Thursday, July 30, 2009

Energy Efficiency Investment Report by McKinsey & Company

In this report, McKinsey & Company offers a detailed analysis of the magnitude of the efficiency potential in non-transportation uses of energy, a thorough assessment of the barriers that impede the capture of greater efficiency, and an outline of the practical solutions available to unlock the potential.

The research shows that the U.S. economy has the potential to reduce annual non-transportation energy consumption by roughly 23 percent by 2020, eliminating more than $1.2 trillion in waste – well beyond the $520 billion upfront investment (not including program costs) that would be required. The reduction in energy use would also result in the abatement of 1.1 gigatons of greenhouse gas emissions annually – the equivalent of taking the entire U.S. fleet of passenger vehicles and light trucks off the roads.

Such energy savings will be possible, however, only if the United States can overcome significant sets of barriers. These barriers are widespread and persistent, and will require an integrated set of solutions to overcome them – including information and education, incentives and financing, codes and standards, and deployment resources well beyond current levels.

In addition to the above central conclusion, five observations will be relevant to a national debate about how best to pursue energy efficiency opportunities of the magnitude identified and within the timeframe considered in this report. Specifically, an overarching strategy would need to:
  • Recognize energy efficiency as an important energy resource that can help meet future energy needs while the nation concurrently develops new no- and low-carbon energy sources
  • Formulate and launch at both national and regional levels an integrated portfolio of proven, piloted, and emerging approaches to unlock the full potential of energy efficiency
  • Identify methods to provide the significant upfront funding required by any plan to capture energy efficiency
  • Forge greater alignment between utilities, regulators, government agencies, manufacturers, and energy consumers
  • Foster innovation in the development and deployment of next-generation energy efficiency technologies to ensure ongoing productivity gains.

Wednesday, July 29, 2009

Low-Energy Lifestyle: Lessons from Cuba

Pat Murphy, the Executive Director of Community Solutions presented an overview on the Special Period of Cuba in which oil use was reduced over 50% in 1990.

The Special Period in Peacetime (Spanish: Período especial en tiempo de paz) in Cuba was an extended period of economic crisis that began in 1991 after the collapse of the Soviet Union and, by extension, the Comecon. The economic depression of the Special Period was at its most severe in the early-to-mid 1990's before slightly declining in severity towards the end of the decade. It was defined primarily by the severe shortages of hydrocarbon energy resources in the form of gasoline, diesel, and other oil derivatives that occurred upon the implosion of economic agreements between the oil-rich Soviet Union and Cuba. The period radically transformed Cuban society and the economy, as it necessitated the successful introduction of sustainable agriculture, decreased use of automobiles, and overhauled industry, health, and diet countrywide.

Here is a related video on Learning from Cuba's Response to Peak Oil:

Peak Moment #27: Megan Quinn of The Community Solution discusses her visit to Cuba, and the movie "The Power of Community". This young woman sees Peak Oil as an opportunity to create the communities we want, but notes that we must reduce our consumption despite environmentalists' assurances that biofuels will save us.

Tuesday, July 28, 2009

Next Geneation Biofuels in the News

A Biofuel Process to Replace All Fossil Fuels
A startup unveils a high-yield process for making fuel from carbon dioxide and sunlight.

A startup based in Cambridge, MA--Joule Biotechnologies--today revealed details of a process that it says can make 20,000 gallons of biofuel per acre per year. If this yield proves realistic, it could make it practical to replace all fossil fuels used for transportation with biofuels. The company also claims that the fuel can be sold for prices competitive with fossil fuels.

Big Oil Turns to Algae
ExxonMobil invests $300 million in Synthetic Genomics to develop algae biofuel.

ExxonMobil announced a commitment to invest $300 million over five to six years in Synthetic Genomics, which Craig Venter founded and now leads as CEO, and to spend an additional $300 million on a complementary internal algae program.

The push is to take advantage of algae's ability to efficiently transform sunlight into lipids that can be relatively easily converted into diesel, gasoline, and possibly even advanced hydrocarbons used to manufacture plastics, chemicals, and other products.

Dow to Test Algae Ethanol
Startup Algenol partners with Dow Chemical on a demonstration ethanol plant.

