The NEW Oil Age Poster (Dec 2010)

This is the newly updated December 2010 edition of The Oil Age Poster. Oil forms the basis of our industrial age, powering everything we know as modern, from automobiles to airplanes to power plants to plastics. Colorful and authoritative, this poster traces the history of the Oil Age from its beginnings in the hills of western Pennsylvania to its rise as the engine of global industrial economies.


Two hundred years of the Oil Age are depicted in the poster's main chart, which features a colorful year-by-year rendering of Colin Campbell's Depletion Model. Historical annotations as well as detailed data on production, trade and reserves make this poster a versatile tool for presenting the realities and implications of global oil production and its impending peak.

The Next Oil Shock? - Report

The Economics and Industry Team of New Zealand Parliamentary Library has published a new research paper: The Next Oil Shock?

The Conclusion of the report

The global economy is heavily dependent on affordable oil.

It may seem counter-intuitive that, when oil reserves and production capacityare higher than ever, the future of the oil market appears bleak. The problem is that production capacity is not expected to keep up with demand. That fact leads to severe economic consequences.

To replace the declining production from existing oil wells and increase production, oil companies are forced to extract oil in more difficult and expensive conditions (deep-water, oil sands, lignite to liquids) from smaller, less favourable reserves. The marginal (price-setting) barrel of oil costs around US$75-$85 a barrel to produce. This will continue to rise with higher demand and exhaustion of reserves.

Although there remain large reserves of oil which can be extracted, the world’s daily capacity to extract oil cannot keep increasing indefinitely. A point will be reached where it is not economically and physically feasible to replace the declining production from existing wells and add new production fast enough for total production capacity to increase. Projections from the IEA and other groups have this occurring, at least temporarily, as soon as 2012.

The difference between the global capacity to produce oil and global demand is the supply buffer. When the supply buffer is large, oil prices will be low. When the supply buffer shrinks - due to demand rising faster than production capacity or production capacity falling - prices will rise as markets add in the risk that supply will not be available to meet demand at any given point in time.

When a supply crunch forces oil prices beyond a certain point, the cost of oil forces consumers and businesses to cut other spending, inducing a recession. The recession destroys demand for oil, allowing prices to drop. Major international organisations are warning of another supply crunch as soon as 2012.

The world may be entering an era defined by relatively short periods of economic growth terminating in oil price spikes and recession.

New Zealand is not immune to the consequences of this situation. In fact, its dependency on bulk exports and tourism makes New Zealand very vulnerable to oil shocks.

Lloyds Report - Sustainable Energy Security: Strategic Risks and Opportunities for Business

Chatham House-Lloyd's 360 Risk Insight White Paper
by Antony Froggatt and Glada Lahn, June 2010

As the disaster in the Gulf of Mexico has amply demonstrated, growing global energy demand and the anticipated restricted availability of some conventional fossil fuels pose an escalating threat to the security of energy supply for global businesses. Sustainable Energy Security: Strategic Risks and Opportunities for Business, produced jointly by Chatham House and Lloyd's, reveals multiple vulnerabilities in our current energy system and urges both business strategists and government policy-makers to take into account a range of encroaching risks and be bold in making plans for a more resilient and low carbon energy future.



This report, jointly produced by Lloyd’s 360 Risk Insight programme and Chatham House, should cause all risk managers to pause. What it outlines, in stark detail, is that we have entered a period of deep uncertainty in how we will source energy for power, heat and mobility, and how much we will have to pay for it.

Is this any different from the normal volatility of the oil or gas markets? Yes, it is. Today, a number of pressures are combining: constraints on ‘easy to access’ oil; the environmental and political urgency of reducing carbon dioxide emissions; and a sharp rise in energy demand from the Asian economies, particularly China.

Executive Summary

• Businesses which prepare for and take advantage of the new energy reality will prosper - failure to do so could be catastrophic
• Market dynamics and environmental factors mean business can no longer rely on low cost traditional energy sources
• China and growing Asian economies will play an increasingly important role in global energy security
• We are heading towards a global oil supply crunch and price spike
• Energy infrastructure will become increasingly vulnerable as a result of climate change and operations in harsher environments
• Lack of global regulation on climate change is creating an environment of uncertainty for business, which is damaging investment plans
• To manage increasing energy costs and carbon exposure businesses must reduce fossil fuel consumption
• Business must address energy-related risks to supply chains and the increasing vulnerability of 'just-in-time' models
• Investment in renewable energy and 'intelligent' infrastructure is booming. This revolution presents huge opportunities for new business partnerships

[via Transition Culture]

"Better than Growth" released by Australian Conservation Foundation

Arguing for something beyond economic growth

Australian Conservation Foundation has published an outstandingly well produced paper on how we can redesign our ways of living based on something other than economic growth and all its attendant troubles.


"Most australians don’t agree that their only goal in life is to increase their financial wealth and consumption – but too often our economic policy treats us as if we do. in reality, our quality of life depends on having time for family and friends, a strong sense of community, and a healthy natural environment. our economy should help us achieve those goals.

We can do better than a narrow vision of economic growth, and this report shows us how. Better than Growth explores the best practical thinking from around the world about how to improve economic measurements and align our economies to long-term environmental and social wellbeing."

[via Transition Network]

Water vs Energy - Special Report by IEEE Spectrum

The Coming Clash Between Water and Energy

Our thirst for water competes with our hunger for energy. Only radical new ideas will get us out of this mess

Consider a giant sponge, with limbs and tentacles that reach to the horizon. It dips into distant rivers, it delves for deep waters, it digs ditches to catch the rain—all to slake its insatiable thirst.

