Richard Heinberg

The renewable energy transition is failing

Despite all the renewable energy investments and installations, actual global greenhouse gas emissions keep increasing. That’s largely due to economic growth: While renewable energy supplies have expanded in recent years, world energy usage has ballooned even more—with the difference being supplied by fossil fuels. The more the world economy grows, the harder it is for additions of renewable energy to turn the tide by actually replacing energy from fossil fuels, rather than just adding to it.

This article was produced by Earth | Food | Life, a project of the Independent Media Institute.

The notion of voluntarily reining in economic growth in order to minimize climate change and make it easier to replace fossil fuels is political anathema not just in the rich countries, whose people have gotten used to consuming at extraordinarily high rates, but even more so in poorer countries, which have been promised the opportunity to “develop.”

After all, it is the rich countries that have been responsible for the great majority of past emissions (which are driving climate change presently); indeed, these countries got rich largely by the industrial activity of which carbon emissions were a byproduct. Now it is the world’s poorest nations that are experiencing the brunt of the impacts of climate change caused by the world’s richest. It’s neither sustainable nor just to perpetuate the exploitation of land, resources, and labor in the less industrialized countries, as well as historically exploited communities in the rich countries, to maintain both the lifestyles and expectations of further growth of the wealthy minority.

From the perspective of people in less-industrialized nations, it’s natural to want to consume more, which only seems fair. But that translates to more global economic growth, and a harder time replacing fossil fuels with renewables globally. China is the exemplar of this conundrum: Over the past three decades, the world’s most populous nation lifted hundreds of millions of its people out of poverty, but in the process became the world’s biggest producer and consumer of coal.

The Materials Dilemma

Also posing an enormous difficulty for a societal switch from fossil fuels to renewable energy sources is our increasing need for minerals and metals. The World Bank, the IEA, the IMF, and McKinsey and Company have all issued reports in the last couple of years warning of this growing problem. Vast quantities of minerals and metals will be required not just for making solar panels and wind turbines, but also for batteries, electric vehicles, and new industrial equipment that runs on electricity rather than carbon-based fuels.

Some of these materials are already showing signs of increasing scarcity: According to the World Economic Forum, the average cost of producing copper has risen by over 300 percent in recent years, while copper ore grade has dropped by 30 percent.

Optimistic assessments of the materials challenge suggest there are enough global reserves for a one-time build-out of all the new devices and infrastructure needed (assuming some substitutions, with, for example, lithium for batteries eventually being replaced by more abundant elements like iron). But what is society to do as that first generation of devices and infrastructure ages and requires replacement?

Circular Economy: A Mirage?

Hence the rather sudden and widespread interest in the creation of a circular economy in which everything is recycled endlessly. Unfortunately, as economist Nicholas Georgescu-Roegen discovered in his pioneering work on entropy, recycling is always incomplete and always costs energy. Materials typically degrade during each cycle of use, and some material is wasted in the recycling process.

A French preliminary analysis of the energy transition that assumed maximum possible recycling found that a materials supply crisis could be delayed by up to three centuries. But will the circular economy (itself an enormous undertaking and a distant goal) arrive in time to buy industrial civilization those extra 300 years? Or will we run out of critical materials in just the next few decades in our frantic effort to build as many renewable energy devices as we can in as short a time as possible?

The latter outcome seems more likely if pessimistic resource estimates turn out to be accurate. Simon Michaux of the Finnish Geological Survey finds that “[g]lobal reserves are not large enough to supply enough metals to build the renewable non-fossil fuels industrial system … Mineral deposit discovery has been declining for many metals. The grade of processed ore for many of the industrial metals has been decreasing over time, resulting in declining mineral processing yield. This has the implication of the increase in mining energy consumption per unit of metal.”

Steel prices are already trending higher, and lithium supplies may prove to be a bottleneck to rapidly increasing battery production. Even sand is getting scarce: Only certain grades of the stuff are useful in making concrete (which anchors wind turbines) or silicon (which is essential for solar panels). More sand is consumed yearly than any other material besides water, and some climate scientists have identified it as a key sustainability challenge this century. Predictably, as deposits are depleted, sand is becoming more of a geopolitical flashpoint, with China recently embargoing sand shipments to Taiwan with the intention of crippling Taiwan’s ability to manufacture semiconductor devices such as cell phones.

To Reduce Risk, Reduce Scale

During the fossil fuel era, the global economy depended on ever-increasing rates of extracting and burning coal, oil, and natural gas. The renewables era (if it indeed comes into being) will be founded upon the large-scale extraction of minerals and metals for panels, turbines, batteries, and other infrastructure, which will require periodic replacement.

