For much of last year, one of the questions I researched in detail was What will Higher Education look like in a 2050 -80% +2c 450ppm world? My research began with a personal interest in Peak Oil and from there led me to look at climate change and the social and economic impacts of these related subjects. The focus of my research was initially an application for a research grant. You can read the application and the judges comments, which were very favourable but ultimately didn’t secure the grant because it was outside the remit of the programme of funding. Oh well. For months after that, I tried to understand the implications of a future where energy production doesn’t meet demand and the impacts of climate change become more apparent and wrote about it regularly under the tag ‘resilient education‘. Ultimately, my research led me to be quite pessimistic about our ability and willingness to deal with the projected problems. If you read my blog posts, you’ll see that there are really deep structural issues that need to be faced, in particular around the relatively recent obsession with economic growth. I say recent, but the underlying logic of capitalism has always been concerned with the accumulation of surplus value in the form of money, something Marx identified in the 19th century, but it’s only in the last 50 years or so that the idea of ‘economic growth’ has been an explicit political priority.
Anyway, the news over the last week or so has reminded me that the government and mainstream media are literally years behind acting on the research available to them. I was encouraged to read that the UK government seems to be acknowledging Peak Oil and is working with an industry group to model the impact on the UK economy if the price of oil rises to $250/barrel in 2014 (it’s currently around $115). This new relationship might have been forged due to the excellent report that the group produced last year, showing the likelihood of an ‘oil crunch’ in the middle of this decade, or it might have been because the International Energy Agency finally admitted that Peak Oil had actually occurred (in terms of crude oil – not total liquid fuels) in 2006. Energy analysts already knew this – you only had to look at the trend in crude oil production to get an idea – but with the IEA now using the term ‘peak oil’, the issue is bound to get more coverage.
Other news in the last week confirms the problems we face with climate change, too. Again, it takes the IEA to speak out before it gets any real coverage, but thankfully they’ve highlighted the the very tight correlation between economic growth (GDP) and rising emissions, saying that “it is becoming extremely challenging to remain below 2 degrees. The prospect is getting bleaker. That is what the numbers say.”
Finally, Larry Elliot, the Economics Editor for the Guardian wrote a column yesterday, which ties everything up together reasonably well. Energy, the economy and emissions are all inextricably linked and point to a ‘triple crunch’ that is yet to fully impact on the UK. I’m pleased to see this kind of reporting in the mainstream media but what’s really frustrating is that it only took me a few months of research to figure this out. The message has been clear for a number of years now and the public discussion is a decade overdue. There is a substantial body of research which I identify in my blog posts, that points to an oil crisis this decade (not what we’re seeing at the moment, but a real crisis where liquid fuel production falls over a number of years), which shows that the -80% emissions target is all but impossible and that when global net energy production falls, so does GDP.
As I’ve said before, this all has significant immediate and long-term social and political implications, including the effects it could have on the provision of higher education. It’s time that a co-ordinated effort was made by the sector to examine these issues in detail, involving academics from across disciplines as well as business continuity managers and VCs. We really do need to start ‘thinking the unthinkable‘…
Owen, Inderwildi and King’s recent paper, The status of conventional world oil reserves—Hype or cause for concern?, supports previous studies by others which show that conventional oil production peaked in 2005 and that the peak production capacity of all liquids (excluding gas), will peak around 2010. Conventional oil supply is declining by over 4%/annum, with the shortfall and anticipated additional demand being met by non-conventional oil (deep sea, tar sands) and other liquid sources such as gas and bio-fuels. In just ten years, 50% of the global demand for liquid fuel will have to be met by sources that are not in production today. Not surprisingly then, speculation over the price of oil based on fundamental supply and demand factors, as well as global events such as the invasion of Iraq, Hurricane Katrina and Israel threatening to attack Iran, has resulted in increased volatility of prices, reaching a high of $147 a barrel in July 2008. In 2000, a barrel of oil cost around $20. A decade later, the price of oil is around $80 a barrel and the trend remains upwards.
Different economic theories applied to the supply and demand of oil offer opposite outcomes. One suggests that the law of diminishing returns would create an incentive to invest further in unconventional sources such as tar sands and deep sea resources. On the other hand, some economists argue that due to the inextricable link between oil and economic activity, high oil prices can’t be sustained and that a price of $100 a barrel would induce global recession, driving down oil prices and paradoxically reducing investment in alternative fuels. While rising oil prices can damage economic growth, lowering oil prices does not have the same, proportionate effect on stimulating growth. It has been estimated that oil price-GDP elasticity is -0.055 (+/- 0.005) meaning that a 10% rise in oil prices leads to a 0.55% loss in global GDP.
