies as nuclear fission.347 In other words, many of the technologies that make up the global energy system are mature technologies and their current efficiencies are at or almost at their practical maximums.

The slow capital stock turnover for large energy infrastructure - shown in Figure 20 also means that energy decisions made now will influence the trajectory of emissions over the next 25-60 years, with obvious implications for the speed at which a transition to a low carbon economy can take place.
Amongst the most efficient technologies are large electric generators (98-99 per cent efficient) and motors (90-97 per cent). This is followed by rotating heat engines that are limited by the Carnot efficiency limits (35-50 per cent), diesel (30-35 per cent) and internal combustion engines (15-25 per cent). Improvements in these areas are, therefore, small. In fact, the energy efficiency of steam boilers and electrical generators has been close to maximum efficiency for more than half a century. 349 Similarly, the most efficient domestic hot water and home heating systems have been close to maximum efficiency for a few decades.350

Whilst hydrogen fuel cells are often pursued as future sources of 'clean, zero-carbon, highly efficient sources of energy', there are also upper limits to the energy efficiency achievable. Fuel cells are currently 50-55 per cent efficient, and are believed to reach a maximum at around 70 per cent. This is due to limits imposed by electrolytes, electrode materials and catalysts within the fuel cell system. Additionally the production of hydrogen from oil or methanol is has a maximum efficiency of 75-80 per cent.351

In terms of renewable energy, photovoltaic (PV) cells currently have efficiencies between 15 and 20 per cent (in commercial arrays) with a theoretical peak of around 24 per cent (highest recorded efficiency = 24.7 per cent). This maximum is higher for multi-band cells and lower for more cost-effective amorphous thin films. Wind turbines have commercial limits are around 30-40 per cent, with a maximum efficiency limit of 59.6 per cent - the Betz limit.352 Hydroelectric power is already at its maximum average efficiency of around 85 per cent.353

Photosynthesis is highly inefficient in converting sunlight into chemical energy with the most productive ecosystems being around 1-2 per cent efficient and a theoretical peak of around 8 per cent. The extent of bioenergy is also restricted by the volume of biomass necessary versus land available which is possibly not greater than 30 per cent of the Earth's land-surface.

In the case of lighting, high pressure sodium vapour has an energy efficiency of around 15-20 per cent, whilst fluorescent (10-12 per cent) and incandescent (2-5 per cent) illumination generate more heat than light.

For transport systems, specifically road transport, improvements in private vehicle efficiencies are largely due to vehicle mass (see Box 9), driving patterns and aerodynamic drag and the use of technology such as regenerative breaking (electric power recovery from mechanical energy otherwise lost). The efficiency of the internal combustion and diesel engine are largely at their maximum. Further improvements could be made by hybrid, electric (dependent on the central power plant efficiency) or fuel cell vehicles. Box 24 shows a similar levelling of in aviation efficiency gains.

How much can energy efficiency really improve?

Box 24. Aviation eating up efficiency gains

Some are optimistic that technological improvements will allow air travel to continue to grow into the future while keeping emissions under control - and eventually reducing them overall. This kind of optimism was embodied by the strap line that heralded the new Airbus A380 on its maiden flight from Singapore to Sydney in 2007: 'cleaner, greener, quieter, smarter'.

Overall fuel efficiency gains of 70 per cent between 1960 and 2000 are often cited as evidence for continued improvements in efficiency. For example, the Air Transport Action Group has said: 'Building on its impressive environmental record, which includes a 70 per cent reduction in... emissions at source during the past 40 years, the aviation industry reaffirmed its commitment to... further develop and use technologies and operational procedures aimed at minimising noise, fuel consumption and emissions.'354

There is little evidence, however, that major improvements will be made in the near future. Despite technological achievements so far, absolute growth in fuel use by aircraft has grown by at least 3 per cent per year.355 Quite simply, the efficiency improvements of 0.5 to 1.3 per cent a year that have been achieved are being dwarfed by the industry's annual growth of 5-6 per cent.356 The time it takes to pension off and replace commercial aircraft is long, and any additional efficiency gains anticipated are likely to be wiped out by a continuing increase in flights.357