Clearly, this is no ordinary sea creature quietly snuffling the currents. We have met this sponge, and it is us. We humans are the thirstiest of creatures, and we’ve developed a nearly insatiable taste for this simple but delectable arrangement of hydrogen and oxygen atoms. But we need more. So much more.

We’re not talking about just drinking or bathing. Without water, we’d have practically no energy. Without energy—and therefore cars, planes, laptops, smartphones, and lighting—we wouldn’t be doing much.

In almost every type of power plant, water is a major hidden cost. Water cools the blistering steam of thermal plants and allows hydroelectric turbines to churn. It brings biofuel crops from the ground and geothermal energy from the depths of the Earth. Our power sources would be impotent without water.

Podcast

IEEE Spectrum's June Special report is about “The Water-Energy Nexus.” It sounds wonky, but it’s a subject about which you’ll inevitably be hearing more and more. In coming years, we’ll undoubtedly face the quandaries of the Water-Energy Nexus because many renewable technologies come with big water tradeoffs. IEEE Spectrum’s Senior Editor, Sam Moore, is with us to discuss the special report in this podcast, and acquaint us with some of the stories.

Check out the rest of the special report: Water vs Energy.

The Outlook for Energy in Eastern Europe and the FSU

Lights Out? The Outlook for Energy in Eastern Europe and the Former Soviet Union

This new report has been recently published by the World Bank. Download the pdf version to read the full Lights Out? The Outlook for Energy in Eastern Europe and the Former Soviet Union paper. A short excerpt:

Foreword

Before the current economic crisis hit the Europe and Central Asia (ECA) region in 2008, energy security was a major source of concern in Central and Eastern Europe and in many of the economies in the former Soviet Union. Energy importers were experiencing shortages
leading to periodic brownouts and blackouts. An energy crisis seemed imminent.

Summary

• Emerging Europe and Central Asia, the region made up of the countries of Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS), is a major energy supplier to both Eastern and Western Europe. However, the outlook for both primary and derivative energy supplies is questionable, with a real prospect of a significant decline during the next two decades.
• Western Europe is heavily dependent on energy imports from this region. It will therefore be affected by declines in primary energy supplies. But Western Europe has the financial capacity to secure the energy supplies it needs (albeit at the expense of others). In contrast, the region’s energy-importing countries are caught between Western Europe, which has increasing import needs, and the region’s exporters, whose exports will likely decline. These countries face the prospect of being squeezed both financially and in terms of energy access.
• This difficult prospect is compounded by the deterioration of the region’s energy infrastructure, including power generation and district heating. Although the public sector will have to finance a portion of these investments, it will not have the capacity to meet the full investment needs. It is therefore essential that countries in the region move quickly to put in place an enabling environment to support investment in the sector.
• Overlaying all of this are environmental concerns, in particular concern about climate change. Member states of the European Union (EU) and those with EU ambitions will need to meet the challenging EU greenhouse gas emissions targets. At the same time, a number of countries in the region will face the temptation to use environmentally unfriendly technology to meet their immediate energy needs.
• Policy responses need to emphasize demand-side management and the use of energy efficiency measures. The Russian Federation, as the region’s major energy exporter, needs to direct additional resources to energy production over the longer term if export levels are to be maintained. Incentives need to be devised and implemented to encourage countries to avoid environmentally unfriendly solutions.

[via The Oil Drum's daily Drumbeat news]

A Green New Deal for Europe

The Green European Foundation (GEF) is the political foundation of the aisbl Green European Institute. It is one of the newly created political foundations on European level, and is funded on an annual basis by the European Parliament. GEF is publishing the Green New Deal series.
In the face of the current multiple crisis (financial, economic, social, environmental), the need for sustainable policies is self-evident. The Green New Deal is the integrated policy approach that Greens in Europe are putting forward as a solution to the crisis. The Towards Green Modernization in the face of Crisis report by the Wuppertal Institute analyzes in depth the climate, environment and energy aspects of this proposal.

Over the past year, billions of Euros have been spent in Europe, the US and other industrialised countries on so-called ‘recovery packages’ to overcome the economic crisis. However, these unprecedented amounts of public money could also be focused on fostering an ecological transformation of our economies, and not on safeguarding the economic patterns that brought about the crisis in the first place. Needless to say, this is no easy task. The present report by the Wuppertal Institute is meant to take stock of the current situation and identify the most suitable areas, the most effective instruments and the best practices for promoting this transformation.

Greening recovery packages

The report gives an overview of the “recovery packages” introduced by governments around the globe and reveals that the European Union is lagging behind the United States and Asia in terms of the Green share of those recovery plans. The authors show the economic and employment potential of a Green New Deal and that the EU has the possibility of leading the way.The report takes a pragmatic approach in the sense that it focuses primarily on how to ‘green’ immediate recovery activities in specific economic areas, and how to support the creation of framework conditions which initiate a dynamic for ecological modernisation and structural change. It also identifies key elements for the implementation of a Green New Deal.

Policy recommendations

The report ends with a series of recommendations that urge the European Union and its Member States to focus their programmes on investments that will kick-start a Green economy and provide sustainable ways out of the crisis.