These two economic eras imply different risks: The fossil fuel regime risked depletion and pollution (notably atmospheric carbon pollution leading to climate change); the renewables regime will likewise risk depletion (from mining minerals and metals) and pollution (from dumping old panels, turbines, and batteries, and from various manufacturing processes), but with diminished vulnerability to climate change. The only way to lessen risk altogether would be to reduce substantially society’s scale of energy and materials usage—but very few policymakers or climate advocacy organizations are exploring that possibility.

Climate Change Hobbles Efforts to Combat Climate Change

As daunting as they are, the financial, political, and material challenges to the energy transition don’t exhaust the list of potential barriers. Climate change itself is also hampering the energy transition—which, of course, is being undertaken to avert climate change.

During the summer of 2022, China experienced its most intense heat wave in six decades. It impacted a wide region, from central Sichuan Province to coastal Jiangsu, with temperatures often topping 40 degrees Celsius, or 104 degrees Fahrenheit, and reaching a record 113 degrees in Chongqing on August 18. At the same time, a drought-induced power crisis forced Contemporary Amperex Technology Co., the world’s top battery maker, to close manufacturing plants in China’s Sichuan province. Supplies of crucial parts to Tesla and Toyota were temporarily cut off.

Meanwhile, a similarly grim story unfolded in Germany, as a record drought reduced the water flow in the Rhine River to levels that crippled European trade, halting shipments of diesel and coal, and threatening the operations of both hydroelectric and nuclear power plants.

A study published in February 2022 in the journal Water found that droughts (which are becoming more frequent and severe with climate change) could create challenges for U.S. hydropower in Montana, Nevada, Texas, Arizona, California, Arkansas, and Oklahoma.

Meanwhile, French nuclear plants that rely on the Rhône River for cooling water have had to shut down repeatedly. If reactors expel water downstream that’s too hot, aquatic life is wiped out as a result. So, during the sweltering 2022 summer, Électricité de France (EDF) powered down reactors not only along the Rhône but also on a second major river in the south, the Garonne. Altogether, France’s nuclear power output has been cut by nearly 50 percent during the summer of 2022. Similar drought- and heat-related shutdowns happened in 2018 and 2019.

Heavy rain and flooding can also pose risks for both hydro and nuclear power—which together currently provide roughly four times as much low-carbon electricity globally as wind and solar combined. In March 2019, severe flooding in southern and western Africa, following Cyclone Idai, damaged two major hydro plants in Malawi, cutting off power to parts of the country for several days.

Wind turbines and solar panels also rely on the weather and are therefore also vulnerable to extremes. Cold, cloudy days with virtually no wind spell trouble for regions heavily reliant on renewable energy. Freak storms can damage solar panels, and high temperatures reduce panels’ efficiency. Hurricanes and storm surges can cripple offshore wind farms.

The transition from fossil fuel to renewables faces an uphill battle. Still, this switch is an essential stopgap strategy to keep electricity grids up and running, at least on a minimal scale, as civilization inevitably turns away from a depleting store of oil and gas. The world has become so dependent on grid power for communications, finance, and the preservation of technical, scientific, and cultural knowledge that, if the grids were to go down permanently and soon, it is likely that billions of people would die, and the survivors would be culturally destitute. In essence, we need renewables for a controlled soft landing. But the harsh reality is that, for now, and in the foreseeable future, the energy transition is not going well and has poor overall prospects.

We need a realistic plan for energy descent, instead of foolish dreams of eternal consumer abundance by means other than fossil fuels. Currently, politically rooted insistence on continued economic growth is discouraging truth-telling and serious planning for how to live well with less.

Author Bio: Richard Heinberg is a senior fellow at the Post Carbon Institute and the author of Power: Limits and Prospects for Human Survival.

Is the green energy transition taking off or hitting a wall?

With the Inflation Reduction Act, the federal government is illogically encouraging the increasing use of fossil fuels—in order to reduce our reliance on fossil fuels.

The passage of the Inflation Reduction Act (IRA) constitutes the boldest climate action so far by the American federal government. It offers tax rebates to buyers of electric cars, solar panels, heat pumps, and other renewable-energy and energy-efficiency equipment. It encourages the development of carbon-capture technology and promotes environmental justice by cleaning up pollution and providing renewable energy in disadvantaged communities. Does this political achievement mean that the energy transition, in the U.S. if not the world as a whole, is finally on track to achieving the goal of net zero emissions by 2050?

This article was produced by Earth | Food | Life, a project of the Independent Media Institute.

If only it were so.