The Advisory Council for Aeronautics Research in Europe (ACARE) has established ambitious goals for improvements to aircraft efficiency. By 2020, it wants the industry to achieve a 50 per cent reduction in CO2 per passenger kilometre. Of this, 15-20 per cent will be from improvements to engines, 20-25 per cent from airframe improvements and a further 5-10 per cent from air traffic management.358 But to achieve these targets, the industry would need to improve its efficiency by over 2.5 per cent per year. In reality, efficiency gains of just 1 per cent have been described as 'rather optimistic' given that the jet engine is now regarded as mature technology, and annual efficiency improvements are already falling.359

An analysis of projected aviation growth and anticipated improvements in aircraft efficiency suggests that if growth in Europe continues at 5 per cent, Growth isn't possible traffic will double by 2020 (relative to 2005). With an 'ambitious' 1 per cent annual improvement in fleet efficiency, CO2 emissions would rise by 60 per cent by 2020 (and 79 per cent if emission trading did not affect growth). Even if a 10 per cent reduction in CO2 per passenger kilometre were to be achieved, CO2 emissions would rise by 45 per cent.360

Figure 21 shows long-haul aircraft efficiency gains since 1950 as an index based on the De Havilland DH106 Comet 4 (the least efficient long-haul jet airliner that ever flew). It shows a sharp improvement in efficiency between 1960 and 1980 but a steady slowing of efficiency gains since then. Further efficiency gains between 2000 and 2040 are likely to be in the order of 20-25 per cent.361 Even the performance of the new Airbus A380 fits neatly into the regression, indicating that the 50 per cent more efficient aircraft that some have predicted by 2020 are highly unlikely.
One way of comparing efficiencies of different technologies is through an EROI assessment. Figure 22 shows various EROI ratios for a number of electric power generators. It shows that wind turbines compares favourably with other power generation systems. Base load coal-fired power generation has an EROI between 5 and 10:1. Nuclear power is probably no greater than 5:1, although there is considerable debate regarding how to calculate its EROI. The EROI for hydropower probably exceeds 10, but in most places in the world the most favourable sites have already been developed.

Practical limitations to the improvements in supply-side energy efficiency

An increase in resource efficiencies alone leads to nothing, unless it goes hand in hand with an intelligent restraint of growth.364 Wolfgang Sachs (1999)
In terms of work generation from a heat engine (where heat is converted to work), the Carnot efficiency, named after the French Physicist Nicolas Léonard Sadi Carnot, determines the maximum efficiency in which this can be achieved.

The thermal efficiency of gas and steam turbines is a function of the temperature difference between the inlet temperature and the outlet temperature. In a perfect Carnot cycle, the maximum efficiency that can be achieved is around 85 per cent. In reality, the most efficient combined-cycle gas turbine (CCGT) plants have efficiencies in the range of 59-61 per cent. In a CCGT, gas is used to drive a turbine and the exhaust gases are used to raise steam to drive a second turbine. The high efficiency of this type of turbine is due to the use of both the gas and the 'waste' exhaust gases. Currently, however, the average fossil-fuelled power plant is approximately 33 per cent efficient.365 With the potentially imminent peaking in production of gas, it seems unlikely this will change significantly in the future.

An Integrated Gasification Combined Cycle plant (IGCC), is a similar technology to CCGT, but uses coal as a feedstock. Coal is converted into a synthetic gas and then used in a CCGT. The efficiency of an IGCC is in the range of 30-45 per cent. Obviously, without CCS, this process would act to increase the carbon intensity of the economy, but with CCS the efficiency of the plant declines. Biomass could be used as a feedstock however, which could have a significant impact on the level of carbon emissions.