Owen, Inderwildi and King’s paper concludes that published world oil reserve estimates are inaccurate and should be revised downwards by a third. Over-reporting since the 1980s due to the ‘fight for quotas’ whereby OPEC agreed to set export quotas in proportion to reserve volumes, and the inclusion of tar-sands into reserve estimates since 2004 have distorted reality. They add that “supply and demand is likely to diverge between 2010 and 2015, unless demand falls in parallel with supply constrained induced recession” and that “the capacity to meet liquid fuel demand is contingent upon the rapid and immediate diversification of the liquid fuel mix, the transition to alternative energy carriers where appropriate, and demand side measures such as behavioural change and adaptation.”
In their report, The Oil Crunch. A wake-up call for the UK economy, the Industry Taskforce on Peak Oil and Energy Security (ITPOES) likens the effect of an imminent ‘oil crunch’ due mid-decade, with the current ‘credit crunch’. The report identifies a slow down in the production of oil prior to 2013, when it then begins to drop and without replacement infrastructure already in place, little can be done to address this fully within the next five years. The authors note that the discovery rate of oil is inadequate to meet projected demand and they too, have concerns over published OPEC quotas.
It is worth noting the difference between conventional and unconventional oil, such as deep sea oil and tar sands. The ITPOES report note how the unconventional sources of oil are much more energy intensive to exploit and therefore more expensive to supply oil from. Whereas OPEC might extract a barrel of oil for around $20, deep sea oil might cost around $70 and a barrel of oil from tar sands costs around $90 to extract. Therefore, as conventional sources decline at more than 4% per year for conventional sources, the replacement non-conventional oil pushes the price upwards if demand is to be met.
Global oil demand is forecast to rise, although much of this increased demand will come from developing countries. An extrapolation of historical demand would suggest that 120Mb/day will be required by 2050, compared to our current use of around 84.5Mb/day. However, a historical extrapolation of largely OECD demand could be deceptive, given that five out of a global population of six billion people live in non-OECD countries like China and India, where demand for oil is growing strongest. OECD demand for oil has flattened out in recent years and may stay that way, yet globalisation has created new markets which are emerging in an environment of relatively high oil prices and may be more immune to price rises than OECD economies. Where OECD countries may tip into recession when oil hits $100/barrel, China’s economy and therefore demand for oil, may continue to grow.
However, it is one thing to extrapolate continued economic growth and a corresponding demand for oil and another to supply that demand. Like Owen, Inderwildi and King, the ITPOES report argues that global oil capacity will peak later this year at around 91-92Mb/d and continue at that level until 2015 at which time depletion will overtake capacity growth. Just as the production of conventional oil has plateaued since 2005, the production of all liquids will plateau from 2010/11 for about five years before entering terminal decline. This would have happened two years earlier were it not for the global recession temporarily reducing demand.
Similarly, the ITPOES report highlights the link between high oil prices and recessions, drawing on recent work that shows how every US recession since 1960 has been preceded by rapid oil price rises and that when the price of oil exceeds 4% of US GNP, a recession occurs shortly afterwards. Although this correlation is not necessarily causation, it is “highly suggestive” and the report notes that 4% at current GNP is around $80/barrel, roughly the price of oil at the time of writing. OPEC have publicly stated that they prefer a price around $75/barrel.
The relationship between oil prices and the economy is referred to repeatedly in the ITPOES report. OECD countries are heading some way towards a partial decoupling of economic growth from the consumption of oil, although not to an extent that assures overall energy security. By 2013, OECD and non-OECD countries are likely to each take half of the total global supply of oil. The recession since 2008 has had some impact on global oil consumption, but this is recovering quickly and demand is on the rise. By 2014, prices are expected to be volatile, between $120-$150/barrel resulting in “recessionary forces” which produce a repeat of the 2008 recession. Consequently, oil prices are then expected to drop to somewhere between $90-$120/barrel, picking up again as the global economy recovers. And so on…
For the UK, the ITPOES report highlights the vulnerability of the transport sector and the knock-on effects that higher petrol prices are likely to have on our ‘just-in-time’ business models, recalling the effects of the fuel protests in 2000. While the domestic, industrial and service sectors of the UK economy are able to reduce their reliance on oil products, the transport sector continues to use more, with road and air transport using more than 50% of total UK consumption in 2008.
Increases in the cost of oil are felt in other sectors due to the vulnerability of the transport sector. It raises the cost of capital and puts off investment. With transportation being integral to the supply chain, the price rise is felt through higher consumables, significantly, food. The agriculture sector is highly dependent on oil for transportation fuel and as a component in fertilisers and insecticides. Due to increasing overall energy prices, the number of households trapped in fuel poverty is expected to continue to rise. Their business-as-usual scenario is expected to see the UK become an overwhelmingly major energy importer, with a devalued currency that offsets economic growth.
