In the same week as oil prices hit over $90 a barrel, and share prices on both slides of the Atlantic went into freefall, a clarion call to act came from a group of energy experts. The respected German Energy Watch Group published a much needed independent report on our remaining oil reserves (EWG Oil Report). Unlike most other future mapping reports (such as the fair-weather approach of the IEA), this analysis does not rely on unverifiable and unreliable reserve data. Rather the analysis is based primarily on production data. It concludes that world oil production had in fact peaked in 2006.
Production, it says, will start to decline at a rate of several percent per year. By 2020, and even more by 2030, global oil supply will be dramatically lower. So what of it? Well, this steep resource depletion will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame. Crude oil is the most important energy carrier at a global scale. All kinds of transport relies heavily on oil and the future oil availability is of paramount importance as it entails completely different actions by politics, business and individuals. With a 3 - 7% decline per annum, the UK's proposed 4% plug by nuclear by 2025 is woefully inadequate. A matter of too little too late. By my simple reckoning, at the most conservative estimate, we are looking at a 54% decline by 2025, almost 70% by 2030. Peak oil is now they say, but in the UK our government and the energy industry seems to be in denial - what Jeremy Leggett, Solarcentury CEO and former member of the British Government’s Renewables Advisory Board, calls "institutional denial".
Remaining world oil reserves are estimated to be 1,255 Gb (Giga barrel) according to the industry database HIS (2006). For the Energy Watch Group (EWG), however, there are sound reasons to modify these figures for some regions and key countries, leading to a corresponding EWG estimate of 854 Gb. The report concludes that world is at the beginning of a structural change of its economic system, a change that will be triggered by declining fossil fuel supplies and will influence almost all aspects of our daily life. Climate change will also force humankind to change energy consumption patterns by reducing significantly the burning of fossil fuels. Our way of dealing with energy issues will have to change fundamentally.
The point is made that we are now entering a period of transition. A period which will probably has its own rules which are valid only during this phase. Things might happen which we never experienced before and which we may never experience again once this transition period has ended.
Just as oil prices ebb and flow before it's own tsunami breaks, so too do our climate warnings. It was reported that absorption of atmospheric CO2 by the North Atlantic ocean has plunged by half in the last ten years. This of course has major implications: one of the world’s main carbon sinks is, for a reason that scientists can not explain, breaking down. The just released Global Environment Outlook (GEO-4) UNEP report is equally hard hitting in outlook and serves to underline the fact that the world does not face separate crises - the “environmental crisis”, “development crisis”, and “energy crisis”. They are infact all one.
The question is, what sort of framework should be and could be put in place? To that end, I trotted off to hear Jonathon Porritt speak at the RSA . He proffers a workable framework: Capitalism as if the World Matters. Like Jeremy Leggett, he recognises the lack of readiness of governments and industry to engage and suggests that the pending oil crisis will focus minds. He believes that there is a case and an opportunity for capitalism to become sustainable, providing it is also equitable. The environment and society, sustainability and social equity - these are the cornerstones of our future, if we are to have a future. You can listen to what he said here: podcast of Jonathon Porritt at the RSA
And who's going to take up the mantle of this good leadership? At governmental level, in the UK The Environmental Audit Committee has just called for a Climate Minister to have overall responsibility for co-ordinating the Climate Change Programme and a Climate Change and Energy Secretariat, with the duty to provide clear political leadership on climate change. That strikes me as an eminently sensible and vital first step. How long will it be until this is done?
I shall be off to Seville at the end of the week - a 24 hour train journey each way. It should give me ample time to read the newly revised and updated Capitalism as if the World Matters .
The Last Oil Shock