Emissions modelers have estimated that the IRA will reduce U.S. emissions by 40 percent by 2030. But, as Benjamin Storrow at Scientific American has pointed out, the modelers fail to take real-world constraints into account. For one thing, building out massive new renewable energy infrastructure will require new long-distance transmission lines, and entirely foreseeable problems with permitting, materials, and local politics cast doubt on whether those lines can be built.

But perhaps the most frustrating barriers to grid modernization are the political ones. While Texas produces a significant amount of wind and solar electricity, it is unable to share that bounty with neighboring states because it has a stand-alone grid. And that’s unlikely to change because Texas politicians fear that connecting their grid with a larger region would open the state’s electricity system to federal regulation. Similar state-based regulatory heel-dragging is pervasive elsewhere. In a report posted in July, the North Carolina Clean Energy Technology Center noted that, so far this year, Texas regulators have approved only $478.7 million out of the $12.86 billion (3.7 percent) in grid modernization investment under consideration, due to fears of raising utility bills for local residents.

But grid modernization is only one area in which the energy transition is confronting roadblocks in the U.S.

Certainly, as a result of the IRA, more electric vehicles (EVs) will be purchased. California’s recent ruling to phase out new gas-powered cars by 2035 will buttress that trend. Currently, just under 5 percent of cars sold in the U.S. are EVs. By 2030, some projections suggest the proportion will be half, and by 2050 the great majority of light-duty vehicles on the road should be electric. However, those estimates assume that enough vehicles can be manufactured: Supply-chain issues for electronics and for battery materials have slowed deliveries of EVs in recent months, and those issues could worsen. Further, the IRA electric-vehicle tax credits will go only to buyers of cars whose materials are sourced in the U.S. That’s probably good in the long run, as it will reduce reliance on long supply chains for materials. But it raises questions about localized environmental and human impacts of increased mining.

Many environmentalists are thrilled with the IRA; others less so. Those in the more critical camp have pointed disapprovingly to the bill’s promotion of nuclear, and note that, in order to gain Senator Joe Manchin’s vote, Democrats agreed to streamline oil and gas pipeline approvals in a separate bill. In effect, the government will be encouraging the increasing use of fossil fuels… in order to reduce our reliance on fossil fuels.

Despite the flaws of the Inflation Reduction Act, it is likely the best that the federal government can accomplish in terms of climate progress for the foreseeable future. The U.S. is a country mired in institutional gridlock, its politics trapped in endless culture wars, with a durable Supreme Court majority intent on hampering the government’s ability to regulate carbon emissions.

Climate leadership is needed in the U.S., the country responsible for the largest share of historic emissions and is the second-biggest emitter (on a per-capita basis, the U.S. ranks far ahead of China, the top emitter). Without the U.S., global progress in reducing greenhouse gas emissions will be difficult. But the American political system, pivotal as it is in the project, is only the tip of the proverbial iceberg of problems with the shift from fossil fuels to renewables. The barriers to meeting climate goals are global and pervasive.

Global Inertia and Roadblocks

Consider Germany, which has been working on energy transition longer and harder than any other large industrial nation. Now, as Russia is withholding natural gas supplies following its invasion of Ukraine and NATO’s hostile reaction, German electricity supplies are tight and about to get tighter. In response, Germany’s Green Party is leading the push to restart coal power plants rather than halting the planned shuttering of nuclear power plants. And it’s splitting environmentalists. Further, the country’s electricity problems have been exacerbated by a lack of, well, wind.

Unless Russia increases natural gas supplies headed west, European manufacturing could largely shut down this winter—including the manufacturing of renewable energy and related technologies. UK day-ahead wholesale electricity prices have hit 10 times the last decade’s average price, and Europe faces energy scarcity this winter. French President Emmanuel Macron recently warned that his people face the “end of abundance.”

Inadequate spending is also inhibiting a renewables takeoff. Last year, EU member states spent over $150 billion on the energy transition, compared to about $120 billion by the U.S. Meanwhile, China spent nearly $300 billion on renewable energy and related technologies. According to the China Renewable Energy Engineering Institute, the country will install 156 gigawatts of wind turbines and solar panels this year. In comparison, the U.S., under the Inflation Reduction Act, would grow renewable energy annual additions from the current rate of about 25 GW per year to roughly 90 GW per year by 2025, with growth rates increasing thereafter, according to an analysis by researchers at Princeton University.

The recent remarkable increase in spending is far from sufficient. Last year, the world spent a total of about $530 billion on the energy transition (for comparison’s sake, the world spent $700 billion on fossil fuel subsidies in 2021). However, to bring worldwide energy-related carbon dioxide emissions to be net zero by 2050, annual capital investment in the transition would need to grow by over 900 percent, reaching nearly $5 trillion by 2030, according to the International Energy Agency. Bloomberg writer Aaron Clark notes, “The one thing public climate spending plans in the U.S., China, and the EU all have in common is that the investments aren’t enough.”