Green New Deal series
The next volume of the series has also been published: Green New Deal and a European Response to the Crisis: towards ambitious macroeconomic governance of the EU

In this second volume, Francisco Padilla argues in favor of the idea of transforming the Stability and Growth Pact into a Sustainable Stability and Growth Pact.

In this recent article published by the Green European Foundation, the author argues that apart from the reforms of financial regulation that have already been announced, the European Union has to respond to the global crisis by pursuing a double objective. On the one hand, it should focus on economic reorganization, centered around eco-efficency and low carbon economy as engines of job creation. On the other hand, attention must be paid to the fight against unsustainable (public and private) debt and to the alarming increase in poverty rates, fostered in turn by wage deflation. The article maintains that only by focusing on these two conditions at the same time the European Union will be able to tackle the structural causes of systemic economic instability, exacerbated by the past 30 years of financial liberalisation.

This latter publication is so far only available in French on the GEF web page.

Feasta Tipping Point Report and the New Emergency Conference

Feasta aims to identify the characteristics (economic, cultural and environmental) of a truly sustainable society, articulate how the necessary transition can be effected and promote the implementation of the measures required for this purpose.

Feasta has released a new report Tipping Point: Near-Term Systemic Implications of a Peak in Global Oil Production, by David Korowicz of Feasta and the Risk/Resilience Network, is now available for download. The report argues that the defining dynamic of our civilisation is the withdrawal of energy from a complex and integrated system adapted only to growing. A managed "de-growth" is impossible; what is required is rapid emergency planning coupled with a plan for longer-term adaptation.

Feasta organized The New Emergeny Conference last year. The videos of all of the presentations from the conference can now be viewed for free on the conference website.

This conference, marking Feasta's tenth anniversary, analysed the systems and the mindsets that have steered the world onto its grotesquely unsustainable current path. Discussions focussed on the new systems (financial, energy, food) and ways of thinking that are urgently required to correct the situation and bring about a rapid transition to a more secure future. Many of the ideas explored were Feasta's. Others were presented by international speakers who broadly share Feasta's analysis of what needs to be done to build a truly sustainable world.

That's it for the 100th post on the Energy Crash blog.

Global Wind Power Boom Continues Despite Economic Woes

China doubles installed capacity for fifth year running – Global markets up 31%

Brussels, 3 February 2010. The Global Wind Energy Council today announced that the world’s wind power capacity grew by 31% in 2009, adding 37.5 GW to bring total installations up to 157.9 GW. A third of these additions were made in China, which experienced yet another year of over 100% growth.

“The continued rapid growth of wind power despite the financial crisis and economic downturn is testament to the inherent attractiveness of the technology, which is clean, reliable and quick to install. Wind power has become the power technology of choice a growing number of countries around the world,” said Steve Sawyer, GWEC’s Secretary General. “Copenhagen didn’t bring us any closer to a global price on carbon, but wind energy continued to grow due to national energy policy in our main markets and also because many governments in prioritised renewable energy development in their economic recovery plans,” he said.

Wind energy is now an important player in the world’s energy markets. The global wind market for turbine installations in 2009 was worth about 45 bn EUR or 63 bn US$. GWEC estimates that around half a million people are now employed by the wind industry around the world.

The main markets driving this significant growth continue to be Asia, North America and Europe, each of which installed more than 10 GW of new wind capacity in 2009.

China was the world’s largest market in 2009, nearly doubling its wind generation capacity from 12.1 GW in 2008 to 25.1 GW at the end of 2009 with new capacity additions of 13 GW.

“The Chinese government is taking very seriously its responsibility to limit CO2 emissions while providing energy for its growing economy. China is putting strong efforts into developing the country’s tremendous wind resource. Given the current growth rates, it can be expected that the even the unofficial target of 150 GW will be met well ahead of 2020,” said Li Junfeng, Secretary General of the Chinese Renewable Energy Industries Association.

Newly added capacity of 1,270 MW in India and some smaller additions in Japan, South Korea and Taiwan make Asia the biggest regional market for wind energy in 2009, with more than 14 GW of new capacity.

However, the US continues to have a comfortable lead in terms of total installed capacity. Against all expectations, the US wind energy market installed nearly 10 GW in 2009, increasing the country’s installed capacity by 39% and bringing the total installed, grid-connected capacity to 35 GW. In early 2009, some analysts had foreseen a drop in wind power development of as much as 50%, but the implementation of the US Recovery Act with its strong focus on wind energy development in the summer reversed this trend.

“The U.S. wind energy industry shattered all installation records in 2009, chalking up the Recovery Act as a historic success in creating jobs, avoiding carbon, and protecting consumers,” said AWEA CEO Denise Bode. “But U.S. wind turbine manufacturing is down compared to last year’s levels, and needs long-term policy certainty and market pull in order to grow.”

Europe, which has traditionally been the world’s largest market for wind energy development, continued to see strong growth, also exceeding expectations. In 2009, 10.5 GW were installed in Europe, led by Spain (2.5GW) and Germany (1.9 GW). Italy, France and the UK all added more than 1 GW of new wind capacity each.

“It is a remarkable result in a difficult year” said Christian Kjaer, CEO of the European Wind Energy Association. “The figures, once again, confirm that wind power, together with other renewable energy technologies and a shift from coal to gas, are delivering massive European carbon reductions, while creating much needed economic activity and new jobs for Europe’s citizens.”

