A World Without Oil (and Gas and Coal)

Yesterday the Independent published a front-page article about the coming oil crisis. At last the media, or this part of it at least, have recognised that there’s an energy crisis ahead. The article was triggered by the publication of the latest edition of BP’s Statistical Review of World Energy. A number of industry experts have taken issue with the rosy view they claim the report is taking. Some of them believe that oil supplies will begin to run out in four years. Some believe that cheap oil has run out already.

Paradoxically, taxation is one of the factors that have cushioned the British public against the evidence of an increasing oil price. Petrol is taxed at a fixed sum per gallon; unlike VAT which is calculated as a percentage of the selling price. Because UK petrol duty is relatively high, the cost of the oil at the pump is only a small portion of the price paid. If the cost goes up, the petrol duty per litre does not. Thus in the UK the price of petrol has risen from 85p to 97p over the last few months; an increase of some 14%. Over the same period US prices have risen from $2 to $3 – a 50% increase caused by the same underlying rise in oil prices. Another factor is the dollar rate: as oil prices have gone up the dollar has declined, offsetting the increases for us in Europe. This cannot continue, however. The signs are that the oil producers are less willing to accept payment in dollars as the American economy weakens. This will push prices up for the rest of us.

Going back to the BP review; there are some startling figures. The report calculates R/P - the reserves to production ratio. So if a country has 100 barrels and uses 10 barrels per year the R/P is 10: they have enough reserves for another 10 years.

Take a look at the UK figures:
Coal R/P = 12 years
Oil R/P = 6.5 years
Gas R/P = 6 years

Of course we will not be able to maintain our production rates as these resources get harder to find and more difficult to extract, so they will last longer than implied. They are still running out, though, and the UK is increasingly dependent on foreign supplies.

Heavy Weather

Climate change and global warming. Many people think we can look forward to more of the same only warmer, and particularly for those of us in the UK the prospect of warmer summers can’t be bad. The truth is that climate change is climate destabilisation, and the experts predict more unusual, more unseasonable and more violent weather.

Are we now seeing the evidence? Across a major part of the United States there are serious droughts. Droughts have gone on for so many years in parts of Australia that the government is planning to evacuate whole communities from areas that have become totally unviable. Then just this week, in the wine-growing Hunter Valley, another part of Australia, there have been torrential storms, flash floods, property damage and fatalities.

Last week there was a cyclone, though in the UK at least we heard little about it. It caused serious property damage and a number of people lost their lives. The scary thing about this cyclone, though, is not that it’s perhaps a bit early but that it occurred not in the US or Australia but in the Persian Gulf. They just don’t get cyclones there, but it tore through Muscat and Oman – you can see pictures of the damage in this blog.

Experts in climate change have mapped the weather over thousands of years, so it’s impossible to say whether the events of the last three or four years are evidence of a new trend. Even so, these storms are not inconsistent with the unpredictable, violent weather that climate change could bring. They may be a taste of things to come!

Festina lente G8!

Festina lente – hurry slowly.

After a lot of pre-conference posturing and sabre-rattling, Angela Merkel the German Chancellor and G8 president announced that the agreements on climate change were "the most important decision for the coming two years."

It really all depends where you’re coming from. Arguably the situation is better than it was before the conference. The United States will “strongly consider” ways of cutting greenhouse gas emissions by 50% by 2050. George Bush has said that the US will take a lead on meeting the climate change challenge and appears to agree with the Europeans that the United Nations and the IPCC (Intergovernmental Panel on Climate Change) are central to the process.

Hurry? Well they hope to have something in place by 2009 to replace the Kyoto Protocol which expires in 2012. Some people would argue that targets for 2050 are all very well, but if we don’t make real changes within five or ten years, then climate change will be out of control. (The same lack of urgency is written into Britain’s Climate Change Bill, by the way. Progress will be reviewed once every five years. Do you know of any project, business, public authority which can get away with reporting less than once a year? And the climate is an immediate and crucial issue!)

Going back to G8. Few commentators are happy with the outcome because it is so full of caveats and maybes. Fifty percent of what? Fifty percent of 1990 levels is more than 50% of current levels. The UK and Europe were aiming at 60% of 1990 levels; the US is proposing 50% of current levels. The climate is uncompromising. We need what the climate needs. George Bush is largely uncompromising: China and India as the two largest developing nations must come to the table and commit to cuts. No matter that emissions in the US are six times per head what they are in China. George Bush will not accept actions which put the US economy at a disadvantage. And "strongly consider" achieves nothing. Somebody has to act. Plenty of room for negotiation – some would say for delay.

Of course everyone admits that it’s urgent, but no-one in power seems ready to take urgent action.

Lente is just not in it. Festina, festina, before it’s too late!

Managing the message on climate change

I’ve already commented in the past that the climate change debate is a dialogue of the deaf. Certainly there’s lots of dialogue – maybe it’s because it’s World Environment Day tomorrow and the G8 Summit starts later this week.

Looking again at George Bush’s announcements on climate change we see a worrying message. He wants to call a global summit in America to discuss the issues to an American agenda. We already have the G8. We already have the IPCC. The last thing we want is the world’s biggest polluter trying to take over the debate. The US has made it clear that its economy depends ultimately on coal, and certainly that country has massive reserves. We know that burning coal releases CO2 – and many other substances that are far more harmful. The US line is that technology will find a way and we don’t need to cut consumption while we’re looking for the solution. No carbon trading or limits, they say, - we must not prejudice economic growth. The US is gambling on undiscovered technologies – and some believe that science proves that gamble is already lost.

Today China has entered the debate. In advance of the G8 they have announced a climate change initiative, but they too emphasise that the protection of economic growth is crucial. They recognise that there is much to be done, because China’s rapid industrialisation has led to far worse pollution than anything in the West, quite apart from CO2 emissions. As I’ve mentioned before, China is a major polluter but the pollution per head is much lower than in America and in many other countries.
We need to support China’s efforts to clean up.

We need to get used to using less energy ourselves (-not a bad strategy as it’s going to get scarce and expensive) and we need to build on what has already been developed by the G8 and IPCC – not start a new debate. We need a clear and constructive dialogue – not a dialogue of the deaf.

US to act on climate change?

In advance of the G8 summit, where climate change will be a prominent issue, George Bush has announced America’s commitment to action. This has been met with some cynicism, given that apart from Australia the USA was the only country to refuse to ratify the Kyoto Protocol. The view of the present US administration has always been that specific emission targets would hamper the American economy, and while China was doing nothing to cut emissions America could not afford to put itself at a disadvantage.

Kyoto did not put restrictions on China or any of the other developing nations because their per capita emissions are so much lower than those of the western world. China is accused of building coal-burning power stations – the most polluting form of energy – and opening a new one almost every week. On the other hand it still has 3 million citizens without electricity, it has very little oil or gas, it will produce clean electricity from the Three Gorges Dam and it is a leader in solar power. Every member of the Chinese cabinet is an engineer, so the consequences of climate change and energy shortages are not lost on them. Much of what China produces is destined for the American market, so it could be argued that they are making American emissions by proxy.

At the end of the day the important issue must be to cut energy use and cut emissions, not argue about who is doing what and why. George Bush is talking about a policy to be in place by the end of 2008. Even if we suspect his motives we must welcome the fact that he is talking about the issue, even if 2008 is probably too late if those who say we have only 5 years left to save the planet are correct!