There’s one other hurdle to addressing climate change that goes almost entirely unnoticed. Most cost estimates for the transition are in terms of money. What about the energy costs? It will take a tremendous amount of energy to mine materials; transport and transform them through industrial processes like smelting; turn them into solar panels, wind turbines, batteries, vehicles, infrastructure, and industrial machinery; install all of the above; and do this at a sufficient scale to replace our current fossil-fuel-based industrial system. In the early stages of the process, this energy will have to come mostly from fossil fuels, since they supply about 83 percent of current global energy. The result will surely be a pulse of emissions; however, as far as I know, nobody has tried to calculate its magnitude.

The requirement to reduce our reliance on fossil fuels represents the biggest technical challenge humanity has ever faced. To avoid the emissions pulse just mentioned, we must reduce energy usage in non-essential applications (such as for tourism or the manufacture of optional consumer goods). But such reductions will provoke social and political pushback, given that economies are structured to require continual growth, and citizens are conditioned to expect ever-higher levels of consumption. If the energy transition is the biggest technical challenge ever, it is also the biggest social, economic, and political challenge in human history. It may also turn out to be an enormous geopolitical challenge, if nations end up fighting over access to the minerals and metals that will be the enablers of the energy transition.

Author Bio: Richard Heinberg is a senior fellow at the Post Carbon Institute and the author of Power: Limits and Prospects for Human Survival.

Can we abandon pollutive fossil fuels and avoid an energy crisis?

When it comes to maintaining energy flows, there is a closing window to avert both climate catastrophe and economic peril.

Similar to the two navigational hazards mythologized as sea monsters in ancient Greece—Scylla and Charybdis—which gave rise to sayings such as, “between the devil and the deep blue sea” and “between a rock and a hard place,” modern energy policy has its own Scylla and Charybdis. On the one hand is the requirement to maintain sufficient energy flows to avoid economic peril. On the other hand is the need to avert climate catastrophe resulting from such activities. Policymakers naturally want all the benefits of abundant energy with none of the attendant climate risks. But tough choices can no longer be put off.

This article was produced by Earth | Food | Life, a project of the Independent Media Institute.

Russia’s invasion of Ukraine and the West’s response of imposing sanctions on Russia are forcing a reckoning as far as global energy policy is concerned. The International Energy Agency (IEA) forecasts that the ongoing war and the U.S. sanctions may together reduce Russian oil exports by at least 3 million barrels per day—more than 4 percent of global supplies, which is a huge chunk of the delicately balanced world energy market. Some energy analysts are forecasting that oil prices could spike up to $200 per barrel later this year, exacerbating inflation and triggering a global recession. We’re facing the biggest energy crisis in many decades, with supply chains seizing up and products made from or with oil and gas (notably fertilizers) suddenly becoming scarce and expensive. Scylla, therefore, calls out: “Drill more. Lift sanctions on Venezuela and Iran. Beg Saudi Arabia to increase output.” But if we go that route, we only deepen our dependency on fossil fuels, aggravating the climate monster Charybdis.

The IEA was created in the aftermath of the 1970s oil shocks to inform policymakers in times of energy supply crisis. The agency recently issued a 10-point emergency plan to reduce oil demand and help nations deal with looming shortages owing to Russia’s invasion of Ukraine. Its advice includes lowering speed limits, instituting car-free Sundays, encouraging working from home, and making public transport cheaper and more widely available.

All of these are good suggestions—and are very similar to what my colleagues and I have been advocating for nearly 20 years (some were even part of U.S. energy policy 50 years ago). Fossil fuel supply problems shouldn’t come as a surprise: we treat these fuels as though they were an inexhaustible birthright; but they are, of course, finite and depleting substances. We have extracted and burned the best of them first, leaving lower-quality and more polluting fuels for later—hence the recent turn toward fracked oil and gas and growing reliance on heavy crude from Venezuela and “tar sands” bitumen from Canada. Meanwhile, rather belatedly, it has gradually dawned on economists that these “unconventional” fuels typically require higher rates of investment and deliver lower profits to the energy industry, unless fuel prices rise to economy-crushing levels.

Indeed, it’s as though our leaders have worked overtime making sure we’re unprepared for an inevitable energy dilemma. We’ve neglected public transportation, and many Americans who are not part of the white-collar workforce have been pushed out from expensive cities to suburbs and beyond, with no alternative other than driving everywhere. While automakers have turned their focus to manufacturing electric vehicles (EVs), these still account for a small fraction of the car market, and most of today’s gas-guzzling cars will still be on the road a decade or two from now. Crucially, there are as yet only exploratory efforts underway to transition trucking and shipping—the mainstays of global supply chains—and find more sustainable alternatives. That creates a unique vulnerability: the current worldwide diesel shortage could hammer the economy even if the government and the energy industry somehow come up with enough gasoline to keep motorists cruising to jobs and shopping malls.