Fuel cell technology converts the chemical energy of fuels directly (electrochemically rather than through combustion) and therefore, is not restricted by the Carnot efficiency limit. Therefore, considerably higher efficiencies can be met. There are a number of different types of fuel cells entering the market. Generally all fuel cells run on hydrogen, although some can run on fuels such as CO, methanol, natural gas or even coal if externally converted to hydrogen.366 The advantage of fuel cells is that emissions at point of use are simply water vapour and therefore could significantly contribute to a reduction in urban pollution. But, as described earlier in the report, hydrogen is not a fuel; it is a carrier of energy. And, if the hydrogen is produced from a hydrocarbon fuel, then the benefits as a low carbon solution are reduced. Furthermore, scaled up significantly, fuel cell technology will hit other limiting factors, such as the availability of the metal platinum - a catalyst in the fuel cell.

It is useful at this point to return to the term 'exergy'. This describes the maximum useful work obtainable from an energy system at a given state in a specified environment.

By and large, any attempt to increase the overall efficiency of a supply-side energy process could be achieved by making use of low exergy products as well as high exergy products of energy generation. An example of this is CCGT (described above) or a combined heat and power station (co-generation). Co-generation involves the recovery of thermal energy that is normally lost or wasted. Both electricity and the low-grade waste heat are used for both powering appliances and heating. By adding district heating capacity to a CCGT, efficiency can increase to almost 80 per cent.

Distributed generation?

An area that is strongly associated with efficiency of the energy industry is distributed generation. While its main benefits are cleaner and more efficient generation and location of generation closer to demand, distributed generation also has an effect on losses. In simple terms, locating generation closer to demand will reduce distribution losses as the distance electricity is transported will be shortened, the number of voltage transformation levels this electricity undergoes is lessened and the freed capacity will reduce utilisation levels.367 Ofgem (2003)

Using an economic model developed by the World Alliance for Decentralised Energy (WADE),368 it has been repeatedly shown that the pursuit of a decentralised renewable energy system with cogeneration is becoming increasingly economically attractive; not only for mitigating climate change, but also in the face of dwindling fossil fuel reserves.369

Centralised energy systems, such as the UK's on average lose 9.3 per cent (global average is 7.5 per cent) of all electricity generated through transmission and distribution losses.370 Ofgem estimated that the UK could achieve approximately 4 per cent of the UK government's domestic target of a 20 per cent reduction in CO2e by 2010 through simply reducing distribution losses by 1 per cent. When these distribution losses are considered, the argument against a new nuclear age or large-scale CCS is strengthened further.

Distributed energy is a favourable pathway for developing nations. This is because a centralised energy system using a transmission network like the National Grid requires a high capital transmission and distribution network. Once in place, the network will also have high operation and maintenance costs as well as significant energy losses.

The challenges to decentralised energy are fourfold, however:

1 Policy and regulatory barriers to decentralised energy.

2 Lack of awareness and effectiveness of decentralised energy.

3 Failure of industrial end-users to accept and adapt to decentralised energy agenda.

4 Concerns regarding the dependence of decentralised/cogeneration of fossil fuels. Indeed, the decentralised system proposed by Ken Livingstone, is based on combined heat and power from CCGT.

Cogeneration lends itself to specific types of generation, generally small scale (less efficient), close to where the low-grade heat can be used. This, therefore excludes nuclear. It is also difficult to obtain large and/or consistent benefits from cogeneration, since the normally lost or waste heat cannot be stored until needed. Thus, it is necessary to try to balance the amount and timing of the loads between electricity generation and heat utilization.371
Given this, 'cogeneration is likely to remain a relatively minor contributor to improved energy efficiency.'372 Nevertheless, a decentralised energy system is still more efficient in terms of transmission and distribution losses.

The absolute theoretical efficiency that can be achieved assumes that energy operations experience no losses. It is estimated that ess is currently 37 per cent at the global level and that a two-fold increases may be possible, i.e., a 200 per cent improvement in ess.373 But the assumption that the types of technology that could lead to such a significant change will become commercially available and installed at a rate concomitant with within the timescales necessary to stabilise greenhouse gas concentrations at a 'safe level' is questionable.