“Wind energy is already making a significant contribution to saving CO2 emissions. The 158GW of global wind capacity in place at the end of 2009 will produce 340 TWh of clean electricity and save 204 million tons of CO2 every year,” concluded Sawyer. “As we see in Europe and the US, wind power is now often the most attractive option for new power generation, both in economic and environmental terms, and for improved supply security.”

Forecasting World Crude Oil Production Using Multicyclic Hubbert Model

A new oil forecast research from Kuwait

The year 2008 has witnessed unprecedented fluctuations in the oil prices. During the first three-quarters, the oil price abruptly increased to $140/bbl, a level that has never been reached before; then because of the global economic crisis, the price dramatically plunged to less than $50/bbl by the end of the year losing more than 64% of the maximum price in less than three months period. The supply of crude oil to the international market oscillated to follow suite according to the law of supply and demand. This behavior affected oil production in all exporting countries. Nonetheless, the demand for crude oil in some developing countries, such as China and India, has increased in the past few years because of the rapid growth in the transportation sector in addition to the absence of viable economic alternatives for fossil fuel. The rapid growth in fuel demand has forced the policy makers worldwide to include uninterrupted crude oil supply as a vital priority in their economic and strategic planning.

Even though forecasting should be handled with extreme caution, it is always desirable to look ahead as far as possible to make an intellectual judgment on the future supplies of crude oil. Over the years, accurate prediction of oil production was confronted by fluctuating ecological, economical, and political factors, which imposed many restrictions on its exploration, transportation, and supply and demand. The objective of this study is to develop a forecasting model to predict world crude oil supply with better accuracy than the existing models. Even though our approach originates from Hubbert model, it overcomes the limitations and restrictions associated with the original Hubbert model. As opposed to Hubbert single-cycle model, our model has more than one cycle depending on the historical oil production trend and known oil reserves. The presented method is a viable tool to predict the peak oil production rate and time. The model is simple, accurate, and totally data driven, which allows a continuous updating once new data are available. The analysis of 47 major oil producing countries estimates the world’s ultimate crude oil reserve by 2140 BSTB and the remaining recoverable oil by 1161 BSTB. The world production is estimated to peak in 2014 at a rate of 79 MMSTB/D. OPEC has remaining reserve of 909 BSTB, which is about 78% of the world reserves. OPEC production is expected to peak in 2026 at a rate of 53 MMSTB/D. On the basis of 2005 world crude oil production and current recovery techniques, the world oil reserves are being depleted at an annual rate of 2.1%.

Economic Growth And Climate Change — No Way Out?

Dave Cohen has posted a new entry on his Peak Watch blog on Economic Growth And Climate Change — No Way Out? I recommend you to check out the full article. Here is a short excerpt:

Humankind has reached a fork in the road. The business-as-usual path implies robust economic growth with a rise in the carbon dioxide emissions that contribute to anthropogenic climate change. The other path, whatever its actual form turns out to be, shuns business-as-usual in an attempt stabilize greenhouse gas levels (mainly carbon dioxide CO2) in the Earth's atmosphere (e.g. at 450 ppmv, parts-per-million-by-volume) to avoid catastrophic warming (e.g. > 2°C). Considered alternatives invariably lay out a vision of the future in which emissions steadily decline while economies continue to grow. Is such a vision realistic? This essay questions standard assumptions underlying this "have your cake and eat it too" view.

Conclusions

The main conclusions of this essay subvert standard views of how the future looks if humankind chooses to make a serious effort to mitigate anthropogenic climate change.

For now, and in the "foreseeable" future, putting the breaks on economic growth appears to be the only practical way out of the climate dilemma. Unfortunately, this solution is politically impossible, a circumstance which is reinforced by economists' incontestable, unshakable belief that economic growth will continue in all future emissions (energy) scenarios. This conclusion rests upon the equally incontestable, unshakable Assumption of Technological Progress.

The inescapable conclusion in 2010 is that continued economic growth at near 20th century rates in the 21st century is incompatible with taking positive, effective steps to mitigate anthropogenic climate change. Moreover, such assumptions are not compatible with a near-term peak in the conventional oil supply.

Our species faces unprecedented challenges in this new century. Our response to those challenges will define Homo sapiens in ways we never had to come to grips with during the Holocene (roughly the last 10,000 years) or before that in the Pleistocene. The problems we face in this century are unique, even on geological time-scales extending far into the past beyond the 200,000-year-old Human experience on Earth.

Both our limitations and our abilities, such as they are, will be displayed in the bright, harsh light of the energy & climate outcomes in the 21st century. Regardless of who we pretend to be, our response to these challenges will tell us who we really are.

21 Hours - Why a Shorter Working Week Can Help Us All to Flourish in the 21st Century

A ‘normal’ working week of 21 hours could help to address a range of urgent, interlinked problems: overwork, unemployment, over-consumption, high carbon emissions, low well-being, entrenched inequalities, and the lack of time to live sustainably, to care for each other, and simply to enjoy life.

This new report by nef sets out arguments for a much shorter working week. It proposes a radical change in what is considered ‘normal’ – down from 40 hours or more, to 21 hours. While people can choose to work longer or shorter hours, we propose that 21 hours – or its equivalent spread across the calendar year – should become the standard that is generally expected by government, employers, trade unions, employees, and everyone else.

The shape of the report
The report first describe the way people use their time today. Next, it looks at experiments with shorter working hours and some of their effects. It considers how our notions of ‘normal’ working hours emerge, and then set out reasons why a move towards 21 hours could help meet the challenges of the twenty-first century. Finally, it explores the main problems that arise and how these might be addressed.