Then there’s the issue of the way fossil fuels are financed. They’re not treated as a depleting public good, but as a source of profit—with investors either easily enticed to plunge into a passing mania or spooked to flee the market. Just in the past decade, investors have gone from underwriting a rapid expansion of fracking (thereby incurring massive financial losses), to insisting on fiscal responsibility, while companies are now milking profits from high prices and buying back stocks to increase their wealth. Long-term energy security be damned.

Meanwhile, the climate monster stirs fitfully. With every passing year, we have seen worsening floods, fires and droughts; glaciers that supply water to billions of people melting; and trickles of climate refugees threatening to turn into rivers. As we continue to postpone reducing the amounts of fossil fuels we burn, the cuts that would be required in order to avert irreversible climate doom become almost impossibly severe. Our “carbon budget”—the amount of carbon we can burn without risking catastrophic global warming—will be “exhausted” in about eight years at current emission rates, but only a few serious analysts believe that it would be possible to fully replace fossil fuels with energy alternatives that soon.

We need coherent, bold federal policy—which must somehow survive the political minefield that is Washington, D.C., these days. Available policies could be mapped on a coordinate plane, with the horizontal x-axis representing actions that would be most transformative and the vertical y-axis showing what actions would be most politically feasible.

High on the y-axis are actions like those that the Biden administration just took, to release 1 million barrels a day of oil from the strategic petroleum reserve and to invoke the Defense Production Act to ramp up the production of minerals needed for the electric vehicle market. While politically feasible and likely popular, these efforts won’t be transformative.

An announcement by President Joe Biden of an ambitious energy-climate vision, with the goal of eliminating our dependence on foreign fuel sources and drastically reducing carbon emissions by the end of the decade, would probably fall somewhere in the middle, where the x- and y-axes meet. Such a vision would encompass a four-pronged effort being proposed by the government:

  • Incentivizing massive conservation efforts, including “Heat Pumps for Peace and Freedom” and providing inducements for businesses to implement telework broadly.
  • Directing domestic production of fossil fuels increasingly toward energy transition purposes (for example, making fossil fuel subsidies contingent on how businesses are growing the percentage of these fuels being used to build low-carbon infrastructure).
  • Mandating massive investments in domestic production of renewables and other energy transition technologies (including incentives to recycle materials).
  • Providing an “Energy Transition Tax Credit” to households or checks to offset energy inflation, with most of the benefits going to low-income households.

Ultimately, some form of fuel rationing may be inevitable, and it is time to start discussing that and planning for it (Germany has just taken the first steps toward gas rationing)—even though this would be firmly in the x-axis territory. Rationing just means directing scarce resources toward what’s vital versus what’s discretionary. We need energy for food, critical supply chains and hospitals; not so much for vacation travel and product packaging. When people first hear the word “rationing,” many of them recoil; but, as author Stan Cox details in his history of the subject, Any Way You Slice It, rationing has been used successfully for centuries as a way to manage scarcity and alleviate poverty. The U.S. SNAP (food stamp) program is essentially a rationing system, and all sorts of materials, including gasoline, were successfully rationed during both world wars. More than two decades ago, the late British economist David Fleming proposed a system for rationing fossil fuel consumption at the national level called Tradable Energy Quotas, or TEQs, which has been discussed and researched by the British government. The system could be used to cap and reduce fossil fuel usage, distribute energy fairly and incentivize energy conservation during our transition to alternative sources.

Also, we need to transform the ways we use energy—for example, in the food system, where a reduction in fossil fuel inputs could actually lead to healthier food and soil. Over the past century or so, fossil fuels provided so much energy, and so cheaply, that humanity developed the habit of solving any problem that came along by simply utilizing more energy as a solution. Want to move people or goods faster? Just build more kerosene-burning jet planes, runways and airports. Need to defeat diseases? Just use fossil fuels to make and distribute disinfectants, antibiotics and pharmaceuticals. In a multitude of ways, we used the blunt instrument of cheap energy to bludgeon nature into conforming with our wishes. The side effects were sometimes worrisome—air and water petrochemical pollution, antibiotic-resistant microbes and ruined farm soils. But we confronted these problems with the same mindset and toolbox, using cheap energy to clean up industrial wastes, developing new antibiotics and growing food without soil. As the fossil fuel era comes to an end, the rules of the game will change. We’ll need to learn how to solve problems with ecological intelligence, mimicking and partnering with nature rather than suppressing and subverting her. High tech may continue to provide useful ways of manipulating and storing data; but, when it comes to moving and transforming physical goods and products, intelligently engineered low tech may offer better answers in the long run.