A more explicitly critical report has been written by the NGO, Global Witness. Focusing on the ‘four fundamentals’ of oil field depletion, declining discovery rates, insufficient new projects and increasing demand, Heads in the Sand specifically targets governments and their agencies for inaction, being “asleep at the wheel” and demonstrating a lack of appreciation of the imminence and scale of the problem a global oil crunch will bring. The report is especially critical of the International Energy Agency (IEA), upon which governments rely for the reporting of data and forecasts.
Heads in the Sand highlights the geopolitical and social consequences of peak oil, linking the energy crisis to the climate crisis in terms of how short-term, national economic interests are overtaking the need to shift to more sustainable energy supply systems. The consequences of this are disastrous affecting almost every aspect of life, including “food security, increased geopolitical tension, increased corruption and threats to the nascent global governance reform agenda, and the potential for major international conflict over resources.” As with the effects of climate change, the poor are vulnerable to oil price volatility and restricted supply, as was seen with the food price rises in 2008, which the World Food Programme described as a “…a silent tsunami threatening to plunge more than 100 million people on every continent into hunger.” Such volatility has geopolitical implications that are difficult to predict but are likely to be in the form of increased tension between states, rioting and protests around the world and human rights abuses perpetrated by kleptocratic governments. A scenario of collapse within one or two decades, with the decline of globalisation and increased environmental destruction, is suggested.
Like the other reports summarised above, Global Witness describe the strong links between oil use and economic growth and the consequent reversal of growth with a declining supply of oil. With each price shock comes “a vast deployment of national wealth by consuming economies, expenditure that would have been better used in the creation of an alternative and sustainable energy system.” The Heads in the Sand report provides a useful overview of key illustrated facts and figures relating to peak oil aimed at the general reader and is international in outlook, rather than concerned specifically with industry analysis or the impact on the UK economy. It also examines the alternatives to conventional oil production and their feasibility. Enhanced Oil Recovery (EOR), exploitation of Canada’s tar sands, oil shales, heavy oil and natural gas liquids all come with caveats that make them very unlikely to mitigate a decline in global oil production this decade and often come with serious environmental impacts.
In particular, is the problem of shrinking Energy Return On Investment (EROI), which refers to the ratio of energy input required to produce each unit of energy output. The Canadian tar sands, for example, have a net energy of around 10:1 compared with conventional oil of around 30:1. Therefore, the estimated production of 5.9m barrels/day from the tar sands by 2030 is actually worth just 1.6m barrels/day of conventional oil output. Increasingly, more energy that is produced is being diverted back into the production of raw energy.
Finally, Global Witness discuss the wasted decade when governments could have acted to mitigate the effects of peak oil, but chose to rely on the overly optimistic projections, claiming that the IEA misrepresented projected discovery data and was overconfident in its forecasts of future oil production. Clearly business as usual is no longer an option and radical measures are required by governments to address the scale and imminence of peak oil and its impacts.
The Royal Academy of Engineering’s report, Generating the Future. A report on UK energy systems fit for 2050, warns of the magnitude of the task of reducing emissions by 80%, examining four possible energy scenarios that could meet that target. The report discusses the engineering challenges, emphasising how dependent we currently are on fossil fuels for the vast majority of our energy. A reduction in emissions of 80% would change the chart below, “beyond all recognition.” Carbon Capture and Storage (CCS) of coal, “if successful”, would allow for greater use of coal, but “major changes” would still be required.
The report makes the point that most of the technologies required are already available, but the period of transition from R&D to 90% market penetration is normally in the region of 30-40 years. Not only is the transition to the use of new technologies a major challenge, but the building of new infrastructure is also a “huge challenge.” Reference is made to how the country has met comparable challenges when “on a war footing” when a whole national manufacturing base shifts focus, but clearly the point being made is that the task is not just technological, nor economic, but political and social. Where is the policy that confronts the threat of this ‘war’?
At present there is generally insufficient incentive to make the switch to a new low-carbon technology, particularly when such a switch would be costly and disruptive.
As Engineers, the report highlights the scale of work that is required, listing examples such as the building of three miles of wave power machines each month for the next 40 years, the importing of huge numbers of wind and wave turbines, the building of port facilities to handle the scale of off-shore wind turbine construction (similar on scale to that required for the North Sea oil and gas development), a network of pipes to carry carbon captured from coal stations, again equivalent to the infrastructure developed for the North Sea Oil and gas industry. Their scenarios all necessitate a major upgrade to the electricity grid, not seen since the 1970s, requiring billions of pounds of investment, too. The electrification of transport and improvements to the efficiency of buildings, require “major systemic changes” to millions of individual assets. To build and maintain this, major training programmes are required to develop the skills needed for this to succeed. With new technologies, new academic disciplines will be needed, too. All of this will take place within an increasingly competitive global environment as other countries work towards decarbonisation and requires our industry to remain agile enough so as to avoid lock-in to new technologies that have short-term benefit but become obsolete over these crucial decades. “In summary, the changes to the UK energy system required to meet any of the scenarios will be considerable and disruptive.”