Florida startup Algenol Biofuels says that it can efficiently produce commercial quantities of ethanol directly from algae without the need for fresh water or agricultural lands--a novel approach that has captured the interest and backing of Dow Chemical, the chemical giant based in Midland, MI.

The companies announced plans to build and operate a demonstration plant on 24 acres of property. It will consist of 3,100 horizontal bioreactors, each about 5 feet wide and 50 feet long and capable of holding 4,000 liters.

Monday, July 27, 2009

Oil Price vs. Supply / Demand

The above figure by Euan Mearns on The Oil Drum Europe shows monthly oil production data and monthly average oil price data from economagic fit Phil Hart's simple model. The return path since July 2008 is shown in light blue. Marks at one month intervals.

A reduction in global oil production capacity will mean that higher future oil price will be attained at a lower level of demand than in 2008. Is another oil price spike on the way? Will oil trade well above $100 in 2012 as suggested by the following scenario?

Check out the full post on future oil price.

Friday, July 24, 2009

Biggest Economic Opportunity of the 21st Century

John Doerr, Silicon Valley's legendary moneyman, is afraid of eco-apocalypse. After building his reputation (and a considerable fortune) investing in high-tech successes, he's turning his focus toward green technologies, and hoping it isn't too late.

Why you should listen to his TED Talk?

"I don't think we're going to make it," John Doerr proclaims, in an emotional talk about climate change and investment. Spurred on by his daughter, who demanded he fix the mess the world is heading for, he and his partners.

John Doerr, a partner in famed VC firm Kleiner Perkins Caufield & Byers, made upwards of $1 billion picking dot-com stars like Amazon, Google, Compaq and Netscape. (He also picked some flops, like Go Corporation and the scandal-ridden He was famously quoted saying, "The Internet is the greatest legal creation of wealth in history," right before the dot-com crash.

But now he's back, warning that carbon-dioxide-sputtering, gas-powered capitalism will destroy us all, and that going green may be the "biggest economic opportunity of the 21st century." So Kleiner Perkins has invested $200 million in so-called greentech, a combination of startups that are pioneering alternative energy, waste remediation and other schemes to prevent the coming environmental calamity. But Doerr is afraid that it might be too little, too late.

"[John Doerr] is, by all accounts, the most influential venture capitalist of his generation."

Fast Company

Thursday, July 23, 2009

Peak Oil From Above - Project Home

A hymn for the planet

HOME is an ode to the planet's beauty and its delicate harmony. Through the landscapes of 54 countries captured from above, Yann Arthus-Bertrand takes us on an unique journey all around the planet, to contemplate it and to understand it. But HOME is more than a documentary with a message, it is a magnificent movie in its own right. Every breathtaking shot shows the Earth - our Earth - as we have never seen it before. Every image shows the Earth's treasures we are destroying and all the wonders we can still preserve. "From the sky, there's less need for explanations". Our vision becomes more immediate, intuitive and emotional. HOME has an impact on anyone who sees it. It awakens in us the awareness that is needed to change the way we see the world. (HOME embraces the major ecological issues that confront us and shows how everything on our planet is interconnected.)


In 200,000 years on Earth, humanity has upset the balance of the planet, established by nearly four billion years of evolution. The price to pay is high, but it is too late to be a pessimist: humanity has barely ten years to reverse the trend, become aware of the full extent of its spoliation of the Earth's riches and change its patterns of consumption.

HOME - a Film by Yann Arthus-Bertrand

"We are living in exceptional times. Scientists tell us that we have 10 years to change the way we live, avert the depletion of natural resources and the catastrophic evolution of the Earth's climate.

The stakes are high for us and our children. Everyone should take part in the effort, and HOME has been conceived to take a message of mobilization out to every human being.

For this purpose, HOME needs to be free. A patron, the PPR Group, made this possible. EuropaCorp, the distributor, also pledged not to make any profit because Home is a non-profit film.

HOME has been made for you: share it! And act for the planet."

The Project HOME movie was distributed online for free on YouTube.

Wednesday, July 22, 2009

EROEI - Energy Returned on Energy Invested

EROEI (Energy Returned on Energy Invested), ERoEI, EROI (Energy Return On Investment) is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource. It is an important metric to decide on the strategy for the transition to renewable energy.

The Oil Drum has great posts on EROEI.