Further along the x-axis would be the daring action of nationalizing the fossil fuel industry. But at the very farthest end of the x-axis is the possibility of deliberately reining in economic growth. Policymakers typically want more growth so we can have more jobs, profits, returns on investment and tax revenues. But growing the economy (at least, the way we’ve been doing it for the past few decades) also means increasing resource extraction, pollution, land use and carbon emissions. There’s a debate among economists and scientists as to whether or not economic growth could proceed in a more sustainable way, but the general public is largely in the dark about that discussion. Only in its most recent report has the Intergovernmental Panel on Climate Change (IPCC) begun to probe the potential for “degrowth” policies to reduce carbon emissions. So far, the scorecard is easy to read: only in years of economic recession (such as in 2008 and in 2020) have carbon emissions declined. In years of economic expansion, emissions increased. Policymakers have held out the hope that if we build enough solar panels and wind turbines, these technologies will replace fossil fuels and we can have growth without emissions. Yet, in most years, the amount of increased energy usage due to economic growth has been greater than the amount of solar and wind power added to the overall energy mix, so these renewable sources ended up just supplementing, not displacing, fossil fuels. True, we could build turbines, panels and batteries faster; but, as long as overall energy usage is growing, we’re continually making the goal of reducing our reliance on fossil fuels harder to achieve.

Wouldn’t giving up growth mean steering perilously close to the Scylla of economic peril in order to avoid the Charybdis of climate doom? So far, we’ve been doing just the reverse, prizing growth while multiplying climate risks. Maybe it’s time to rethink those priorities. Post-growth economists have spent the last couple of decades enumerating the ways we could improve our quality of life while reducing our throughput of energy and materials. Policymakers must finally start to take these proposals seriously, or we will end up confronting the twin monsters—economy-crushing fossil fuel scarcity and devastating climate impacts—without prior planning and preparation.

It was always clear that we would eventually have to face the music with regard to our systemic economic dependency on depleting, polluting fossil fuels. We have delayed action, making both the economic challenge and the climate threat harder to manage. Our possible navigation channel between Scylla and Charybdis is now perilously narrow. If we wait much longer, this channel will vanish altogether.

Author Bio: Richard Heinberg is a senior fellow at the Post Carbon Institute and the author of Power: Limits and Prospects for Human Survival.

Enviros Blamed for Bursting Frack Bubble

Reprinted with permission from EcoWatch. 

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Why Are Environmentalists Being Blamed for Bursting the Fracking Bubble?

Reprinted with permission from EcoWatch. 

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Have We Really Hit Peak Oil?

Last week, Senate Democrats introduced legislation that would halt a U.S. arms sale to Saudi Arabia worth $1.4 billion. The implication is clear: no more war toys for the Saudis unless they agree to up their oil output.

The same day, the House approved a Senate plan to suspend oil deliveries to the Strategic Petroleum Reserve in hopes of diverting that oil to the market, thus lowering the pump price a tiny amount. A week earlier, a handful of Senators proposed a bill threatening a trade dispute with members of OPEC if the organization doesn't stop "its anti-competitive practices and illegal export quotas on oil."

It's understandable that our elected leaders would want to do something about the meteoric rise of gasoline, diesel, and heating oil prices that are now bankrupting independent truckers and forcing many folks in colder states to choose between being able to stay warm and being able to drive to work. Yet efforts like the ones just mentioned are based on a profound misperception of why oil prices are rising. The real problem is summed up in the phrase "Peak Oil."

Petroleum is a finite substance and we have reached the inevitable point at which it simply isn't possible to increase the rate at which we extract it from the ground. Most oil producing countries, including the US, have already seen their glory days and are now watching output from their wells gradually dwindle. Only a few nations are early in the production cycle and able to ramp up the rate of flow. Here is a concise definition of Peak Oil from my colleague Chris Skrebowsi, the editor of Petroleum Review in London. He says: "Global oil production falls when loss of output from countries in decline exceeds gains in output from those that are expanding."

Well, how are we doing? Who's winning, the decliners or expanders?

According to last year's scorecard, the decliners won. The same happened in 2006. And that's with oil prices at record highs, presumably offering every incentive for nations that can produce more oil to do so. Does this mean we are at the all-time peak of global oil flow rates now? Not necessarily. There are large new production projects coming on line this year and next, including one in Saudi Arabia that will add several hundred thousand barrels a day to that nation's productive capacity.

