Peak Oil becomes an Issue Again after the IEA Revised its Predictions

Among the big energy stories of 2013, “peak oil” -- the once-popular notion that worldwide oil production would soon reach a maximum level and begin an irreversible decline -- was thoroughly discredited. The explosive development of shale oil and other unconventional fuels in the United States helped put it in its grave.

As the year went on, the eulogies came in fast and furious. “Today, it is probably safe to say we have slayed ‘peak oil’ once and for all, thanks to the combination of new shale oil and gas production techniques,” declared Rob Wile, an energy and economics reporter for Business Insider. Similar comments from energy experts were commonplace, prompting an R.I.P. headline at Time.com announcing, “Peak Oil is Dead.”

Not so fast, though. The present round of eulogies brings to mind the Mark Twain’s famous line: “The reports of my death have been greatly exaggerated.” Before obits for peak oil theory pile up too high, let's take a careful look at these assertions. Fortunately, the International Energy Agency (IEA), the Paris-based research arm of the major industrialized powers, recently did just that -- and the results were unexpected. While not exactly reinstalling peak oil on its throne, it did make clear that much of the talk of a perpetual gusher of American shale oil is greatly exaggerated. The exploitation of those shale reserves may delay the onset of peak oil for a year or so, the agency’s experts noted, but the long-term picture “has not changed much with the arrival of [shale oil].”

The IEA’s take on this subject is especially noteworthy because its assertion only a year earlier that the U.S. would overtake Saudi Arabia as the world’s number one oil producer sparked the “peak oil is dead” deluge in the first place. Writing in the2012 edition of its World Energy Outlook, the agency claimed not only that “the United States is projected to become the largest global oil producer” by around 2020, but also that with U.S. shale production and Canadian tar sands coming online, “North America becomes a net oil exporter around 2030.”

That November 2012 report highlighted the use of advanced production technologies -- notably horizontal drilling and hydraulic fracturing (“fracking”) -- to extract oil and natural gas from once inaccessible rock, especially shale. It also covered the accelerating exploitation of Canada’s bitumen (tar sands or oil sands), another resource previously considered too forbidding to be economical to develop. With the output of these and other “unconventional” fuels set to explode in the years ahead, the report then suggested, the long awaited peak of world oil production could be pushed far into the future.

The release of the 2012 edition of World Energy Outlook triggered a global frenzy of speculative reporting, much of it announcing a new era of American energy abundance. “Saudi America” was the headline over one such hosanna in the Wall Street Journal. Citing the new IEA study, that paper heralded a coming “U.S. energy boom” driven by “technological innovation and risk-taking funded by private capital.” From then on, American energy analysts spoke rapturously of the capabilities of a set of new extractive technologies, especially fracking, to unlock oil and natural gas from hitherto inaccessible shale formations. “This is a real energy revolution,” the Journal crowed.

But that was then. The most recent edition of World Energy Outlook, published this past November, was a lot more circumspect. Yes, shale oil, tar sands, and other unconventional fuels will add to global supplies in the years ahead, and, yes, technology will help prolong the life of petroleum. Nonetheless, it’s easy to forget that we are also witnessing the wholesale depletion of the world’s existing oil fields and so all these increases in shale output must be balanced against declines in conventional production. Under ideal circumstances -- high levels of investment, continuing technological progress, adequate demand and prices -- it might be possible to avert an imminent peak in worldwide production, but as the latest IEA report makes clear, there is no guarantee whatsoever that this will occur.

Inching Toward the Peak

Before plunging deeper into the IEA’s assessment, let’s take a quick look at peak oil theory itself.

As developed in the 1950s by petroleum geologist M. King Hubbert, peak oil theory holds that any individual oil field (or oil-producing country) will experience a high rate of production growth during initial development, when drills are first inserted into a oil-bearing reservoir. Later, growth will slow, as the most readily accessible resources have been drained and a greater reliance has to be placed on less productive deposits. At this point -- usually when about half the resources in the reservoir (or country) have been extracted -- daily output reaches a maximum, or “peak,” level and then begins to subside. Of course, the field or fields will continue to produce even after peaking, but ever more effort and expense will be required to extract what remains. Eventually, the cost of production will exceed the proceeds from sales, and extraction will be terminated.

Related article: Kashagan, Down but not Out

For Hubbert and his followers, the rise and decline of oil fields is an inevitable consequence of natural forces: oil exists in pressurized underground reservoirs and so will be forced up to the surface when a drill is inserted into the ground. However, once a significant share of the resources in that reservoir has been extracted, the field’s pressure will drop and artificial means -- water, gas, or chemical insertion -- will be needed to restore pressure and sustain production. Sooner or later, such means become prohibitively expensive.