As production from fossil fuel deposits starts to decline, we are being forced to procure energy from other sources such as wind, tidal, solar, bio-fuel and nuclear. It is important to understand the energy efficiency of new energy procurement systems, if industrial society as we know it is to survive the next great energy transition away from fossil fuels.

The Energy Return on Energy Invested (ERoEI) provides one measure of the efficiency of energy procurement and is quite simply defined as:

Energy procured / Energy used to procure energy

The chart shows how the proportion of net energy available for society to use varies with ERoEI. There is in fact much uncertainty in the data displayed and many large gaps in knowledge. The shape of the curve shows that for ERoEI above 10, the bulk of energy procured is available to society – to power industry, transportation, schools and hospitals. With falling ERoEI below 10 there is an exponential increase in the amount of energy required to procure energy with a corresponding decline in net energy available for society.

High per-capita energy use is considered desirable as it is associated with a high standard of living based on energy-intensive machines. A society will generally exploit the highest available EROEI energy sources first, as these provide the most energy for the least effort. With non-renewable sources, progressively lower EROEI sources are then used as the higher-quality ones are exhausted.

For example, when oil was originally discovered, it took on average one barrel of oil to find, extract, and process about 100 barrels of oil. That ratio has declined steadily over the last century to about three barrels gained for one barrel used up in the U.S. (and about ten for one in Saudi Arabia). The EROEI of wind energy is about 20:1 which is driving its adoption.

Tuesday, July 21, 2009

Peak Oil Overview on The Oil Drum - July 2009

Gail the Actuary has a great introduction and overview of Peak Oil on The Oil Drum site. Check out his original post here.

The question now is with respect to world production. The price of oil isn't very high--is there any possibility of a near-term peak in world oil production? Lower prices would seem to suggest there is no problem.

It seems to me that if we look closely at the situation, world oil production has likely peaked, even though prices are not behaving as most had expected. Furthermore, the peaking of world oil production seems to be a major cause of the current financial crisis. The tie of peak oil to recent demand destruction points to a possible continuing destruction in demand in the years ahead, with oil prices fluctuating, but not necessarily rising to great heights.

Monday, July 20, 2009

Energy Dependency of EU Countries

Europe's Energy Portal has statistics on the energy dependency of the EU-member states.
The portal aims to guide us Toward a low-carbon, environmentally friendly & sustainable future.

The gross energy consumption of the EU27 in 2008 was 1825 Million tonnes oil equivalent (Mtoe). Net imports was 1010 Mtoe which means an energy dependency ratio of 53.8%.

Energy Dependency of EU Countries (2008)

Energy consumption by EU-member states, their net imports and dependence rate in 2008.
The most important suppliers of crude oil and natural gas were Russia (33% of oil imports and 40% of gas imports) and Norway (16% and 23% respectively).
  1. Cyprus 100%
  2. Malta 100%
  3. Luxembourg 98.9%
  4. Ireland 90.9%
  5. Italy 86.8%
  6. Portugal 83.1%
  7. Spain 81.4%
  8. Belgium 77.9%
  9. Austria 72.9%
  10. Greece 71.9%
  11. Latvia 65.7%
  12. Lithuania 64%
  13. Slovakia 64%
  14. Hungary 62.5%
  15. Germany 61.3%
  16. Finland 54.6%
  17. Slovenia 52.1%
  18. France 51.4%
  19. Bulgaria 46.2%
  20. Netherlands 38%
  21. Sweden 37.4%
  22. Estonia 33.5%
  23. Romania 29.1%
  24. Czech Republic 28%
  25. United Kingdom 21.3%
  26. Poland 19.9%
  27. Denmark -36.84% (net energy exporter)
The EU is working to reduce the effects of climate change and establish a common energy policy. By 2020 renewable energy should account for 20% of the EU's final energy consumption (8.5% in 2005). Consult the member state's renewable energy(RE) factsheets or browse through any of the latest charts.

Friday, July 17, 2009

Running the Numbers - Chris Jordan Photographs Mass Consumption

Startling digital photographs paint a disturbing yet strangely seductive picture of American life today. The new book Running the Numbers: An American Self-portrait by Chris Jordan provides an amazing visual impression of our mass consumption culture. Jordan's online gallery Intolerable Beauty: Portraits of American Mass Consumption has additional images that reflects on our consumer world.