Whilst the limits of thermodynamics only apply to the heat engine (thermal) generation of electricity, there are also theoretical and practical limits to the use of renewable energy, also based on the second law of thermodynamics.

The limits to a renewable energy fix

There are numerous reasons for a rapid transition to a global energy system based on renewable technologies: wind, water and solar. As described throughout this report, these include climate change, energy security in the face of Peak Oil, cost-effective conversion and flexible and secure supply. Several studies have shown that, although not without a few difficulties to overcome, it is both practical and possible to meet the global demand for energy from these sources.374

One recent study published in Scientific American in late 2009 outlined a plan to achieve just this - the complete decarbonisation of the global energy system - by the year 2030.375 Based only on existing technology that can already be applied on a large scale, it called for the building of 3.8 million large wind turbines, 90,000 solar plants and a combination of geothermal, tidal and rooftop solar-PV installations globally. The authors point out that while this is undeniably a bold scheme, the world already produces 73 million cars and light trucks every year. And, for comparison, starting in 1956 the US Interstate Highway System managed to build 47,000 miles of highway in just over three decades, 'changing commerce and society'.

But, even plentiful supplies of renewable energy are not a 'get out of jail free' card for economic growth. The reasons are few and straightforward. First, growth has a natural resource footprint that goes far beyond energy and we have to learn to live within the waste-absorbing and regenerative capacity of the whole biosphere. Secondly, even under the most ambitious programme of substituting new renewable energy for old fossil fuel systems, it will take time and, in climate terms, we are, according at least to James Hansen, already beyond safe limits of greenhouse gas concentrations.376

More global growth will take us even further beyond, with few guarantees that in the space of a few short years the chances of avoiding runaway climate change become unacceptably small. Thirdly, we also have to take into account the fact that, at least until renewable energy achieves a scale whereby its own generated energy becomes self-reproducing in terms of the energy needed for manufacture, even renewable energy systems have a resource footprint to account for. For example, recent research by the Tyndall Centre for Climate Change Research suggests that embodied energy in new energy infrastructure means that it would be approximately eight years before a decarbonisation plan would have a meaningful impact on emissions.377

Renewable technologies are rightly regarded as a potential source of future employment and have a large economic contribution to make, and tend to be seen as carbon neutral or potentially negative.378 Despite this, their overall environmental impact is not entirely benign, and this is particularly evident when renewable technologies are considered on a large-scale, something that is regularly assumed in future emission/ economic growth scenarios.

Renewable energy supply is still constrained by the laws of thermodynamics, since energy is being removed from a system; the natural system of the Earth. Whilst this refers to the theoretical limits of energy from renewable sources, there are also practical limits; for example, '...large enough interventions in [these] natural energy flows and stocks can have immediate and adverse effects on environmental services essential to human well-being'.379 This is most obviously the case where biomass (e.g. biofuels) are concerned. It has been suggested that given that 30-40 per cent of the terrestrial primary productivity is already appropriated by humans; any major increase could cause the collapse of critical ecosystems.380

In the IEA AP scenario, it is assumed that biofuels, such as biodiesel and bioethanol will replace mineral oil for use in transport. Without encouraging more land-use change, a major anthropogenic contributor to CO2 emissions, relying on energy biomass to provide a natural replacement to gasoline (petrol) would mean competition of agricultural land for food and fuel. Yet, with increasing population and increasing energy requirements is this physically possible without causing widespread ecosystem collapse? This is one of the key reasons why Jacobsen and Delucchi, authors of the study published in Scientific American, do not rely on biofuels in their plan.381

Not all biofuels, though, are reliant on a primary resource feedstock, such as sugarcane and corn (bioethanol) or rapeseed and soya (biodiesel). Cellulosic ethanol can potentially be produced from agricultural plant wastes, such as corn stover, cereal straws, sugarcane bagasse, paper, etc. The technology, however, requires aggressive research and development as it is not yet commercially viable.