Peak oil theory also holds that what is true of an individual field or set of fields is true of the world as a whole. Until about 2005, it did indeed appear that the globe was edging ever closer to a peak in daily oil output, as Hubbert’s followers had long predicted. (He died in 1989.) Several recent developments have, however,raised questions about the accuracy of the theory. In particular, major private oil companies have taken to employing advanced technologies to increase the output of the reservoirs under their control, extending the lifetime of existing fields through the use of what’s called “enhanced oil recovery,” or EOR. They’ve also used new methods to exploit fields once considered inaccessible in places like the Arctic and deep oceanic waters, thereby opening up the possibility of a most un-Hubbertian future.

In developing these new technologies, the privately owned “international oil companies” (IOCs) were seeking to overcome their principal handicap: most of the world’s “easy oil” -- the stuff Hubbert focused on that comes gushing out of the ground whenever a drill is inserted -- has already been consumed or is controlled by state-owned “national oil companies” (NOCs), including Saudi Aramco, the National Iranian Oil Company, and the Kuwait National Petroleum Company, among others. According to the IEA, such state companies control about 80% of the world’s known petroleum reserves, leaving relatively little for the IOCs to exploit.

To increase output from the limited reserves still under their control -- mostly located in North America, the Arctic, and adjacent waters -- the private firms have been working hard to develop techniques to exploit “tough oil.” In this, they have largely succeeded: they are now bringing new petroleum streams into the marketplace and, in doing so, have shaken the foundations of peak oil theory.

Those who say that “peak oil is dead” cite just this combination of factors. By extending the lifetime of existing fields through EOR and adding entire new sources of oil, the global supply can be expanded indefinitely. As a result, they claim, the world possesses a “relatively boundless supply” of oil (and natural gas). This, for instance, was the way Barry Smitherman of the Texas Railroad Commission (which regulates that state’s oil industry) described the global situation at a recent meeting of the Society of Exploration Geophysicists.

Peak Technology

In place of peak oil, then, we have a new theory that as yet has no name but might be called techno-dynamism. There is, this theory holds, no physical limit to the global supply of oil so long as the energy industry is prepared to, and allowed to, apply its technological wizardry to the task of finding and producing more of it. Daniel Yergin, author of the industry classics, The Prize and The Quest, is a key proponent of this theory. He recently summed up the situation this way: “Advances in technology take resources that were not physically accessible and turn them into recoverable reserves.” As a result, he added, “estimates of the total global stock of oil keep growing.”

From this perspective, the world supply of petroleum is essentially boundless. In addition to “conventional” oil -- the sort that comes gushing out of the ground -- the IEA identifies six other potential streams of petroleum liquids: natural gas liquids; tar sands and extra-heavy oil; kerogen oil (petroleum solids derived from shale that must be melted to become usable); shale oil; coal-to-liquids (CTL); andgas-to-liquids (GTL). Together, these “unconventional” streams could theoretically add several trillion barrels of potentially recoverable petroleum to the global supply, conceivably extending the Oil Age hundreds of years into the future (and in the process, via climate change, turning the planet into an uninhabitable desert).

But just as peak oil had serious limitations, so, too, does techno-dynamism. At its core is a belief that rising world oil demand will continue to drive the increasingly costly investments in new technologies required to exploit the remaining hard-to-get petroleum resources. As suggested in the 2013 edition of the IEA’s World Energy Outlook, however, this belief should be treated with considerable skepticism.

Among the principal challenges to the theory are these:

1. Increasing Technology Costs: While the costs of developing a resource normally decline over time as industry gains experience with the technologies involved, Hubbert's law of depletion doesn’t go away. In other words, oil firms invariably develop the easiest “tough oil” resources first, leaving the toughest (and most costly) for later. For example, the exploitation of Canada’s tar sands began with the strip-mining of deposits close to the surface. Because those are becoming exhausted, however, energy firms are now going after deep-underground reserves using far costlier technologies. Likewise, many of the most abundant shale oil deposits in North Dakota have now been depleted, requiring an increasing pace of drilling to maintain production levels. As a result, the IEA reports, the cost of developing new petroleum resources will continually increase: up to $80 per barrel for oil obtained using advanced EOR techniques, $90 per barrel for tar sands and extra-heavy oil, $100 or more for kerogen and Arctic oil, and $110 for CTL and GTL. The market may not, however, be able to sustain levels this high, putting such investments in doubt.

2. Growing Political and Environmental Risk: By definition, tough oil reserves are located in problematic areas. For example, an estimated 13% of the world’s undiscovered oil lies in the Arctic, along with 30% of its untapped natural gas. The environmental risks associated with their exploitation under the worst of weather conditions imaginable will quickly become more evident -- and so, faced with the rising potential for catastrophic spills in a melting Arctic, expect a commensurate increase in political opposition to such drilling. In fact, a recent increase has sparked protests in both Alaska and Russia, including the much-publicized September 2013 attempt by activists from Greenpeace to scale a Russian offshore oil platform -- an action that led to their seizure and arrest by Russian commandos. Similarly, expanded fracking operations have provoked a steady increase in anti-fracking activism. In response to such protests and other factors, oil firms are being forced to adopt increasingly stringent environmental protections, pumping up the cost of production further.