The report is largely concerned with the balance of energy and its flow and does not address issues of energy security. It shows how the Climate Change Act requires a change from this:
The first scenario sets the demand level to be the same as current levels. It should, however, be stressed that this by no means represents business as usual. Simply keeping demand at a similar level to now will require considerable effort. … In technological terms there are no choices to be made – the demand is so large that every available technology will be needed as quickly as possible. The main problems for scenario 1 will be buildability and cost to the nation. With over 80 new nuclear or CCS power plants required – around two per year – along with vast increases in all forms of renewables, building the system would require an enormous effort, probably only achievable by monopolising most of the national wealth and resources.
Rather than outlining the other three scenarios, which assume reductions and changes in demand through efficiencies and alternative uses of technology as well as a substantial use of low-grade heat, it is worth noting the statement above that keeping demand as it is, is a challenge in itself. Since 1980, with the exception of industry, ((Energy demand from industry has decreased -34% presumably due to the de-industrialisation of our economy)) the UK’s final energy demand has risen +68% for transport, +10% for the domestic sector and +3% for the service sector. ((DECC, UK Energy in Brief 2008)) There is a limit to how much more we can de-industrialise so the kinds of demand reductions required for scenarios 2, 3 & 4, assume reductions in sectors that have never previously shown reductions. All scenarios suffer from increased reliance on intermittent sources of energy supply and it is suggested that until we have “adjusted” to this new system, fossil fuels are used as backup sources until 2050. There is an assumption that new, unknown technologies will improve the resilience of supply beyond 2050.
The report concludes that while each of the four scenarios is only meant to be illustrative and not predictive, they do show there is no single ‘silver bullet’ that will achieve the cuts in emissions that are required. The report is useful in the way it discusses energy flows in a national system of supply and demand. Key to each scenario is that electricity generated from a variety of renewable and low carbon sources, will have to become the major source of power, providing energy to around 80% of our transportation. Energy demand must be reduced in all scenarios, even the first scenario which assumes no further increase in demand, represents a reduction on current forecasts. The need for behavioural change is briefly mentioned, but not elaborated on.
The urgency of the task is highlighted in terms of both its scale and the time required to meet the 2050 target and because a re-engineering of the UK’s energy infrastructure is necessarily measured in decades, with technologies themselves expected to be in place for several decades, too, it is the current crop of low carbon technologies that will have to make the significant contribution to the 2050 targets. Future technologies belong to the future and will make little contribution to the work required over the next 40 years. Quite bluntly, the report states: “There is no more time left for further consultations or detailed optimisation. Equally, there is no time left to wait for new technical developments or innovation. We have to commit to new plant and supporting infrastructure now.” The report calls for strong direction from government, admitting that the scale of the challenge is
currently beyond the capacity of the energy industry to deliver. In order to achieve the scale of change needed, industry will require strong direction from government. Current market forces and fiscal incentives will not be adequate to deliver the shareholder value in the short-term and to guarantee the scale of investment necessary in this timescale.
Finally, the report is critical of the current policy situation, stating that
current government structures, including market regulation, are, as yet, simply not adequate for the task.” Government must be re-organised around the challenge (i.e. be on a ‘war footing’), in order to provide “the clear and stable long-term framework for business and the public that is not currently in evidence. It also needs to be recognised that the significant changes required to the UK energy system to meet the emissions reduction targets will inevitably, involve significant rises in energy costs to end users. ((I should also add that a similar report by the Institute of Mechanical Engineers complements the recommendations of this report, too. However, the report places a greater emphasis on the need for methods of adaptation and not just mitigation.))
Pielke Jnr.’s paper, The British Climate Change Act: a critical evaluation and proposed alternative approach, is a short and revealing paper which argues that the magnitude of the task set out by the UK Climate Change Act will inevitably lead to its failure as a piece of legislation and that the sooner this is recognised, the better chance there is of creating policy which drives realistic outcomes. The paper is not an examination of technologies, but rather a calculation of and reflection on the UK’s past rates of decarbonisation and a comparison with other countries’ demonstrable rates of decarbonisation.
Methodologically, Pielke Jnr. examines two “primary factors” that lead to emissions: economic growth (or contraction) i.e. GDP, and changes in technology, typically represented as carbon dioxide emissions per unit of GDP.