Statistics can be daunting and dry: 1,000,000 trees cut down every year; 9,000,000 American children without health insurance; 2,000,000 plastic bottles used every five minutes; 2,300,000 adults incarcerated in U.S. prisons. Renowned photographer Chris Jordan brings these staggering numbers to life in manipulated digital photographs that are at once alluring and shocking. A landscape of toothpicks, each representing a felled tree, stretches into the horizon; a looping maze of plastic cups reveal how many are used each day on airplane flights; fashioned from soda cans, a replica of a Seurat masterpiece becomes a lesson in waste; and thousands of Barbie dolls—representing the number of breast augmentations performed each year—combine to depict a woman’s torso. Filled with astonishing photographs of surprising beauty, this book, manufactured from recycled materials, helps us grasp visually the potential consequences of our culture of waste.

Oil barrels (2008)
Depicts 28,000 42-gallon barrels, the amount of oil consumed in the United States every two minutes (equal to the flow of a medium-sized river).


Light Bulbs (2008)
Depicts 320,000 light bulbs, equal to the number of kilowatt hours of electricity wasted in the United States every minute from inefficient residential electricity usage (inefficient wiring, computers in sleep mode, etc.).


Thursday, July 16, 2009

Plan C: Community Survival Strategies for Peak Oil and Climate Change

Concerns over climate change and energy depletion are increasing exponentially. Mainstream solutions still assume a panacea that will cure our climate ills without requiring any serious modification to our way of life.

Plan C: Community Survival Strategies for Peak Oil and Climate Change explores the risks inherent in trying to continue our energy-intensive lifestyle. Using dirtier fossil fuels (Plan A) or switching to renewable energy sources (Plan B) allows people to remain complacent in the face of potential global catastrophe. Dramatic lifestyle change is the only way to begin to create a sustainable, equitable world.

Excerpts from the Preface to Plan C by Pat Murphy:

We are facing multiple grave world crises— peak oil, climate change, inequity and species extinction to name just a few. When I began this book our situation was very serious — now it is life threatening. The survival of industrial society as we know it today is in doubt. Twenty years of so-called sustainability conversations have led nowhere, and green has degenerated into a marketing term. The time for scientific and technological solutions to problems caused by science and engineering is long past. Survival requires that we begin to see that energy technology is the root cause of many serious world problems. As William Jevons pointed out decades ago, ever more efficient machines designed by scientists and engineers means ever-increasing consumption of fossil fuels and more generation of CO2.

Our problem is cultural, not technical. It is a character issue, not a scientific one. We have never bothered to ask or answer the question “What is energy for?” We have allowed cheap fossil fuels to change us from citizens into mere consumers.

Plan C offers an alternative perspective to the ever more frantic technical proposals for continuing our soul destroying and life endangering way of living. This book opens with a few chapters intended to “make a searching and fearless moral inventory of ourselves,” a starting point for many 12 step programs. In Part I, I take that moral inventory, describing the morally central core issues of fossil fuel depletion, human-caused climate change and global inequity. I relate peak oil to our economy— a word which, together with free market, defines us principally as self-centered consumers rather than as caring citizens. The growth economy has been based on the principle “greed is good,” and the results are disastrous. I review the history of imperialism, especially in the West, and the greed and violence it displays towards the planet’s human and non-human inhabitants. I show that US imperialism has its own history of greed, aggression and cruelty, extending within as well as beyond the national borders. The automobile — possibly the most destructive machine ever built, both of the physical world and of human communities — is addressed along with the electricity generating power plant, the fixed counterpoint to the automobile. The automobile and power plant are the key technologies that produce the CO2 that is so dangerously altering the planet’s climate. Finally I summarize the two institutions, the corporation and the media, that deliberately foster the delusion that the pursuit of personal satisfaction will advance the social good, which keeps us in a trance that all will be well.

Part II is solution focused and covers strategies and action plans. Community is the core aspect of a new set of values and a new consciousness that must replace the consumer driven mentality. Next I define some of the expertise and abilities we need to develop to live in a low energy world. This brings abstract national problems down to the personal level so we can recognize our own culpability for our personal day-to-day choices and habits. It also describes the major areas for individual energy reduction in the household sector — our cars, our homes and our food. I devote four chapters to the household economy — that part of the GNP under personal direct control. The problems and solutions for buildings, for cars and for our food are described in detail. All of us must in fact regain a set of skills and knowledge which atrophied while we put our trust in corporate producers. These are not tips chapters but rather explanations of what we must know in order to make good decisions and to determine which skills we will need for the new world economy.