Related article: Buffett Looks at Pipelines after North Dakota Train Wreck

3. Climate-Related Demand Reduction: The techno-optimist outlook assumes that oil demand will keep rising, prompting investors to provide the added funds needed to develop the technologies required. However, as the effects of rampant climate change accelerate, more and more polities are likely to try to impose curbs of one sort or another on oil consumption, suppressing demand -- and so discouraging investment. This is already happening in the United States, where mandated increases in vehicle fuel-efficiency standards are expected to significantly reduce oil consumption. Future “demand destruction” of this sort is bound to impose a downward pressure on oil prices, diminishing the inclination of investors to finance costly new development projects.

Combine these three factors, and it is possible to conceive of a “technology peak” not unlike the peak in oil output originally envisioned by M. King Hubbert. Such a techno-peak is likely to occur when the “easy” sources of “tough” oil have been depleted, opponents of fracking and other objectionable forms of production have imposed strict (and costly) environmental regulations on drilling operations, and global demand has dropped below a level sufficient to justify investment in costly extractive operations. At that point, global oil production will decline even if supplies are “boundless” and technology is still capable of unlocking more oil every year.

Peak Oil Reconsidered

Peak oil theory, as originally conceived by Hubbert and his followers, was largely governed by natural forces. As we have seen, however, these can be overpowered by the application of increasingly sophisticated technology. Reservoirs of energy once considered inaccessible can be brought into production, and others once deemed exhausted can be returned to production; rather than being finite, the world’s petroleum base now appears virtually inexhaustible.

Does this mean that global oil output will continue rising, year after year, without ever reaching a peak? That appears unlikely. What seems far more probable is that we will see a slow tapering of output over the next decade or two as costs of production rise and climate change -- along with opposition to the path chosen by the energy giants -- gains momentum. Eventually, the forces tending to reduce supply will overpower those favoring higher output, and a peak in production will indeed result, even if not due to natural forces alone.

Such an outcome is, in fact, envisioned in one of three possible energy scenariosthe IEA’s mainstream experts lay out in the latest edition of World Energy Outlook. The first assumes no change in government policies over the next 25 years and sees world oil supply rising from 87 to 110 million barrels per day by 2035; the second assumes some effort to curb carbon emissions and so projects output reaching “only” 101 million barrels per day by the end of the survey period.

It’s the third trajectory, the “450 Scenario,” that should raise eyebrows. It assumes that momentum develops for a global drive to keep greenhouse gas emissions below 450 parts per million -- the maximum level at which it might be possible to prevent global average temperatures from rising above 2 degrees Celsius (and so cause catastrophic climate effects). As a result, it foresees a peak in global oil output occurring around 2020 at about 91 million barrels per day, with a decline to 78 million barrels by 2035.

It would be premature to suggest that the “450 Scenario” will be the immediate roadmap for humanity, since it’s clear enough that, for the moment, we are on a highway to hell that combines the IEA’s first two scenarios. Bear in mind, moreover, that many scientists believe a global temperature increase of even 2 degrees Celsius would be enough to produce catastrophic climate effects. But as the effects of climate change become more pronounced in our lives, count on one thing: the clamor for government action will grow more intense, and so eventually we’re likely to see some variation of the 450 Scenario take shape. In the process, the world’s demand for oil will be sharply constricted, eliminating the incentive to invest in costly new production schemes.

The bottom line: global peak oil remains in our future, even if not purely for the reasons given by Hubbert and his followers. With the gradual disappearance of “easy” oil, the major private firms are being forced to exploit increasingly tough, hard-to-reach reserves, thereby driving up the cost of production and potentially discouraging new investment at a time when climate change and environmental activism are on the rise. More

Where would you rather live? In a clean sunny environment?

Or here in the midst of an unhealthy shale oil environment.

 

Message To World Elites: Don’t Bet On Coal And Oil Growth

Davos 2014

A mind-boggling sum of about US$ 800 for each person on the planet is invested into fossil fuel companies through the global capital markets alone. That’s roughly 10% of the total capital invested in listed companies. The amount of money invested into the 200 biggest fossil fuel companies through financial markets is estimated at US$ 5.5 trillion.

By keeping their money in coal and oil companies, investors are betting a vast amount of wealth, including the pensions and savings of millions of people, on high future demand for dirty fuels. The investment has enabled fossil fuel companies to massively raise their spending on expanding extractable reserves, with oil and gas companies alone (state-owned ones included) spending the combined GDP of Netherlands and Belgium a year, in belief that there will be ongoing demand for dirty fuel.

This assumption is being challenged by recent developments, which is good news for climate but bad news for anyone who thought investing in fossil fuel industries was a safe bet. Frantic growth in coal consumption seems to be coming to an end much sooner than predicted just a few years ago, with China’s aggressive clean airpolicies, rapidly dropping coal consumption in the US and upcoming closures of many coal plants in Europe. At the same time the oil industry is also facing slowingdemand growth, and the financial and share performance of oil majors is disappointing for shareholders.