Each of these two primary factors is typically broken down into a further two sub-factors. GDP growth (or contraction) is comprised of changes in population and in per capita GDP. Carbon dioxide emissions per unit GDP is represented by the product of energy intensity, which refers to energy per unit of GDP and carbon intensity, which refers to the amount of carbon per unit of energy.
The logic of these relationships means that “carbon accumulating in the atmosphere can be reduced only by reducing (a) population, (b) per capita GDP, or (c) carbon intensity of the economy.” Pielke is concerned with the creation of policy that will achieve its intended effect and notes that population reduction and/or a reduction in per capita GDP are not realistic strategies for governments to promote policy. Therefore, a reduction in the carbon intensity of the economy (decarbonisation), is the only realistic policy choice.
The paper approaches the challenge of de-carbonisation in two ways: a ‘bottom up’ approach, which looks at the projected increase in UK population as well as projections of per capita GDP, from which an implied rate of decarbonisation can be estimated. The other, ‘top-down’ approach, examines overall GDP growth and derives the implied rates of decarbonisation needed to meet the specified target. Through a series of straightforward calculations, Pielke’s bottom-up analysis shows that
the combined effects of population and per capita economic growth imply that to meet the 2022 and 2050 emissions targets increasing energy efficiency and reduced carbon intensity of energy would have to occur at an average annual rate of 5.4%–2050 and 4.0%– 2022. These numbers also imply that successfully meeting the 2022 target with a 4.0% annual rate of decarbonization would necessitate a rate higher than 5.4% from 2022 to 2050.
The top-down analysis begins with an assumption about future economic growth, integrating future population growth and future per capita economic growth, then works backwards to determine the rate of de-carbonisation required to meet the future emissions target. This approach underlines the fact that higher rates of GDP growth likewise require higher rates of decarbonisation. It is worth reading the paper for a full understanding of the figures alone, but in summary, this analysis shows that the rates of de-carbonisation required are “4.4% per year for the 2022 target and 5.5% for the 2050 target. These numbers are substantially higher than the rates of decarbonization observed from 1980 to 2006 and 2001 to 2006.” By comparison, between 1980 and 2006, the actual rate of de-carbonisation in the UK was 1.9%, decreasing to 1.3% during the period 2001-6.
In response to this, Julia King, Vice Chancellor of Aston University and member of the Climate Change Committee, replied that technically, these rates of de-carbonisation are “do-able”. However,
I think you really do need to take due account of the fact that most people who are putting together targets and timetables are doing this on the basis of a lot of research into potential scenarios. It is another issue turning that into policy, for governments, and it is very easy for all of us who do not have to be elected to say ‘this is how I would do it’, and I have a lot of sympathy for our politicians, because they are dealing with extremely selfish populations.
The latter part of Pielke’s paper compares his analysis with the actual rates of decarbonisation in the UK and other countries. France provides a good example of the magnitude of the decarbonisation challenge as it is the major, developed economy with the lowest rates of emissions (0.30 t of carbon dioxide per $1000 of GDP in 2006). France has achieved this due to its reliance on nuclear power for electricity generation and was able to decarbonise overall by about 2.5% during the period 1980-2006. Notably, however, it only achieved a rate of 1.0% during 1990 to 2006.
It took France about 20 years to decarbonize from 0.42 t of carbon dioxide per $1000 GDP, the level of the UK in 2006, to 0.30 t of carbon dioxide per $1000 GDP. France’s decarbonization experience thus provides a useful analogue. For the UK to be on pace to achieve the targets for emissions reductions implied by the Climate Change Act its economy would have to become as carbon efficient as France by no later than 2016 … In practical terms this could be achieved, for example, with about 30 new nuclear plants to be built and in operation by 2015, displacing coal and gas fired electrical generation.
Pielke concludes by arguing that the approach to the Climate Change Act has been backwards, setting a target without being clear on how it will be achieved. In terms of policy success, he also points out the danger of confusing a reduction in emissions with decarbonisation, stating that a lowering of emissions, due to the recession for example, does little to change the role of energy technology in the economy. Without changes in energy technology, emissions remain tightly coupled with GDP and population growth, areas which the Climate Change Act is not attempting to reduce. The success of this policy will be on reducing emissions under the forecast conditions of economic and population growth. Thus, carbon dioxide emissions per unit of GDP (i.e. decarbonisation) is the key measurement by which to judge the policy. The UK has achieved significant rates of decarbonisation in the past (better than other countries but not as high as the Act implies), but, as pointed out above, this was due to the de-industrialisation of the 1980s and 1990s, and this rate has since slowed considerably.