However, on the other side of the balance there is some very bad news. Russia, the world's leading oil producing nation and the country that has been responsible for the lion's share of the world's production growth over the past decade, has gone into decline. Optimistic analysts hope Russia will be able to keep production more or less flat for a few years, but that may not be possible. The past few months have seen reductions in output. Other important exporting nations like Nigeria and Mexico are also in trouble.

The timing of the global peak may still be unclear. But surely we can't afford, as a matter of national policy, to assume that it will be decades in the future -- given that all of the symptoms are staring us in the face now. Some economists say that current high oil prices are largely due to the falling value of the dollar, or to speculation. Simple arithmetic tells us that dollar depreciation has added only ten or fifteen percent to oil's cost over the past two to three years.

As for speculation, one has to ask why investors are choosing to park their money in oil contracts. It must be because they see the fundamentals supporting rising prices. In a situation where demand is headed higher but supply isn't, speculation is inevitable. So speculation is a symptom; it isn't the cause of the problem. Given all this, how much sense does it make to spend our time and effort blaming OPEC for not producing more, or to neglect saving some petroleum for the inevitable point in the future when our problem isn't just high oil prices, but actual shortages of fuel for emergency vehicles and food delivery trucks?

If I were a Saudi or a Kuwaiti, I would be advising my government not to pump more oil. After all, these countries earn nearly all of their income from selling the stuff; once the oil's gone, what can they do for an encore? No, it makes more sense for them to husband the resource, sell it for higher prices, and invest in renewable energy sources at home in preparation for the day when nature's patrimony is gone. In fact, however, in recent years most OPEC countries have been pumping flat out; only the Saudis claim to have any spare production capacity to speak of.

But isn't it a good idea for some country somewhere to keep some capacity in reserve in case of a real emergency -- a major pipeline outage, another hurricane in the Gulf of Mexico, or a revolution in one of the other main producing countries? Should efforts at responsible resource management make these people our enemies?

The blame game makes for good sound bites on the floor of Congress. It plays well with folks back home who are struggling to find the money to fill up their SUVs but can't find Saudi Arabia on a map. All they have been taught to know is that Arabs have lots of oil and they are bad people. But think where this might lead: suppose we get tough with the Saudis and end up destabilizing the kingdom so that forces unfriendly to us take over. Then we will feel more or less forced to invade in order to maintain access to our national drug of choice. Where would it end? Does any of this help?

Rather than looking for villains, we should be exploring how we can adapt to having less oil next year, and even less the year after that. Rebuilding our oil-dependent transport, agricultural, and manufacturing infrastructure is going to be a big job, and it's going to take time. So the sooner we start, the better. The real problem is that we use too much oil. It's that simple and that difficult. If we truly want to reduce our vulnerability to high prices, the best way to do so is to reduce consumption. One way or another, we will adapt.

We will drive less, we will fly less, and we will grow our food more locally with fewer inputs. But these changes will go far more smoothly if we plan for them, rather than being forced into them at the nozzle of an empty gas pump. There is a cliché in action films: "We can do this the hard way, or we can do it the easy way." Blaming OPEC while doing nothing to rein in our domestic demand for petroleum only ensures that we will be adapting to Peak Oil the hard way.

Prepare for Peak Oil Now

Editor’s Note: This paper, exclusively available to AlterNet, was presented at a Reception with Their Royal Highnesses The Prince of Wales and the Duchess of Cornwall, at the California Leaders Round Table Dialogue on Peak Oil, Climate Change and Business Action; November 7, 2005 in San Francisco.

The subject I teach -- human ecology -- is a discipline that largely concerns population and resources. Over the past few years I have chosen to study oil, because it is the most important energy resource of the modern world.

Only 150 years ago, 85 percent of all work being accomplished in the U.S. economy was done by muscle power -- most of that by animal muscle, about a quarter of it by human muscle. Today, that percentage is effectively zero; virtually all of the physical work supporting our economy is done by fuel-fed machines. What caused this transformation? Quite simply, it was oil's comparative cheapness and versatility. Perhaps you have had the experience of running out of gas and having to push your car a few feet to get it off the road. That's hard work. Now imagine pushing your car 20 or 30 miles. That is the service performed for us by a single gallon of gasoline, for which we currently pay $2.65. That gallon of fuel is the energy equivalent of roughly six weeks of hard human labor.

It was inevitable that we would become addicted to this stuff, once we had developed a few tools for using it and for extracting it. Today petroleum provides 97 percent of our transportation fuel, and is also a feedstock for chemicals and plastics.

It is no exaggeration to say that we live in a world that runs on oil.