Nevertheless, even faced with weakening demand prospects, outdated investment patterns are driving fossil fuel companies to waste trillions of dollars in developing reserves and infrastructure that will be stranded as the world moves beyond 20th century energy.

A good example is coal export developments. The large recent investment in coal export capacity in all key exporter countries was based on the assumption of unlimited growth of Chinese demand. When public outrage over air pollution reached a new level in 2012-2013, the Chinese leadership moved swiftly to mandate absolute reductions in coal consumption, and banned new coal-fired power plants in key economic regions. A growing chorus of financial analysts is now projecting a peak in Chinese coal demand soon, which seemed unimaginable only a couple of years ago. This new reality has already reduced market capitalization of export-focused coal companies. Even in China itself, investment in coal-fired power plants has now outpaced demand growth, leading to drops in capacity utilization.

Another example of potentially stranded assets is found in Europe, where large utilities ignored the writing on the wall about EU moves to price carbon and boost renewable energy. Betting on old business models and the fossil-fuel generation, they built a huge 80 gigawatts of new fossil power generation capacity in the past 10 years, much of which is already generating losses and now risk becoming stranded assets.

Arctic oil drilling is possibly the ultimate example of fossil companies’ unfounded confidence in high future demand. Any significant production and revenue is unlikely until 2030 and in the meantime, Arctic drilling faces high and uncertain costs, extremely demanding and risky operations, as well as the prospect of heavy regulation and liabilities when (not if) the first major blowout happens in the region. No wonder the International Energy Agency is sceptical about Arctic oil, assuming hardly any production in the next 20 years. More

 

Fossil Fuel Use Pushes Carbon Dioxide Emissions into Dangerous Territory

Increasing global emissions of carbon dioxide (CO2), a heat-trapping gas, are pushing the world into dangerous territory, closing the window of time to avert the worst consequences of higher temperatures, such as melting ice and rising seas.

Since the dawn of the Industrial Revolution, carbon emissions from burning fossil fuels have grown exponentially. Despite wide agreement by governments on the need to limit emissions, the rate of increase ratcheted up from less than 1 percent each year in the 1990s to almost 3 percent annually in the first decade of this century. After a short dip in 2009 due to the global financial crisis, emissions from fossil fuels rebounded in 2010 and have since grown 2.6 percent each year, hitting an all-time high of 9.7 billion tons of carbon in 2012.

Carbon emissions would have risen even faster were it not for the 7 percent drop among industrial countries since 2007—a group that includes the United States, Canada, Europe, Russia, Australia, New Zealand, and Japan. The United States, long the world’s largest emitter until it was eclipsed by China in 2006, cut carbon emissions by 11 percent over the past five years to 1.4 billion tons. The biggest drop was in emissions from coal—which is primarily used to generate electricity—as power plants switched to cheaper natural gas and as the use of carbon-free wind energy more than quadrupled. U.S. emissions from oil, mostly used for transportation, also dipped.

Carbon emissions from fossil fuel burning in Europe, as a whole the third largest emitter, fell 9 percent from 2007 to 2012. Emissions in Italy and Spain shrank by 17 and 18 percent, respectively. The United Kingdom’s emissions dropped by 11 percent to 126 million tons. Germany’s emissions fell by 4 percent to 200 million tons. These countries have been leaders in either wind or solar energy or both.

Russia and Japan are two industrial countries that did not see an overall decline in carbon emissions over the past five years. Russia had an uptick in oil use, increasing its emissions by 2 percent to 449 million tons. And in Japan, the quick suspension of nuclear power generation after the Fukushima disaster led to more natural gas and oil use, pushing emissions up 1 percent to 336 million tons in 2012.

CO2 emissions in developing countries surpassed those from industrial countries in 2005 and have since continued to soar. China’s carbon emissions grew by 44 percent since 2007 to 2.4 billion tons in 2012. Together the United States and China account for more than 40 percent of worldwide emissions. Emissions in India, home to more than a billion people, overtook those in Russia for the first time in 2008. From 2007 to 2012, India’s emissions grew 43 percent to reach 596 million tons of carbon. Carbon emissions in Indonesia, another fast-growing economy, have exploded, growing 52 percent to hit 146 million tons in 2012.

Although emissions from developing countries now dominate, the industrial countries set the world on its global warming path with over a century’s worth of CO2 emissions that have accumulated in the atmosphere. Furthermore, emissions estimates discussed here include only those from fossil fuels burned within a country’s borders, meaning that the tallies do not account for international trade. For example, emissions generated from producing goods in China destined for use in the United States are added to China’s books. When emissions are counted in terms of the final destination of the product, the industrial countries’ carbon bill increases.