Given the magnitude of the challenge and the pace of action, it would not be too strong a conclusion to suggest that the Climate Change Act has failed even before it has gotten started. The Climate Change Act does have a provision for the relevant minister to amend the targets and timetable, but only for certain conditions. Failure to meet the targets is not among those conditions. It seems likely that the Climate Change Act will have to be revisited by Parliament or simply ignored by policy makers. Achievement of its targets does not appear to be a realistic option… Because no one knows how fast a large economy can decarbonize, any policy (or policies) focused on decarbonization will have to proceed incrementally, with constant adjustment based on the proven ability to accelerate decarbonization (cf Anderson et al 2008). Setting targets and timetables for emissions reductions absent knowledge of the ability to decarbonize is thus just political fiction.
Finally, Pielke proposes alternative methods of accelerating decarbonisation. These would involve international co-operation in assisting other countries to decarbonise to at least the level currently observed in the UK and focussing on sector specific policy that addressed the processes of decarbonisation but without the impossible targets and timetables, the expansion of low/no carbon energy supplies and incremental improvements rather than long-term measures. It is a useful paper, both for its analysis and its approach, one which clearly recognises that economic growth will remain the first priority for the UK and other countries.
What the graph above shows is that current global emissions are worse than any of the ‘marker scenarios’ outlined in the 2007 IPCC assessment report on Climate Change. Rather than repeat it here, Stuart Staniford provides an excellent analysis of what this implies. To add to this, I would simply suggest that by the time of the next IPCC report in 2014, it seems likely to me that if the Peak Oil and Climate Change summaries I’ve given above are on the money, the strategy, policy and methods of public engagement to address the related predicaments of both energy and climate change will require a significant re-think in the middle of this decade, just before the next UK general election.
Some significant questions remain, too:
If economic growth is coupled to the supply of energy, how will Peak Oil affect global GDP? The Climate Change Act, Peilke’s analysis and the IPCC scenarios, assume continued economic growth yet how will a decline in the production of oil (and by implication a decline in GDP) affect both the production and supply of other fossil fuels and our ability to fund the required transition to low-carbon economies? Will we have to wait until the subsequent (post 2014) IPCC report before they take Peak Oil and its economic consequences into account? I guess so.
In the course of writing our GreenICT proposal, 2020 Vision: Thinking the unthinkable, I’ve read a large number of recent, good quality reports which provide ample research for the casual reader into Peak Oil and a related energy crisis. Perhaps some readers of this blog might be interested in learning more about this topic, so here are a few good places to start. If you know of other essential reports that I should include, please leave a comment.
UPDATE: I’ve bundled these as a reading list which you can subscribe to by RSS. As I find more reports which are worth including, the reading list will be updated. You can grab the OPML file and the Atom feed, too. The source for the reading list is on delicious.
For the last couple of weeks, I’ve been dipping in and out of a bid that I am writing for JISC’s Greening ICT Programme. Those of you that follow me on Twitter will have seen me drop related tweets into the stream. I’ve been a bit nervous about doing so because they seem quite unrelated to my usual topics of conversation. Also, the subject matter can be pretty depressing and I worry that it might get on people’s nerves after a while. Oh, well. ((Somewhere in this post, I just want to say thanks to Richard Hall at DMU for encouraging me to write about this.))
Anyway, Peak Oil and a related energy crisis is something I’ve been interested in for a few years and is a topic I discuss regularly with friends face-to-face. Over the years, I’ve found that a lot of people aren’t interested; either because the consequences are just too depressing and/or because the the other ‘big issue’ of climate change is surely what we’re supposed to be worrying about now. (It is, but peak oil is likely to increase our consumption of alternative fossil fuels and therefore increase our carbon output). When we hear politicians questioned about an ‘energy crisis’, they say there is no crisis as long as we concentrate on a shift to the use of a mix of renewables and greater energy efficiency. I tend to disagree because…
The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking. ((The ‘Hirsch Report’: Peaking of World Oil Production: Impacts, Mitigation and Risk Management (PDF). An often cited report commissioned by the US Department of Energy in 2005))
You’ll see from my comment, that when I read this, it occurred to me that JISC’s Strategy didn’t seem to recognise the possibility of disruptions to energy supply and significant spikes in the cost of energy over the next ten years. There’s the welcome and necessary acknowledgement of ‘Green Computing’, ‘sustainability’ and ‘efficiency’, but these don’t show an awareness of the fundamental problems that JISC’s Vision, Mission and Objectives would face in the event of an energy crisis.
“But what crisis?!?” I hear some of you say.
Well, there’s a lot of good research available from very credible sources. Today, the BBC and Telegraph reported on The Global Depletion Report, from the Government-funded UK Energy Research Council. The report, launched today, is authoritative in that it’s a review of all the available evidence and arguments around the issues to-date. You only have to read the Executive Summary to find assertions which should cause us all significant concern.
It confirms what some of us have been reading for years, that global peak oil, the point where it becomes increasingly uneconomical to supply the oil that is demanded by the world, is imminent.