In Part III, I discuss the new cultural context that we must create to survive. I emphasize the personal steps we must take, in particular breaking our addiction to machines that use fossil fuels. I discuss the media and emphasize our need to break free from this second addiction, one that allows society to be controlled by powerful corporations. I also cover the current focus on localization — an effort to counter the destructive trend toward globalization.

This is definitely a numbers book. It is focused on analysis and shows by such analysis the tremendous risks we are taking as we attempt to perpetuate, by dubious technological means, the fossil fuel-based society and growth oriented economy. It is also historical. It challenges the authority of our scientific and technological communities and exposes our poor collective record when it comes to managing fossil fuels and CO2 responsibly.

My thesis is that the best of American culture has been seriously degraded since becoming addicted to oil. We used to have fewer material goods but better relationships. The country was less violent. Our citizens sought to avoid entanglement in foreign affairs. The United States had cleaner water, healthier ecosystems, and more caring human relationships. It had neighborhood schools and unlocked doors. It had community in the best sense of that word. Much of this has been lost. We have gained wealth but we are losing our souls. The national soul desperately needs rework. Our best examples of community-focused living, and the sustaining relationships it fosters, show us exactly what to strive for. But the time remaining is limited, and the urgency of engaging ourselves in this work can not be overstated.

Check out the Community Solutions site for more details on Plan C.

Wednesday, July 15, 2009

Prepare for Peak Oil, Climate Change and Economic Collapse

From the Introduction of Peak Oil Prep by Mick Winter:

By the time you're reading this, the situation in our society may have already drastically changed. If not, it's likely to soon. Your options will depend on what has already happened, and what is yet to come. With Peak Oil Prep: Prepare for Peak Oil, Climate Change and Economic Collapse you have a handbook —a how-to and where-to guide—that will help you deal with the consequences of Peak Oil, climate change and economic
collapse, whether those consequences are minor or severe.

The book and its contents are designed so that you'll find it useful whenever you come to the realization that things are changing and not going to be the way they “always” have
been. All of the information in the book is valuable if you still have time to prepare. Most of it is still useful after things have gotten bad.

In this book you'll find suggestions and resources; ideas that will be of help and also ideas that will spur you to think of still other ways of dealing with, and adapting to, the new reality.
There are many factors that can lead to (or, by the time you might read this, have led to) economic collapse. The financial markets, including stocks and bonds and particularly hedge
funds. Increasing unemployment. Declining automobile sales due to the rising cost of gasoline. The bursting of the housing bubble. And, of course, Peak Oil.

The book covers many areas including community, food, money and transport. It is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 3.0 License. The pdf version is available online at Dry Dipstick.

Tuesday, July 14, 2009

Energy & Capital - Practical Investment Analysis

Energy is such a pervasive resource that it affects every single human endeavor.

Energy has become fundamental to the very basic functions of contemporary civilization. And it is imperative to the future growth, prosperity, social stability and security of nations around the world. Without energy, everything comes to a grinding halt.

Today energy is at a crossroads. Like a lit fuse, a catastrophe of immeasurable proportion is looming.

Even though the energy crisis is beginning to make its way into the media limelight, very few people are aware of the true scope and magnitude of this crisis. With today's seemingly abundant energy supply, it can be difficult for us to imagine an energy-limited world. Nevertheless, the impending energy crisis is coming.

And like the ancient phoenix, a great opportunity will rise from the ashes of this crisis. Energy and Capital aims to provide foresight and vision to exploit the commercial opportunities of a post-oil economy. Its goal is to do practical investment analysis in the New Energy Economy. Check out the site and the newsletter.

Monday, July 13, 2009

World Energy Resources and Consumption

Wikipedia has an overview entry on World Energy Resources and Consumption. Although the article is not really up to date it features nice charts such as the World Energy usage in 2006 by resource type based on BP Statistical Review.