On a per person basis, the United States emits 4.4 tons of carbon pollution—twice as much as in China. The highest per capita carbon emissions are in several small oil and gas producing countries. In 2012, Qatar spewed out 11 tons of carbon per person. Trinidad and Tobago is next with 9 tons of carbon per person, and Kuwait follows at 7.5 tons.

Fossil fuels are not the only source of CO2 emissions. Changing the landscape, for example by burning forests, releases roughly 1 billion tons of carbon globally each year. Brazil and Indonesia have high levels of deforestation and are responsible for much of the current carbon emissions from the land.

About half of the CO2 that is released through fossil fuel burning or land use changes stays in the atmosphere. The other half is taken up by the oceans or by plants. As more CO2 is absorbed by the world’s oceans, the water becomes more acidic. This change in ocean chemistry can strip away the building blocks of coral reefs, weakening an important link in the oceanic food chain. Scientists warn that the oceans could eventually become saturated with CO2, compromising their capacity to absorb our carbon emissions, with serious consequences for the global thermostat.

For some 800,000 years, the amount of CO2 in the atmosphere did not go above 300 parts per million (ppm). But in the 250 years following the start of the Industrial Revolution, enough CO2 built up to bring the average concentration to nearly 394 ppm in 2012. Throughout each year, the concentration of the gas fluctuates, reaching its annual peak in the spring. In May 2013, the CO2 concentration briefly hit 400 ppm, a grim new milestone on the path of climate disruption. Never in human history has the atmosphere been so full of this odorless and colorless yet powerfully disruptive gas.

CO2 acts like the glass of a greenhouse, trapping heat. Since humans began burning fossil fuels on a large scale, the global average temperature has risen 1.4 degrees Fahrenheit (0.8 degrees Celsius), with most of the increase occurring since 1970. The effects of higher temperatures include rising sea levels, disappearing Arctic sea ice, more heat waves, and declining yields of food crops.

More warming is in the pipeline as the climate system slowly responds to the higher CO2 concentrations. Reports from international institutions, such as the International Energy Agency, based on work by thousands of scientists emphasize that little time remains to cut emissions and avoid a climate catastrophe. The World Bank notes that absent any policy changes, the global average temperature could be 9 degrees Fahrenheit warmer by the end of this century, well above what human civilization has ever witnessed. More

 

The Biggest Criminal Enterprise in History

Terracide and the Terrarists Destroying the Planet for Record Profits

We have a word for the conscious slaughter of a racial or ethnic group: genocide. And one for the conscious destruction of aspects of the environment: ecocide. But we don’t have a word for the conscious act of destroying the planet we live on, the world as humanity had known it until, historically speaking, late last night. A possibility might be “terracide” from the Latin word for earth. It has the right ring, given its similarity to the commonplace danger word of our era: terrorist.

The truth is, whatever we call them, it’s time to talk bluntly about the terrarists of our world. Yes, I know, 9/11 was horrific. Almost 3,000 dead, massive towers down, apocalyptic scenes. And yes, when it comes to terror attacks, the Boston Marathon bombings weren’t pretty either. But in both cases, those who committed the acts paid for or will pay for their crimes.

In the case of the terrarists -- and here I’m referring in particular to the men who run what may be the most profitable corporations on the planet, giant energy companies like ExxonMobil, Chevron,ConocoPhillips, BP, and Shell -- you’re the one who’s going to pay, especially your children and grandchildren. You can take one thing for granted: not a single terrarist will ever go to jail, and yet they certainly knew what they were doing.

It wasn’t that complicated. In recent years, the companies they run have been extracting fossil fuels from the Earth in ever more frenetic and ingenious ways. The burning of those fossil fuels, in turn, has putrecord amounts of carbon dioxide (CO2) into the atmosphere. Only this month, the CO2 level reached400 parts per million for the first time in human history. A consensus of scientists has long concluded that the process was warming the world and that, if the average planetary temperature rose more than two degrees Celsius, all sorts of dangers could ensue, including seas rising high enough to inundate coastal cities, increasingly intense heat waves, droughts, floods, ever more extreme storm systems, and so on.

How to Make Staggering Amounts of Money and Do In the Planet

None of this was exactly a mystery. It’s in the scientific literature. NASA scientist James Hansen first publicized the reality of global warming to Congress in 1988. It took a while -- thanks in part to the terrarists -- but the news of what was happening increasingly made it into the mainstream. Anybody could learn about it.

Those who run the giant energy corporations knew perfectly well what was going on and could, of course, have read about it in the papers like the rest of us. And what did they do? They put their money into funding think tanks, politicians, foundations, and activists intent on emphasizing “doubts” about the science (since it couldn’t actually be refuted); they and their allies energetically promoted what came to be known as climate denialism. Then they sent their agents and lobbyists and money into the political system to ensure that their plundering ways would not be interfered with. And in the meantime, they redoubled their efforts to get ever tougher and sometimes “dirtier” energy out of the ground in ever tougher and dirtier ways.