At present the energy intensity of this type of ethanol production means that the overall energy value of the product is negative, or only marginally positive, although it is hoped that this will improve as technology develops.382 However, a number of experts feel less positive.383 For example: according to Eric Holt-Giménez, the executive director of FoodFirst/Institute for Food and Development Policy: 'The fact is that with cellulosic ethanol, we don't have the technology yet. We need major breakthroughs in plant physiology. We might have to wait for cellulosic for a long time.'384

Elsewhere, approximately one-half of the global available hydro power has already been harnessed. Little efficiency improvement, also, can be expected from wind turbines, which are at about 80 per cent of the maximum theoretical efficiency.385 The efficiency of solar PV cells could, however, increase from the present 15 per cent to between 20 per cent and 28 per cent in unconcentrated sunlight.386

To be unequivocal, renewable energy is a very good thing and has enormous potential to expand. Something like the Jacobson and Delucchi plan for 2030 is an urgent necessity at a global level if we are to avoid catastrophic global warming.387 As we have shown, zero-carbon or low carbon energy sources are not infinite. Therefore there is no excuse to avoid addressing the waste of energy.

Practical limits to energy efficiency (demand and supply side)

In general, energy efficiency improves at a slow rate of around 1 per cent per year. This rate is not policy-induced and is entirely due to technological developments the Autonomous Energy Efficiency Improvement parameter (AEEI). This global figure, however, has a regional signature. For example, evidence in 1990 suggested that the pace of AEEI in the USA slowed or stopped.388

Overall an energy efficiency improvement rate of 2 per cent (AEEI plus policy intervention) per year is often considered achievable. Higher energy-efficiency improvement rates in the range of 3-3.5 per cent are also thought to be possible due to continuous innovation in the field of energy efficiency.389 For industrialised countries, this means a reduction of primary energy use by 50 per cent in 50 years compared to current levels. This means that in spite of the doubling of energy use under business-as-usual conditions, the energy use could be as low as 50 per cent of the current level.390
But given the limitations discussed above, significant improvements to efficiency increases are only likely to be due to improvements in chemical processes rather than fuel combustion and increases in end-user energy efficiency.391

In terms of end-user efficiency, there is a long way to go. 'Unrealised' energy conservation measures in OECD countries may amount to 30 per cent of total energy consumption.392,393 Some suggest that if there are no economic, social or political barriers, an instantaneous replacement of current energy systems by the best available technology would result in an overall efficiency improvement of 60 per cent.394 This is contrary to the forecast improvement of efficiency by 270 per cent if historical efficiency improvement rate of 1 per cent continues and is maintained over the next 100 years. And, even if this was possible, the improvement rate of 1 per cent would be unlikely to continue beyond 100 years.395

Demand side barriers

When energy efficiency promoters claim that we can get more out of less, we must conclude that the focus so far has been to get more out, period! 396 Nakicenovic and Gruebler (1993)

Throughout this report, we have shown that observations of changes to carbon intensity and energy intensity of the economy over the past decade have failed to improve at a rate necessary to slow the increase in greenhouse gas concentrations, and in recent years appear to be heading in the opposite direction. This is supported by a recent report by the IEA on trends in energy consumption between 1973 and 2004.397 The report found that while energy intensity had fallen by over 30 per cent since 1973 - it now takes one third less energy to produce a unit of GDP in IEA economies - the rate of change has slowed.398 Improvements in energy intensity have slowed in all sectors of the economy since the 1980s. As such, projecting forward historical rates of energy efficiency are misleading. But this is the basic assumption made by most the future emissions scenarios.

While we have shown that improvements to supply-side efficiency is limited by practical limits to energy conversion and technological, what are the drivers of demand side energy efficiency? Earlier in the report we discussed the significance of the rebound effect, whereby efficiency savings are offset by increases in consumption (see Box 8). There are a number of additional barriers to demand side efficiency - eeu (see Equation 1). These are shown in Box 25.
All these factors contribute to the failure of energy efficiency to drive absolute emissions downward. The main reason, however, relates to the market imperfection. For example the IEA found that the price signals in the 1970s did more to increase efficiency than improved technology has done since the 1980s.399 In other words, the cost of energy is currently too low. Because of subsidies or the externalisation of the environmental cost, the wasteful use of energy is encouraged.