Wikipedia lists additional references on world energy resources and consumption:

Thursday, July 9, 2009

The Food and Farming Transition Toward a Post Carbon Food System

How can we continue feeding humanity in a future of declining resources and environmental crisis? The Post Carbon Institute has released a report on The Food and Farming Transition Toward a Post Carbon Food System. This report explores the growing vulnerabilities of the current food system, and the steps needed to transition to a post-carbon food system.


The American food system rests on an unstable foundation of massive fossil fuel inputs. It must be reinvented in the face of declining fuel stocks. The new food system will use less energy, and the energy it uses will come from renewable sources. We can begin the transition to the new system immediately through a process of planned, graduated, rapid change. The unplanned alternative-reconstruction from scratch after collapse-would be chaotic and tragic.

The seeds of the new food system have already been planted. America's farmers have been reducing their energy use for decades. They are using less fertilizer and pesticide. The number of organic farms, farmers' markets, and CSA operations is growing rapidly. More people are thinking about where their food comes from.

These are important building blocks, but much remains to be done. Our new food system will require more farmers, smaller and more diversified farms, less processed and packaged food, and less long-distance hauling of food. Governments, communities, businesses, and families each have important parts to play in reinventing a food system that functions with limited renewable energy resources to feed our population for the long term.

Read the full report:

Wednesday, July 8, 2009

Preparing for Peak Oil: Local Authorities and the Energy Crisis

The Oil Depletion Analysis Centre (ODAC) is an independent, UK-registered educational charity working to raise international public awareness and promote better understanding of the world's oil-depletion problem.

ODAC together with the Post Carbon Institute have prepared a report aimed specifically at local government in the UK called Preparing for Peak Oil: Local Authorities and the Energy Crisis (PDF, 2647 Kb). The Executive Summary includes suggested actions for local authorities.

Global oil production will almost certainly ‘peak’ and go into sustained decline within the next few years. In addition to the challenge of climate change, we will soon have to contend with a rapidly growing deficit in fuels for transport. This will cause big spikes in energy prices – including natural gas and electricity – with potentially devastating economic and social impacts. This has severe implications for the provision of services by local government.

This issue is usually described as ‘peak oil’. It is rarely acknowledged by national governments, but is rapidly gaining credibility among local authorities around the world – and on financial markets. Forecasters differ about the exact date of the peak, but there is a growing consensus that it will happen in the next ten years. To many experts the soaring price of crude suggests that we may be at peak oil now.

The purpose of this report is to summarize which local authorities are doing what, and to draw together the most promising policies for tackling peak oil, so that all British local authorities can benefit from best practices being developed both at home and abroad. Almost every area of policy is affected, from transportation to land use planning to social services. The report is especially relevant for councils affected by the planned expansion of Britain’s airports: mass air travel is likely to be an early casualty of peak oil.

The policies suggested to mitigate peak oil are usually complementary to those required to combat global warming, but there are also important distinctions that may affect the decisions made by local authorities. This is particularly true of natural gas, where supply difficulties are also expected soon. Whatever the motivation of a particular council – climate change or peak oil – many of the suggested policies can also reduce expenditure almost immediately simply by saving energy.

A review of peak oil initiatives across the United States, Canada, and Britain suggests local authorities should consider the following actions:
  • Conduct a detailed energy audit of all council activities and buildings.
  • Develop an emergency energy supply plan.
  • Introduce rigorous energy efficiency and conservation programmes.
  • Encourage a major shift from private to public transport, cycling and walking.
  • Expand existing programmes such as cycle lanes and road pricing.
  • Reduce overall transport demand by using planning powers to shape the built environment.
  • Promote the use of locally produced, non-fossil transport fuels such as biogas and renewable electricity in both council operations and public transport.
  • Launch a major public energy-awareness campaign.
  • Find ways to encourage local food production and processing; facilitate reduction of energy used in refrigeration and transportation of food.
  • Set up a joint peak oil task force with other councils and partner closely with existing community-led initiatives.
  • Coordinate policy on peak oil and climate change.
  • Adopt the Oil Depletion Protocol.
Their conclusion is that Global oil production is approaching a peak, followed by a permanent decline. It will radically change the way our societies are run: our transport systems, how we produce food, where we work and live.