The peak oil people hadn’t been wrong when they suggested years ago that we would soon hit a limit in oil production from which decline would follow. The problem was that they were focused on traditional or “conventional” liquid oil reserves obtained from large reservoirs in easy-to-reach locations on land or near to shore. Since then, the big energy companies have invested a remarkable amount of time, money, and (if I can use that word) energy in the development of techniques that would allow them to recover previously unrecoverable reserves (sometimes by processes that themselves burn striking amounts of fossil fuels): fracking, deep-water drilling, and tar-sands production, among others.

They also began to go after huge deposits of what energy expert Michael Klare calls “extreme” or “tough” energy -- oil and natural gas that can only be acquired through the application of extreme force or that requires extensive chemical treatment to be usable as a fuel. In many cases, moreover, the supplies being acquired like heavy oil and tar sands are more carbon-rich than other fuels and emit more greenhouse gases when consumed. These companies have even begun using climate change itself -- in the form of a melting Arctic -- to exploit enormous and previously unreachable energy supplies. With the imprimatur of the Obama administration, Royal Dutch Shell, for example, has been preparing to test out possible drilling techniques in the treacherous waters off Alaska.

Call it irony, if you will, or call it a nightmare, but Big Oil evidently has no qualms about making its next set of profits directly off melting the planet. Its top executives continue to plan their futures (and so ours), knowing that their extremely profitable acts are destroying the very habitat, the very temperature range that for so long made life comfortable for humanity.

Their prior knowledge of the damage they are doing is what should make this a criminal activity. And there are corporate precedents for this, even if on a smaller scale. The lead industry, the asbestos industry, and the tobacco companies all knew the dangers of their products, made efforts to suppress the information or instill doubt about it even as they promoted the glories of what they made, and went right on producing and selling while others suffered and died.

And here’s another similarity: with all three industries, the negative results conveniently arrived years, sometimes decades, after exposure and so were hard to connect to it. Each of these industries knew that the relationship existed. Each used that time-disconnect as protection. One difference: if you were a tobacco, lead, or asbestos exec, you might be able to ensure that your children and grandchildren weren’t exposed to your product. In the long run, that’s not a choice when it comes to fossil fuels and CO2, as we all live on the same planet (though it's also true that the well-off in the temperate zones are unlikely to be the first to suffer).

If Osama bin Laden’s 9/11 plane hijackings or the Tsarnaev brothers’ homemade bombs constitute terror attacks, why shouldn’t what the energy companies are doing fall into a similar category (even if on a scale that leaves those events in the dust)? And if so, then where is the national security state when we really need it? Shouldn’t its job be to safeguard us from terrarists and terracide as well as terrorists and their destructive plots?

The Alternatives That Weren’t

It didn’t have to be this way.

On July 15, 1979, at a time when gas lines, sometimes blocks long, were a disturbing fixture of American life, President Jimmy Carter spoke directly to the American people on television for 32 minutes, calling for a concerted effort to end the country’s oil dependence on the Middle East. “To give us energy security,” he announced,

“I am asking for the most massive peacetime commitment of funds and resources in our nation's history to develop America's own alternative sources of fuel -- from coal, from oil shale, from plant products for gasohol, from unconventional gas, from the sun... Just as a similar synthetic rubber corporation helped us win World War II, so will we mobilize American determination and ability to win the energy war. Moreover, I will soon submit legislation to Congress calling for the creation of this nation's first solar bank, which will help us achieve the crucial goal of 20% of our energy coming from solar power by the year 2000.”

It’s true that, at a time when the science of climate change was in its infancy, Carter wouldn’t have known about the possibility of an overheating world, and his vision of “alternative energy” wasn’t exactly a fossil-fuel-free one. Even then, shades of today or possibly tomorrow, he was talking about having “more oil in our shale alone than several Saudi Arabias.” Still, it was a remarkably forward-looking speech.

Had we invested massively in alternative energy R&D back then, who knows where we might be today? Instead, the media dubbed it the “malaise speech,” though the president never actually used that word, speaking instead of an American “crisis of confidence.” While the initial public reaction seemed positive, it didn’t last long. In the end, the president's energy proposals were essentially laughed out of the room and ignored for decades.

As a symbolic gesture, Carter had 32 solar panels installed on the White House. (“A generation from now, this solar heater can either be a curiosity, a museum piece, an example of a road not taken, or it can be a small part of one of the greatest and most exciting adventures ever undertaken by the American people: harnessing the power of the sun to enrich our lives as we move away from our crippling dependence on foreign oil.”) As it turned out, “a road not taken” was the accurate description. On entering the Oval Office in 1981, Ronald Reagan caught the mood of the era perfectly. One of his first acts was to order the removal of those panels and none were reinstalled for three decades, until Barack Obama was president.