On the basis of current evidence we suggest that a peak of conventional oil production before 2030 appears likely and there is a significant risk of a peak before 2020.
The estimated range they give is actually between 2009 and 2031, but this doesn’t really matter because they quickly acknowledge that whether it’s already here, ten or twenty years away, the time frame is very tight when it comes to developing substitute fuels. Note that production of oil has actually plateaued since 2006.
The report is up front in saying that it doesn’t discuss the consequences of peak oil or how we might tackle it:
The report does not investigate the potential consequences of supply shortages or the feasibility of different approaches to mitigating such shortages, although both are priorities for future research.
Which is why I hope JISC will recognise that this is a vital area of research they should be funding. I had no idea that this report was being prepared – there are plenty of others that offer the same conclusions – but it does seem very timely given JISC’s Greening ICT programme of funding. As I write in my bid outline:
As HEIs increasingly turn to ICT to enhance, support and deliver education, we ask the question: “What will happen to the provision of a technology enhanced education when the consumption of energy is restricted by recurring interruptions in supply and significant spikes in costs?”
In preparing my bid, I’ve obviously tried to pull a few key points together to convince the judges that this is worth pursuing. The first important point to get across is that oil is fundamental to the UK way of life. Pretty much every material benefit we enjoy can be traced back to the discovery, production, supply and exploitation of oil. Not only does the supply of oil affect the supply of other forms of energy, as the graph below illustrates, it is used in the production of food, plastics, medicines, chemicals, lubricants… you name it and oil plays a part in the process somewhere.
The UK doesn’t rely on oil directly for the production of electricity. We get it from a mixture of coal (32%), gas (45%), nuclear (13%) and renewables (5.5%), importing a third of our gas requirements (this is expected to rise to around 85% of our requirements by 2020). However, we can see that when the price of oil rises, the price of other fuels and, in turn, electricity rises. We’ve all felt this over the last couple of years as we’ve seen consumer electricity prices rise.
As you can imagine, for an organisation the size of a university, rises in the price of electricity can have pretty large financial consequences. Typically, a HEI will tender for a fixed term contract of a couple of years to protect from unforeseen spikes in prices. This is good if the price is relatively low at the time of your tender, like now, but what if your HEI had to renew its electricity contract last year when prices were very high? Our institution, small by comparison with some, is forecasting an annual electricity spend of £1.2m in 2009/2010, up 13% on 2008/9. Even with planned reductions in efficiency and consumption, we’re only likely to be able to reduce the increase from 13% to a 6% increase in spending. Gas, fuel oil and other utilities are in addition to this, too. I might add that we underwent a ‘server consolidation’ exercise last year and most of our server infrastructure is now virtualised, so we’ve already taken steps towards greater energy efficiency there. Of course, there is more we can do.
So, I’ve touched on the cost implications of a peak oil scenario. The bottom line is that it will get much more expensive to run a university, despite increased efforts to reduce energy consumption and improve efficiency. What’s also worth pointing out is that as we increase the efficiency of things that consume energy, we only counteract that by using more energy in other ways. So far, innovation, growth and progress has ultimately required more energy than it’s saved ((An extensive UK government-funded report that discusses this in detail is Prosperity without growth? The transition to a sustainable economy)) which is partly why we’re using 11% more energy now than we were in 1990. ((Digest of United Kingdom Energy Statistics 2008)) This is a global problem to which, despite our best efforts, we are not immune. The OECD European countries are slowly reducing their consumption of oil over the last few years ((Energy Information Administration, International Energy Outlook 2009)), yet consumption pretty much everywhere else is on the rise and so the supply and cost implications still affect us all.
A report from Chatham House, last year (with a postscript in May 2009), concluded that a ‘crunch’ in the supply of oil (i.e. Peak Oil) is likely around 2013 with prices rising to around $200. They note that although recessions temporarily reduce demand for oil, the investment in energy efficiencies decreases during recession, too, and consumers prefer to hang on to less energy efficient appliances for longer because of income fears and unemployment, both of which contribute to an even greater demand for oil as the economy improves. In addition, investment in oil production drops during a recession, so innovation in improving oil extraction from existing reserves and discovery of new reserves is slowed. Any delay in the 2013 crunch which might have come from reduced demand is, according to Chatham House, negated.
It’s all quite complex, but happily (?), even for a lay observer like myself, there is sufficient comprehensible primary research and analysis that it’s not too difficult to get a decent picture of why an energy crisis is imminent and then consider the possible implications of such a scenario.
Scenario planning or scenario thinking is a strategic planning tool used to make flexible long-term plans. It is a method for learning about the future by understanding the nature and impact of the most uncertain and important driving forces affecting our world.