In conclusion
We are at the beginning of a national debate. This report makes the case for a substantial reduction in paid working hours, aiming towards 21 hours a week as the norm. The current norm of a nine-to-five, five-day week in paid employment does not reflect the way most people use their time. Unpaid work is generally overlooked and undervalued. A much shorter working week offers very considerable benefits to the environment, to society, and to the economy. There are serious problems to confront in the transition from where we are to where we want to be: they are mainly concerned with the impact on earnings and on employers’ balance sheets. We have set out suggestions for addressing these problems, acknowledging that an important pre-condition is a strong democracy and an effective and accountable government. Our suggestions include ways of incentivising employers, compensating lost earnings, sharing unpaid time more equally between women and men, and changing the climate of opinion. None of these options will work on its own and there are doubtless many more possibilities. The next step is to make a thorough examination of the benefits, challenges, barriers, and opportunities associated with moving towards a 21-hour week over the next decade. This will be part of the ‘Great Transition’ to a sustainable future.

Check out the full report on the web site of the new economics foundation. It is available for download in pdf.

The Oil Crunch - A wake-up call for the UK economy

• Taskforce warns Britain is unprepared for significant risk to companies and consumers
• Poorest to be hit hardest by price rises for travel, food, heating and consumer goods
• New policies must be priority for whoever wins the General Election
• Recommended packages include legislation, new technologies and behaviour-change incentives
• Fundamental change in demand patterns triggered by emerging economy countries

London, 10 February, 2010: A group of leading business people today call for urgent action to prepare the UK for Peak Oil. The second report of the UK Industry Taskforce on Peak Oil and Energy Security (ITPOES) finds that oil shortages, insecurity of supply and price volatility will destabilise economic, political and social activity potentially by 2015. Peak Oil refers to the point where the highest practicable rate of global oil production has been achieved and from which future levels of production will either plateau, or begin to diminish. This means an end to the era of cheap oil.

The report, “The Oil Crunch - a wake-up call for the UK economy”, urges the formation of a coalition of government, business and consumers to address the issue.

The Taskforce states the impact of Peak Oil will include sharp increases in the cost of travel, food, heating and retail goods. It finds that the transport sector will be particularly hard hit, with more vulnerable members of society the first to feel the impact. The Taskforce warns that the UK must not be caught out by the oil crunch in the same way it was with the credit crunch and states that policies to address Peak Oil must be a priority for the new government formed after the election.

Having assessed the systemic changes caused by the global economic recession, coupled with the projected growth from non-OECD countries, ITPOES predicts Peak Oil will occur within the next decade, potentially by 2015 at less than 95 million barrels per day. (In 2008, production levels were 85 million barrels per day.) The study finds that the recession has delayed the oil crunch by two years. This provides invaluable time to plan for a future which will see structural increases in oil prices coupled with shortages and increased market volatility. The UK will be particularly badly hit by these factors with a tightening of supply leading to greater oil import dependency, rising and volatile prices, inflationary pressures and the risk of disruption to the transport system.

Key recommendations from the report include the acceleration of the “green transport revolution” to see the ongoing introduction of lower carbon technology and trials of sustainable bio fuels. This would cover private vehicles, but also extend to the general transport network, with the government urged not to cut investment in public transport. A focus on new clean technologies should be combined with wide scale behavioural change promoted through incentives and education to produce a modal shift to greener modes of transport.

ITPOES’ membership includes Arup, Foster + Partners, Scottish and Southern Energy, Solar Century, Stagecoach Group and Virgin Group. The report will be launched at an event at the Royal Society with presentations from Richard Branson, Founder of Virgin Group; Philip Dilley, Chairman of Arup; Ian Marchant, CEO of Scottish and Southern Energy; Jeremy Leggett, Chairman of Solarcentury; Brian Souter, CEO of Stagecoach Group; and Will Whitehorn, President of Virgin Galactic.

The Taskforce recognises that oil demand in the OECD area (developed countries) is now flat or declining but also recognises that demand in non-OECD (developing countries) continues to expand rapidly, having already recovered from the recession. Demand in the non-OECD areas already accounts for 45% of global oil demand and is expected to reach 50% by the middle of the decade.

The report issues a range of recommendations including:

General policies:

• Government, local authorities and business must face up to the Peak Oil threat and put contingency plans in place
• A package of policies are required to deal with the economic, financial and social impact of potential high oil prices
• There is a need to accelerate the green industrial revolution

Transport:

• Government support should be boosted for alternative technological solutions and associated infrastructure, such as electric vehicles
• Policies and fiscal measures to support and incentivise a shift from the traditional car to more fuel- and carbon-efficient modes of transport to be established
• Government investment in public transport must be maintained

Power generation and distribution policies:

• Government must provide a stable pro-investment regulatory and political climate
• The nation’s power generation and transmission distribution infrastructure must be changed to adapt to new demand patterns, price spikes and supply interruption

Retail and agriculture:

• Measures must be taken to protect the public, particularly the most disadvantaged, from the impact of rising fuel costs on food and other consumer goods prices

Publications by the new economics foundation

nef (the new economics foundation) is an independent think-and-do tank that inspires and demonstrates real economic well-being.

Growth isn't Possible

Four years on from nef's Growth isn’t Working, this new report goes one step further and tests that thesis in detail in the context of climate change and energy. It argues that indefinite global economic growth is unsustainable. Just as the laws of thermodynamics constrain the maximum efficiency of a heat engine, economic growth is constrained by the finite nature of our planet’s natural resources (biocapacity).