Tuesday, July 7, 2009

Peak Oil Day - July 11

by Richard Heinberg at the Post Carbon Institute:

On July 11, 2008, the price of a barrel of oil hit a record $147.27 in daily trading. That same month, world crude oil production achieved a record 74.8 million barrels per day.
Maybe it’s a stretch to say that the production peak occurred at one identifiable moment, but attributing it to the day oil prices reached their high-water mark may be a useful way of fixing the event in our minds. So I suggest that we remember July 11, 2008 as Peak Oil Day.

We are now approaching the first-year anniversary of Peak Oil Day. Where are we now? The global economy is in tatters, yet oil prices have recovered somewhat (they’re now about half what they were in July 2008). World energy consumption is down, world trade is down, the airline industry is shrinking, and most of the world’s automakers are on life support.

It is too late to prepare for Peak Oil—a year too late, in fact. Now the name of the game is adaptation. We are in an entirely new economic environment, in which old assumptions about the inevitability of perpetual growth, and the usefulness of leveraging investments based on expectations of future growth, are crashing in flames. Even if economic activity picks up somewhat, this will occur in the context of an economy significantly smaller than the one that existed in July 2008, and energy scarcity will quickly cause most green shoots to wither.

It is impossible to say what will happen in the future with regard to oil prices. Clearly, very high prices kill demand by undercutting economic activity. Thus it is possible that the barrel price of petroleum may never break last year’s record. On the other hand, if the value of the dollar were to collapse, then the sky’s the limit for prices in dollars per barrel.

It is easier to forecast the oil supply trend: though we’ll see level-to-rising production temporarily from time to time, in general it’s down, down, downhill from now on.
What are some appropriate ways to commemorate Peak Oil Day? I’d suggest spending time in nature, engaging in a 24-hour oil fast, or organizing a neighborhood bicycle parade and solar-cooker bakeoff. Mark your calendar. What will you be doing on July 11?

Monday, July 6, 2009

Crash Course on Economy, Energy, and the Environment

Chris Martenson is not an economist. He is a trained research scientist, and a former Fortune 300 VP. Most importantly, though, he is a concerned citizen.

He thinks the next twenty years are going to look very different from the last twenty years. His site is an attempt to explain why.

You should start with the Crash Course. This series of videos is, he thinks, the clearest and most straightforward explanation of how our economy, energy systems and environment interact -- how we got to where we are today, and some reasonable expectations for the future.

Massive change is upon us. To understand the nature of this change, we need to understand the three “E”s – the Economy, Energy, and the Environment...
  • The first “E” is the economy, which is the lens through which the Crash Course looks at everything, specifically exponential money, the first-ever collapse of a global credit binge, an aging population, and a national failure to save.
  • The second “E” is energy. We will explore what Peak Oil implies for an economic system that is based on continual expansion.
  • The third “E”, the environment, will be exerting its own unknowable but certainly significant economic burdens due to shrinking resources and other systemic pressures while the other two “E”s are clamoring for your money and attention.

Wednesday, July 1, 2009

The Limits to Growth and Beyond Growth

The Limits to Growth is a famous 1972 book modeling the consequences of a rapidly growing world population and finite resource supplies, commissioned by the Club of Rome. Its authors were Donella H. Meadows, Dennis L. Meadows, Jørgen Randers, and William W. Behrens III. The book used the World3 model to simulate[1] the consequence of interactions between the Earth's and human systems.

Five variables were examined in the original model, on the assumptions that exponential growth accurately described their patterns of increase, and that the ability of technology to increase the availability of resources grows only linearly. These variables are: world population, industrialization, pollution, food production and resource depletion. The authors intended to explore the possibility of a sustainable feedback pattern that would be achieved by altering growth trends among the five variables.

The most recent updated version was published on June 1, 2004 by Chelsea Green Publishing Company and Earthscan under the name Limits to Growth: The 30-Year Update. Donnella Meadows, Jørgen Randers, and Dennis Meadows have updated and expanded the original version. They had previously published Beyond the Limits in 1993 as a 20 year update on the original material.

In 2008 Graham Turner at the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in Australia published a paper called "A Comparison of `The Limits to Growth` with Thirty Years of Reality". It examined the past thirty years of reality with the predictions made in 1972 and found that changes in industrial production, food production and pollution are all in line with the book's predictions of economic and societal collapse in the 21st century.