Carter would, in fact, make his mark on U.S. energy policy, just not quite in the way he had imagined. Six months later, on January 23, 1980, in his last State of the Union Address, he would proclaim what came to be known as the Carter Doctrine: “Let our position be absolutely clear,” he said. “An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.”

No one would laugh him out of the room for that. Instead, the Pentagon would fatefully begin organizing itself to protect U.S. (and oil) interests in the Persian Gulf on a new scale and America’s oil wars would follow soon enough. Not long after that address, it would start building up a Rapid Deployment Force in the Gulf that would in the end become U.S. Central Command. More than three decades later, ironies abound: thanks in part to those oil wars, whole swaths of the energy-rich Middle East are in crisis, if not chaos, while the big energy companies have put time and money into a staggeringly fossil-fuel version of Carter’s “alternative” North America. They’ve focused on shale oil, and on shale gas as well, and with new production methods, they are reputedly on the brink of turning the United States into a “new Saudi Arabia.” More

 

Four energy policies can keep the 2 °C climate goal alive

Warning that the world is not on track to limit the global temperature increase to 2 degrees Celsius, the International Energy Agency (IEA) today urged governments to swiftly enact four energy policies that would keep climate goals alive without harming economic growth.

“Climate change has quite frankly slipped to the back burner of policy priorities. But the problem is not going away – quite the opposite,” IEA Executive Director Maria van der Hoeven said in London at the launch of a World Energy OutlookSpecial Report, Redrawing the Energy-Climate Map, which highlights the need for intensive action before 2020.

Noting that the energy sector accounts for around two-thirds of global greenhouse-gas emissions, she added: “This report shows that the path we are currently on is more likely to result in a temperature increase of between 3.6 °C and 5.3 °C but also finds that much more can be done to tackle energy-sector emissions without jeopardising economic growth, an important concern for many governments.”

New estimates for global energy-related carbon dioxide (CO₂) emissions in 2012 reveal a 1.4% increase, reaching a record high of 31.6 gigatonnes (Gt), but also mask significant regional differences. In the United States, a switch from coal to gas in power generation helped reduce emissions by 200 million tonnes (Mt), bringing them back to the level of the mid‑1990s. China experienced the largest growth in CO₂ emissions (300 Mt), but the increase was one of the lowest it has seen in a decade, driven by the deployment of renewables and improvements in energy intensity. Despite increased coal use in some countries, emissions in Europe declined by 50 Mt. Emissions in Japan increased by 70 Mt.

The new IEA report presents the results of a 4-for-2 °C Scenario, in which four energy policies are selected that can deliver significant emissions reductions by 2020, rely only on existing technologies and have already been adopted successfully in several countries.

“We identify a set of proven measures that could stop the growth in global energy-related emissions by the end of this decade at no net economic cost,” said IEA Chief Economist Fatih Birol, the report’s lead author. “Rapid and widespread adoption could act as a bridge to further action, buying precious time while international climate negotiations continue.”

In the 4-for-2°C Scenario, global energy-related greenhouse-gas emissions are 8% (3.1 Gt CO₂‑equivalent) lower in 2020 than the level otherwise expected.

• Targeted energy efficiency measures in buildings, industry and transport account for nearly half the emissions reduction in 2020, with the additional investment required being more than offset by reduced spending on fuel bills.
• Limiting the construction and use of the least-efficient coal-fired power plants delivers more than 20% of the emissions reduction and helps curb local air pollution. The share of power generation from renewables increases (from around 20% today to 27% in 2020), as does that from natural gas.
• Actions to halve expected methane (a potent greenhouse gas) releases into the atmosphere from the upstream oil and gas industry in 2020 provide 18% of the savings.
• Implementing a partial phase-out of fossil fuel consumption subsidies accounts for 12% of the reduction in emissions and supports efficiency efforts.

The report also finds that the energy sector is not immune from the physical impacts of climate change and must adapt. In mapping energy-system vulnerabilities, it identifies several sudden and destructive impacts, caused by extreme weather events, and other more gradual impacts, caused by changes to average temperature, sea level rise and shifting weather patterns. To improve the climate resilience of the energy system, it highlights governments’ role in encouraging prudent adaptation (alongside mitigation) and the need for industry to assess the risks and impacts as part of its investment decisions.

The financial implications of climate policies that would put the world on a 2 °C trajectory are not uniform across the energy sector. Net revenues for existing renewables-based and nuclear power plants increase by $1.8 trillion (in year-2011 dollars) collectively through to 2035, offsetting a similar decline from coal plants. No oil or gas field currently in production would need to shut down prematurely. Some fields yet to start production are not developed before 2035, meaning that around 5% to 6% of proven oil and gas reserves do not start to recover their exploration costs. Delaying the move to a 2 °C trajectory until 2020 would result in substantial additional costs to the energy sector and increase the risk of assets needing to be retired early, idled or retrofitted. Carbon capture and storage (CCS) can act as an asset protection strategy, reducing the risk of stranded assets and enabling more fossil fuel to be commercialised.