The Cuts Won't Work

Why spending on a Green New Deal will reduce the public debt, cut carbon emissions, increase energy security and reduce fuel poverty.

The Great Transition

Creating a new kind of economy is crucial if we want to tackle climate change and avoid the mounting social problems associated with the rise of economic inequality. The Great Transition provides the first comprehensive blueprint for building an economy based on stability, sustainability and equality.

The Consumption Explosion

Overconsumption, not overpopulation, is the real threat to the environment. Even the recession has had little impact on our burgeoning ecological debt.

Ecological Debt

This book explores a great paradox of our age: how the global wealth gap was built on ecological debts, which the world's poorest are having to pay for.

A Green New Deal

The global economy is facing a ‘triple crunch’: a combination of a credit-fuelled financial crisis, accelerating climate change and soaring energy prices underpinned by encroaching peak oil. It is increasingly clear that these three overlapping events threaten to develop into a perfect storm, the like of which has not been seen since the Great Depression, with potentially devastating consequences.

Hooked on Oil

How fossil fuel profits could be taxed to fund a clean energy economy.

Oil demand has peaked in developed world: IEA

LONDON (Reuters) - Oil use in rich industrialized countries will never return to 2006 and 2007 levels because of more fuel efficiency and the use of alternatives, the chief economist of the International Energy Agency said on Thursday.

The bold prediction, while made previously by some analysts, is significant because the IEA advises 28 countries on energy policy and its oil demand forecasts are closely watched by traders and policymakers.

Is it demand or is it suppy which has peaked?

Environmental and Energy Policy Challenges in the EU

The website of the President of the European Parliament has two key documents on some of the forward policy challenges and choices that are likely to face the European Union in the coming decade from 2009-2019.

The first document is a compendium of papers on policy challenges and choices. These papers provide a valuable overview of multiple issues which the EU in general is likely to confront over coming years, together with a series of useful pointers as to how the EU institutions might choose to respond.

The second document is much shorter, and is a synoptic 'EU Policy Challenges', which is a check-list of 69 possible areas for future policy work. These challenges include the following three areas related to the environment and energy.

Tackling climate change effectively

• The European Parliament will need to work towards reaching the 20-20-20 target (20% reduction in greenhouse gas emissions (possibly 30%), 20% improvement in energy efficiency and 20% renewables in the energy mix) by 2020. The following four steps of the climate energy package of December 2008 will be on the agenda:
  1) revision of the directive on EU emission Trading System;
  2) creation of a directive for pilot projects on carbon storage;
  3) creation of a directive on renewable energy in electricity, transportation and heating and cooling;
  4) setting binding national targets for CO2 reduction.
  
• A future financial framework will need to be created so that EU budget lines can be adapted in line with the requirements of climate policy. The European Parliament can no longer redistribute existing resources but could propose the creation of new resources to finance the cross-sectoral nature of the fight against climate change.
• The Parliament could consider using 'green diplomacy', by regularly raising the issue of the EU climate targets, and defending those targets, in its contacts with parliamentarians from other countries. In addition, it could prompt the Commission and the Member States to construct a foreign policy on climate change and repeatedly draw attention to the EU climate targets in the EU's and the Member States' diplomatic missions.
• International cooperation is crucial. Building an effective global carbon market will help achieve sustainable globalization. Also, the Parliament could push for placing climate change at the core of the development policy. The EU will need to give assistance to developing countries to draw up targets, to adopt new technologies and to stop deforestation.
• Mitigation and adaptation policies will lead to a new model of sustainable development, where the social character could be promoted in order to secure the necessary social consensus. Thus the European Parliament could fully involve citizens in the process of combating climate change.
  

Shaking up EU biodiversity policy

• The European Parliament could push for the development of a more coherent European integrated approach for halting the biodiversity loss. A clear post 2010 target could be set by the Member States and new funding opportunities could be established under the Common Agriculture Policy, the Common Fisheries Policy, and the Cohesion and Structural Funds.
• The Parliament could take the global initiative of proposing the creation, based on the model of IPCC, of an Intergovernmental Panel on Biodiversity Loss, which would be responsible for the coordination of the activities of the Member States and for the monitoring of the progress made in this area.
  

Transforming the EU into a sustainable and efficient energy system

• The European Parliament can encourage Member States to devise a forward-looking common energy policy both within the EU and in external relations, so as to ensure a high level of security of energy supply. The proposal of the Parliament to form solar energy partnerships with third countries in the Mediterranean region could be taken forward.
• The Parliament will need to promote further research and pilot projects in this field, as well as the development of the grid so as to allow for the optimal integration of renewable energy resources.
• The transformation of the energy system will require the adjustment of the fiscal and market instrument. The Parliament could call on the Member States and the other institutions to introduce reduced rates of VAT for renewable energy and for energy-saving goods and services and to create incentives to modernisation by means of VAT reductions.
• The growing energy dependence on fossil fuels will have to be limited and managed through diversification. The Parliament could stimulate investments in renewables and upgraded energy infrastructure, whilst developing a common approach towards Russia's influence on the gas market.
• It could be important that the Parliament supports the restructuring of the industrial system (buildings, transport and manufacturing) with reinforced innovation. This includes strengthening existing measures, continuing public intervention and the increasing of financial resources for eco-innovation.