"For the first 30 years of the model, the world has been tracking along an unsustainable trajectory," Turner concludes. Herman Daly of the University of Maryland says these results show that we "must get off the growth path of business as usual, and move to a steady state economy", stopping population growth, resource depletion, and pollution.

Plan B 3.0: Mobilizing to Save Civilization

Plan B 3.0 by Lester R. Brown is the updated edition of Plan B 2.0. Excerpts from the preface:

Perhaps the most revealing difference between Plan B 2.0 and Plan B 3.0 is the change of the subtitle from “Rescuing a Planet Under Stress and a Civilization in Trouble” to simply “Mobilizing to Save Civilization.” The new subtitle better reflects both the scale of the challenge we face and the wartime speed of the response it calls for.

Our world is changing fast. When Plan B 2.0 went to press two years ago, the data on ice melting were worrying. Now they are scary.

Two years ago, we knew there were a number of failing states. Now we know that number is increasing each year. Failing states are an early sign of a failing civilization.

Two years ago there was early evidence that the potential for expanding oil production was much less than officially projected. Now, we know that peak oil could be on our doorstep. Two years ago oil was $50 a barrel. As of this writing in late 2007, it is over $90 a barrel [it is now around $70 in July 2009].

In Plan B 2.0, we speculated that if we continued to build ethanol distilleries to convert grain into fuel for cars, the price of grain would move up toward its oil-equivalent value. Now that the United States has enough distilleries to convert one fifth of its grain crop into fuel for cars, this is exactly what is happening. Corn prices have nearly doubled. Wheat prices have more than doubled.

Two years ago, we reported that in five of the last six years world grain production had fallen short of consumption. Now, it has done so in seven of the past eight years, and world grain stocks are dropping toward all-time lows.

As the backlog of unresolved problems grows, including continuing rapid population growth, spreading water shortages, shrinking forests, eroding soils, and grasslands turning to desert, weaker governments are breaking down under the mounting stress. If we cannot reverse the trends that are driving states to failure, we will not be able to stop the growth in their numbers.

Some of the newly emerging trends—such as the coming decline in world oil production, the new stresses from global warming, and rising food prices—could push even some of the stronger states to the breaking point.

The challenge for our generation is to build a new economy, one that is powered largely by renewable sources of energy, that has a highly diversified transport system, and that reuses and recycles everything. And to do it with unprecedented speed.

Continuing with business as usual (Plan A), which is destroying the economy’s eco-supports and setting the stage for dangerous climate change, is no longer a viable option. It is time for Plan B.

There are four overriding goals in Plan B 3.0: stabilizing climate, stabilizing population, eradicating poverty, and restoring the earth’s ecosystems. At the heart of the climate-stabilizing initiative is a detailed plan to cut carbon dioxide emissions 80 percent by 2020 in order to hold the global temperature rise to a minimum. The climate initiative has three components: raising energy efficiency, developing renewable sources of energy, and expanding the earth’s forest cover both by banning deforestation and by planting billions of trees to sequester carbon.

We are in a race between tipping points in nature and our political systems. Can we phase out coal-fired power plants before the melting of the Greenland ice sheet becomes irreversible? Can we gather the political will to halt deforestation in the Amazon before its growing vulnerability to fire takes it to the point of no return? Can we help countries stabilize population before they become failing states?

In Plan B 2.0, we talked about the enormous potential of renewable sources of energy, especially wind power. Since then we’ve seen proposed projects to generate electricity from such resources on a scale never seen with fossil fuel power plants. For example, the state of Texas is coordinating a vast expansion of wind farms that will yield up to 23,000 megawatts of new electrical generating capacity, an amount equal to 23 coal-fired power plants.

Two years ago, the notion of plug-in gas-electric hybrid cars was little more than a concept. Today five leading automobile manufacturers are moving to market with plug-in hybrids, with the first ones expected in 2010.

We have the technologies to restructure the world energy economy and stabilize climate. The challenge now is to build the political will to do so. Saving civilization is not a spectator sport. Each of us has a leading role to play.

And finally, there is not anything sacred about Plan B. It is our best effort to lay out an alternative to business as usual, one that we hope will help save our civilization. If anyone can come up with a better plan, we will welcome it. The world needs the best plan possible.

The Plan B 3.0: Mobilizing to Save Civilization book can be downloaded without charge from the Web site of the Earth Policy Institute.