To download the WEO special report Redrawing the Energy-Climate Map, click here.

To read Executive Director Maria van der Hoeven's comments at the report's launch, please click here.

To see the presentation that accompanied the report's launch, please click here.

Accredited journalists who would like more information should contact ieapressoffice@iea.org.

About the IEA

The International Energy Agency is an autonomous organisation which works to ensure reliable, affordable and clean energy for its 28 member countries and beyond. Founded in response to the 1973/4 oil crisis, the IEA’s initial role was to help countries co-ordinate a collective response to major disruptions in oil supply through the release of emergency oil stocks to the markets. While this continues to be a key aspect of its work, the IEA has evolved and expanded. It is at the heart of global dialogue on energy, providing reliable and unbiased research, statistics, analysis and recommendations.

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Redrawing the Energy-Climate Map

 

Kosovo Is a Test for the World Bank’s Support of Clean Energy

In April, World Bank president Jim Yong Kim said in a panel discussion in Washington, D.C., “I don’t think it’s fair to tell the people in Kosovo, ‘While the rich countries continue to burn coal, you’re going to have to freeze to death because it’s against our political ideology to support you.’”

Kim added, “I can’t do that."

Kim’s statement puts the World Bank somewhat at odds with itself. The World Bank has been a majorproponent of investment in renewable energy. Yet, it says it must choose between a coal-fired plant in Kosovo and people freezing to death.

But based on the solutions available today (some created by the World Bank itself under Dan Kammen), and where the world is heading on CO2 emissions, the choice between development and combating climate change is a false choice.

Here’s the false choice argument.

On the one hand, we are already deeply in the red in terms of greenhouse gas emissions, meaning that even if we could go carbon-free tomorrow, we are still going to subject ourselves to human-induced climate change beyond our goal of a maximum of 2° Celsius temperature rise. As a result, we must curtail any future emissions wherever and whenever possible.

On the other hand, what is one more coal-fired power plant in a nation such as Kosovo where energy shortages impact industry and economic development? This is a bright red line for the World Bank President. Are his previous words about the dangers of climate change sincere or hollow?

Development agencies such as the World Bank have generally argued that their poverty mission includes bringing energy access to those without energy. So despite the World Bank’s support of renewable energy in most cases, every once in a while, a coal plant needed to save those who are freezing trumps the environment.

But they have to dance around the central question: can Kosovo’s energy needs be met without coal?

This is the ultimate question facing not only the World Bank, but also India, China, South Africa, and all others that seek to provide power to the powerless.

It’s now 2013, and we are deploying advanced energy technologies at the billion-dollar scale -- $279 billion alone in 2012. Finance and business model innovation have made this choice of coal or freezing to death (in the Kosovo case) obsolete.

From no-money-down solar to the use of “big data” to reduce electricity theft, entrepreneurs have come up with clever ways to solve real-world problems while accommodating the power structures currently in place.

Those of us in the energy industry need to step in to help the World Bank -- not only with words, but also with action. We can make climate-friendly development a top priority, as it goes hand-in-hand with human needs.

In fact, World Bank President Kim commissioned a report last year that found “the Earth system's responses to climate change appear to be non-linear. […] If we venture far beyond the 2° guardrail, toward the 4° line, the risk of crossing tipping points rises sharply. The only way to avoid this is to break the business-as-usual pattern of production and consumption."

What is important -- and deserves repeating to all agencies involved in international development and the financing of health, education, infrastructure and other drivers of economic growth -- appears in the preface of the report written by Kim himself: "Most importantly, a 4°C world is so different from the current one that it comes with high uncertainty and new risks that threaten our ability to anticipate and plan for future adaptation needs."

So this is the World Bank president’s moment of truth.

Christiana Figueres, the United Nations' top climate change official, said last week the time has come for the World Bank to get out of coal.

Speaking in Washington, D.C. after attending the World Bank spring meetings, Figueres praised Kim for making global warming a top priority. Figueres said that nations, along with the World Bank, no longer need to invest in coal as an energy source.

However, in defiance of international pressure after the Tata Mundra coal project in India and Eskom’s project in South Africa, the World Bank is currently considering an investment in a 600-megawatt coal-fired power plant for Kosovo.

Yet Kosovo does not have a great experience with coal. The country suffers from regular power outages and from the worst coal-driven air pollution in Europe. Investing in coal when European nations are working to clean their energy economies and to set region-wide standards to push out coal would be handing Kosovo a discriminatory, backward-looking investment package.

Instead, this should be an easy decision for investors and the World Bank. The World Bank’s own studyfound that Kosovo has wind, biomass, solar, hydro, and energy efficiency resources available that are more than sufficient to meet the 600-megawatt supply needs. Further, European investors have already proposed over 200 megawatts of privately funded wind energy investments in Kosovo. This shows that industry is ready to move at the scale needed to put clean energy to work in Kosovo today. More