Limits to the speed of technological uptake The magnitude of implied infrastructure transition suggest the need for massive investments in innovation energy research.400 Hoffert et al. (1998)

Based on historical evidence, what is the capacity for social and institutional organisations to rapidly change? Is there a limit to our ability to produce knowledge and new technology to deal with a problem? Surprisingly, this is a vastly under researched field. For example, Tim Lenton and colleagues conclude in their paper on tipping points with the following statement: 'A rigorous study of potential tipping elements in human socioeconomic systems would also be welcome, especially to address whether and how a rapid societal transition toward sustainability could be triggered, given that some models suggest there exists a tipping point for the transition to a low-carbon-energy system.'

While there is a growing awareness of the urgency with which the transition to a low carbon economy must be made, identification of potential tipping elements in human systems is still a largely under-researched area.

Box 25. Barriers for energy efficiency improvements 402, 403

Technical barriers: Options may not yet be available, or actors may consider options not sufficiently proven to adopt them.

Knowledge/information barriers: Actors may not be informed about possibilities for energy-efficiency improvement. Or they know certain technologies, but they are not aware to what extent the technology might be applicable to them.

Economic barriers: The standard economic barrier is that a certain technology does not satisfy the profitability criteria set by firms. Another barrier can be the lack of capital for investment. Also the fact that the old equipment is not yet depreciated can be considered as an economic barrier.

Institutional barriers: Especially in energy-extensive companies there is no well-defined structure to decide upon and carry out energy-efficiency investments.

The investor-user or landlord-tenant barrier: This barrier is a representative of a group of barriers that relate to the fact that the one carrying out an investment in energy efficiency improvement (e.g., the owner of an office building) may not be the one who has the financial benefits (in this example the user of the office building who pays the energy bill).

Lack of interest in energy-efficiency improvement: May be considered as an umbrella barrier. For the vast majority of actors, the costs of energy are so small compared to their total (production or consumption) costs that energy-efficiency improvement is even not taken into consideration. Furthermore, there is a tendency that companies, organisations and households focus on their core activities only.Growth isn't possible

A recent report to the US Department of Energy has noted that it takes decades to remake energy infrastructures.404 This is further supported by Figure 20 which maps capital stock turnover rates for energy related infrastructure. Decisions made now in terms of transport and energy infrastructure and the built environment will determine the capability of a nation to reduce its carbon footprint. Highly centralised energy systems, inefficient buildings and poor planning will make a difficult task even more challenging.

Climate change has long been viewed as a pollution problem. This has led to the interpretation of climate change in predominantly scientific terms by policy makers, the media and environmental NGOs resulting in technocentric responses gaining more interest than any more systemic change. However, the growing emphasis on the technological or market-based initiatives as a cure-all ignores what we have shown in this report - that the challenges we currently face, have their roots in a faulty economic system. So, with the vast majority of efficiencies realised, it appears restructuring of the economic system may be the only route by which we can achieve the emission cuts necessary.

In the context of energy systems, the findings of this report only add to the desirability of carefully considered low carbon planning, and other prompt actions to slow down the use of energy and resources. Such solutions can also improve inter alia resilience to exogenous shocks such as volatile food or energy prices, local economic regeneration, social cohesion, physical and mental well-being, employment opportunities and the increased individual and community capacity to reduce emissions and resource use. For example, investment into renewable energy can create new jobs often in areas where they are needed the most. If installed at the local level, renewable energy schemes can also contribute to local economic regeneration, social cohesion (an important factor for adaptive capacity) and improve environmental literacy. Energy efficiency and decentralised or low carbon energy production targeted at low-income households also has the potential to reduce fuel poverty or access to energy caused by poor living standards and low-incomes.

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