Economic Dynamics - And the Real Danger

George Mobus has published a new summary paper on his blog Question Everything that he have written to explain the findings from his computer model of an abstract economy's dynamics when it is run mostly on fixed, finite fuel sources such as fossil fuels.

His model describes an abstract economy in which work processes use energy and raw materials to produce assets, some of which are consumed by processes that constitute the major body of the system, some of which will be reinvested in the work processes.

The dynamics of asset production and decay are governed by the laws of thermodynamics. The general conservation law applies to both matter and energy. But the second law, in particular, has ultimate influence over the efficiency and effectiveness of work processes as well as the entropic decay of all forms of assets.

A key question that needs to be addressed is: given our current heavy reliance on fossil fuels for more than 80% of our energy inputs, what happens in an economy that is growing when the resources are depleting?


Many people have realized, either intuitively or logically, that what matters insofar as economic activity is concerned is the net energy — the energy available after extraction of the gross energy (in this case crude oil) and refinement or conversion to a form useful in doing work. Energy must be reinvested in energy extraction, transportation, and refinement in order to gain net energy that can be available for asset production (other than assets needed for energy extraction). Thus there is an energy return on energy invested (EROI or EROEI) that must be taken into account in determining if an economy is viable, stable, or growing.

Check out the very interesting full post on the Question Everything blog.

‘Net Energy’ Limits & the Fate of Industrial Society

The new Searching for a Miracle: ‘Net Energy’ Limits & the Fate of Industrial Society report by Richard Heinberg and Jerry Mander is intended as a non-technical examination of a basic question: Can any combination of known energy sources successfully supply society’s energy needs at least up to the year 2100? In the end, we are left with the disturbing conclusion that all known energy sources are subject to strict limits of one kind or another. Conventional energy sources such as oil, gas, coal, and nuclear are either at or nearing the limits of their ability to grow in annual supply, and will dwindle as the decades proceed—but in any case they are unacceptably hazardous to the environment. And contrary to the hopes of many, there is no clear practical scenario by which we can replace the energy from today’s conventional sources with sufficient energy from alternative sources to sustain industrial society at its present scale of operations. To achieve such a transition would require (1) a vast financial investment beyond society’s practical abilities, (2) a very long time—too long in practical terms—for build-out, and (3) significant sacrifices in terms of energy quality and reliability.

Perhaps the most significant limit to future energy supplies is the “net energy” factor—the requirement that energy systems yield more energy than is invested in their construction and operation. There is a strong likelihood that future energy systems, both conventional and alternative, will have higher energy input costs than those that powered industrial societies during the last century.We will come back to this point repeatedly.

The report explores some of the presently proposed energy transition scenarios, showing why, up to this time, most are overly optimistic, as they do not address all of the relevant limiting factors to the expansion of alternative energy sources. Finally, it shows why energy conservation (using less energy, and also less resource materials) combined with humane, gradual population decline must become primary strategies for achieving sustainability.

***

The world’s current energy regime is unsustainable. This is the recent, explicit conclusion of the International Energy Agency1, and it is also the substance of a wide and growing public consensus ranging across the political spectrum. One broad segment of this consensus is concerned about the climate and the other environmental impacts of society’s reliance on fossil fuels.The other is mainly troubled by questions regarding the security of future supplies of these fuels—which, as they deplete, are increasingly concentrated in only a few countries.

To say that our current energy regime is unsustainable means that it cannot continue and must therefore be replaced with something else.However, replacing the energy infrastructure of modern industrial societies will be no trivial matter. Decades have been spent building the current oil-coal-gas infrastructure, and trillions of dollars invested. Moreover, if the transition from current energy sources to alternatives is wrongly managed, the consequences could be severe: there is an undeniable connection between per-capita levels of energy consumption and economic well-being.2 A failure to supply sufficient energy, or energy of sufficient quality, could undermine the future welfare of humanity, while a failure to quickly make the transition away from fossil fuels could imperil the Earth’s vital ecosystems.

Nonetheless, it remains a commonly held assumption that alternative energy sources capable of substituting for conventional fossil fuels are readily available—whether fossil (tar sands or oil shale), nuclear, or a long list of renewables—and ready to come on-line in a bigger way. All that is necessary, according to this view, is to invest sufficiently in them, and life will go on essentially as it is.

But is this really the case? Each energy source has highly specific characteristics. In fact, it has been the characteristics of our present energy sources (principally oil, coal, and natural gas) that have enabled the building of a modern society with high mobility, large population, and high economic growth rates. Can alternative energy sources perpetuate this kind of society? Alas, we think not.

While it is possible to point to innumerable successful alternative energy production installations within modern societies (ranging from small homescale photovoltaic systems to large “farms” of threemegawatt wind turbines), it is not possible to point to more than a very few examples of an entire modern industrial nation obtaining the bulk of its energy from sources other than oil, coal, and natural gas. One such rare example is Sweden, which gets most of its energy from nuclear and hydropower. Another is Iceland, which benefits from unusually large domestic geothermal resources, not found in most other countries. Even in these two cases, the situation is more complex than it appears.The construction of the infrastructure for these power plants mostly relied on fossil fuels for the mining of the ores and raw materials, materials processing, transportation, manufacturing of components, the mining of uranium, construction energy, and so on. Thus for most of the world, a meaningful energy transition is still more theory than reality. But if current primary energy sources are unsustainable, this implies a daunting problem. The transition to alternative sources must occur, or the world will lack sufficient energy to maintain basic services for its 6.8 billion people (and counting).