Many of the regular methods for strategy development assume that the world in three to ten years’ time will not significantly differ from that of today and that an organisation will have a large impact on its environment: they assume we can mould the future. Scenario planning however assumes that the future can differ greatly from what we know today.
Participants in Scenario Planning are encouraged to ‘think the unthinkable’ and ask the question, ‘what do we need to do (now) to be ready for all scenarios?’ This is what I propose to do, together with our Business Continuity Manager, Environmental Sustainability Manager, ICT Information Security Manager and other colleagues. We need to be thinking the unthinkable a lot right now and JISC’s Strategy for energy efficiency and sustainability needs to be informed by more than the climate change debate, important though it is.
We will seek to clarify the areas of uncertainty with respect to sustainable ICT by re-framing the provision of Higher Education within an energy crisis scenario that may arguably emerge in the next ten years – the reference period for JISC’s 2010-2012 Strategy.
While the policies to mitigate an energy crisis are often complementary to those required to combat global warming, the explicit policy-making in the UK for global ‘Peak Oil’ is nothing like as advanced as climate change, yet the threat to institutional business continuity is arguably greater in the short to medium term. The project will seek to effect attitudinal and behavioural change across the sector by developing scenarios for HEIs that examine the provision and continuity of education within the context of a long-term global energy crisis and suggest actions that JISC and the community may make to forecasts widely held by energy analysts though rarely acknowledged by government policy and strategy.
This is important to me, not least because the social implications are so great, but because increasingly I’m thinking that Educational Technologists are building a house of cards. We’re investing our occupation in developing a vision of the future which there is good evidence to suggest, won’t exist.
Everything is put at risk by peak oil. The manufacture of microchips and hard drives ((I ran across an article yesterday that describes how Intel Executives are trying to petition the US government to focus on the problem)), the transportation of ICT equipment to consumers, the reliable supply of electricity to power equipment. ((See also, the report by the UK Industry Taskforce on Peak Oil & Energy Security, which includes Yahoo! and Virgin, among others.)) And it’s not just the obvious things that it will affect. I was discussing this with our Business Continuity Manager recently and she pointed out that if there is no power to the fire detection and alarm system, the building has to be evacuated. ((UPDATE: If they cannot be powered the Unviersity will either have to employ fire marshalls patroling buildings keeping a fire watch or when the battery power backups fail they will have to move to another building. In addition the University would have to go back to manual fire alarm e.g. bells, or an alternative manual warning system (e.g. person shouting being the last resort).)) Our UPS and backup batteries will allow for a graceful power down in some parts of the campus in the event of power cuts, but they won’t maintain business as normal. We had a three-day-week in the UK for three months in 1974, in order to conserve electricity. ‘South African style power cuts’ are forecast for the UK by 2015. What might be the government’s response to an energy crisis and how might it affect HEIs and our provision of an industrialised education? Some local authorities are beginning to take the issue into their own hands. ((See the The Welsh Local Government Association’s Peak Oil and Energy Uncertainty, and ODAC’s Preparing for Peak Oil: Local Authorities and the Energy Crisis)) I think Educational Technologists should be leading on this in our sector, too.
The bid to JISC was not funded though I quote their feedback below:
The main reason that your proposal was not approved for funding was that, although the evaluators thought the question you posed was of great importance and one that really ought to be answered, they decided that it really did not belong in a JISC funded call for projects around Green ICT.
For example, in the question of the overall fit to call, they said:
“Whilst in the general area of sustainability and a piece of useful work, its link to the specifics of the programme is a little thin. Not about Green IT but energy uses response.”
“The proposal is very left of afield (sic), it is a good idea and while I am sure it would be extremely interesting to pursue; it does not, I feel, fit within the scope of the call.”
“Think this is a very interesting bid that is likely to produce some very thought provoking outputs. It does seem to be slightly orthognonal to the issues described in the call but I think that it would be very useful despite that. It is very clearly written and makes its case well.”
Under the question of the workplan one said:
“Most of it seems well planned. However, I am concerned about only allowing a month for the survey and dissemination. The recruitment risk is significant. Dissemination is very strong.”
In terms of value for money concern was expressed at the high cost of the scenario planning exercise and it was felt overall to be not good value for money.
Overall Comments from the evaluators were:
1. A good proposal, of value to JISC but consideration needs to be given to its relationship to the programme. It appears to be out of scope.
2. Quite interesting as a proposal and possibly work that JISC might want to consider funding under a future call. However, this does not fit well within the current call.
3. An interesting and thought provoking bid that looks to be very useful I would like to give it an A but I have a number of minor concerns as discussed above.
…the evaluation panel came to the conclusion that it was too far from the scope of the programme that we could not fund it. However the panel wanted to pass on their encouragement to seek other sources of funding for this idea and keep in touch with JISC.
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