Thus it is vitally important that energy alternatives be evaluated thoroughly according to relevant criteria, and that a staged plan be formulated and funded for a systemic societal transition away from oil, coal, and natural gas and toward the alternative energy sources deemed most fully capable of supplying the kind of economic benefits we have been accustomed to from conventional fossil fuels.

By now, it is possible to assemble a bookshelf filled with reports from nonprofit environmental organizations and books from energy analysts, dating from the early 1970s to the present, all attempting to illuminate alternative energy transition pathways for the United States and the world as a whole.These plans and proposals vary in breadth and quality, and especially in their success at clearly identifying the factors that are limiting specific alternative energy sources from being able to adequately replace conventional fossil fuels.

It is a central purpose of this document to systematically review key limiting factors that are often left out of such analyses.We will begin that process in the next section. Following that, we will go further into depth on one key criterion: net energy, or energy returned on energy invested (EROEI).This measure focuses on the key question: All things considered, how much more energy does a system produce than is required to develop and operate that system? What is the ratio of energy in versus energy out? Some energy “sources” can be shown to produce little or no net energy. Others are only minimally positive.

Unfortunately, as we shall see in more detail below, research on EROEI continues to suffer from lack of standard measurement practices, and its use and implications remain widely misunderstood. Nevertheless, for the purposes of large-scale and long-range planning, net energy may be the most vital criterion for evaluating energy sources, as it so clearly reveals the tradeoffs involved in any shift to new energy sources.

This report is not intended to serve as a final authoritative, comprehensive analysis of available energy options, nor as a plan for a nation-wide or global transition from fossil fuels to alternatives. While such analyses and plans are needed, they will require institutional resources and ongoing reassessment to be of value.The goal here is simply to identify and explain the primary criteria that should be used in such analyses and plans, with special emphasis on net energy, and to offer a cursory evaluation of currently available energy sources, using those criteria.This will provide a general, preliminary sense of whether alternative sources are up to the job of replacing fossil fuels; and if they are not, we can begin to explore what might be the fall-back strategy of governments and the other responsible institutions of modern society.

As we will see, the fundamental disturbing conclusion of the report is that there is little likelihood that either conventional fossil fuels or alternative energy sources can reliably be counted on to provide the amount and quality of energy that will be needed to sustain economic growth—or even current levels of economic activity—during the remainder of the current century.

This preliminary conclusion in turn suggests that a sensible transition energy plan will have to emphasize energy conservation above all. It also raises questions about the sustainability of growth per se, both in terms of human population numbers and economic activity.

Download the full pdf report from the PostCarbon.org website.

World Energy Outlook 2009 Edition

The time has come to make the hard choices needed to combat climate change and enhance global energy security, says the latest IEA World Energy Outlook

Since WEO-2008, the economic downturn has led to a drop in energy use, CO2 emissions and energy investment. Is this an opportunity to arrest climate change or a threat that any economic upturn might be stifled at birth?

What package of commitments and measures should the climate negotiators at Copenhagen put together if they really want to stop global temperatures rising? How much would it cost? And how much might the developed world have to pay to finance action elsewhere?

How big is the gas resource base and what is the typical pattern of production from a gas field? What does the unconventional gas boom in the United States mean for the rest of the world? Are we headed for a global gas glut? What role will gas play in the future energy mix? And how might the way gas is priced change?

All these questions and many others are answered in WEO-2009. The data are extensive, the projections more detailed than ever and the analyses compelling.

• The past 12 months have seen enormous upheavals in energy markets around the world, yet the challenges of transforming the global energy system remain urgent and daunting.
• How we rise to that challenge will have far-reaching consequences for energy markets.
• The scale and breadth of the energy challenge is enormous — far greater than many people realise. But it can and must be met.
• Households and businesses are largely responsible for making the required investments, but governments hold the key to changing the mix of energy investment.

World Running Out of Oil?

(via Guardian) Key oil figures were distorted by US pressure, says whistleblower

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies.

In particular they question the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels. External critics have frequently argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production.

Read the full report here.

The Peak of the Oil Age - The Uppsala Energy Outlook

A new study has been accepted for publication in the journal of Energy Policy. The article performs an analysis of the oil production forecast done by the International Energy Agency in 2008 and highlights several shortcomings as well as confirms other parts.

Abstract:
The assessment of future global oil production presented in the IEA's World Energy Outlook 2008 (WEO 2008) is divided into 6 fractions; four relate to crude oil, one to non-conventional oil and the final fraction is natural-gas-liquids (NGL). Using the production parameter, depletion-rate-of-recoverable-resources, we have analyzed the four crude oil fractions and found that the 75 Mb/d of crude oil production forecast for the year 2030 appears significantly overstated, and is more likely to be in the region of 55 Mb/d. Moreover, analysis of the other fractions strongly suggests lower than expected production levels. In total, our analysis points to a world oil supply in 2030 of 75 Mb/d, some 26 Mb/d lower than the IEA predicts.

The connection between economic growth and energy use is fundamental in the IEA's present modelling approach. Since our forecast sees little chance of a significant increase in global oil production, our findings suggest that the "policy makers, investors and end users" to whom WEO 2008 is addressed should rethink their future plans for economic growth. The fact that global oil production has very probably passed its maximum implies that we have reached the Peak of the Oil Age.

The study is available online as PDF here.