However, oil is a finite resource. Therefore the peaking and decline of world oil production are inevitable events -- and on that there is scarcely any debate; only the timing is uncertain. Forecast dates for the peak range from this year to 2035.

The peaking phenomenon itself has been observed again and again in individual oil fields and in entire producing nations. One of the first countries to hit its peak was the U.S.. During the 1930s and '40s, half the world’s production of petroleum came from Texas and Oklahoma. However, U.S. production reached its all-time maximum in 1970 and has been declining ever since. Currently the U.S. imports 60 percent of its oil.

Concern over the likelihood of an impending world peak has increased markedly in recent months as global spare production capacity has dwindled and as prices have achieved what seems to be a new baseline of over $50 per barrel.

Evidence that we are approaching peak includes the following:

  • ExxonMobil documents that global oil discoveries peaked in 1964. Declining rates of discovery are therefore a long-established trend.

  • Chevron notes in recent advertisements that 33 of 48 nations are in decline. We have thus seen the peaking of production in a majority of individual nations, including some important producers such as Indonesia, Norway, Great Britain, and Venezuela. Mexico will reach its peak within the next two years.

  • As noted by the International Energy Agency, there is evidence that a substantial amount of "proven reserves" in OPEC countries are illusory, the result of a scramble for market share within a cartel that allocates export quotas based on stated reserves.

With regard to this last point it should be noted that reserves figures, even when accurate, have historically given little warning of peaking. The U.S. instance is once again emblematic: in 1970, U.S. oil reserves were higher than ever; so were production rates. But only a year later, American production began its terminal decline. The study of discovery rates and depletion rates gives us a much better idea of when the global peak is likely to occur.

Optimistic estimates of future discovery and production issued by Cambridge Energy Research Associates and the U.S. Geological Survey have been criticized by several analysts. The optimists have generally failed to anticipate peaks, first in the U.S. and repeatedly in the case of other nations around the world.

This morning the International Energy Agency (IEA) issued a statement saying that the world will have sufficient energy supplies for the next quarter century. However, the statement noted the necessity of the investment of $17 trillion in the supply train in order to maintain sufficiency for so long. Also, the IEA anticipates Saudi Arabian production expanding to 18 million barrels per day by 2030�a figure considerably higher than the maximum possible rate of production from that country cited not long ago by Sadad al Husseini, the recently retired head of exploration for Saudi Aramco.

Expressions of concern have been voiced by corporations, prominent organizations, and knowledgeable individuals, including ChevronTexaco, the Royal Swedish Academy of Sciences, Volvo, Ford Motor Company Executive Vice President Mark Fields, the Chinese Offshore Oil Corporation’s chief economist, and numerous petroleum scientists and oil industry analysts.

The question immediately arises: Will alternative sources be able to make up the difference?

Alternative sources often discussed include oil sands from Canada, shale oil in Colorado, coal-to-liquids, gas-to-liquids, nuclear, and renewables such as solar and wind. Each of these will require immense investment and well over a decade of intense effort in order to produce substantial quantities of energy to offset declines from fossil fuels. And in most cases, rates of production are and will be constrained by non-economic factors. Take the oil sands, for example. Currently Canada produces one million barrels of synthetic crude per day from that source. There is expectation of two mb/d by 2010, and perhaps as much as four mb/d by 2025. We are unlikely to see higher numbers than that even with extraordinary capital investment, because the production process requires large amounts of natural gas and fresh water, both in short supply in Alberta. Moreover, according to the IEA, the world needs six mb/d of new production capacity each year (and that number is growing) to meet new demand and to offset depletion from existing fields.

How about increased efficiency -- surely that can offset any potential oil supply problems. In principle, yes, but most efficiency strategies will likewise require significant lead times. For example, we have the technology now to enable all of us who own cars to be driving ones that get up to 100 miles per gallon. If we were, that would obviously save an enormous amount of fuel. But how long would it take to implement that strategy? It would certainly take four or five years for Detroit to begin producing such high-efficiency cars in large numbers.

Then, not everyone buys a new car every year. In fact, it takes about 15 years to change out nearly the entire U.S. car and truck fleet. So, altogether, it would take about 20 years to fully implement this particular efficiency strategy.

Will the market be able to respond quickly enough to forestall serious economic, social, and political impacts? It is often said that the Stone Age did not end for lack of stones, nor will the Oil Age end because we run out of petroleum -- but instead because we find a cheaper source of energy. However, as we have just seen, that cheaper source of energy has yet to be identified.

Early this year a report was released, prepared for the U.S. Department of Energy by a team led by Robert L. Hirsch, who has a distinguished background in the oil industry and is a senior energy analyst at SAIC and the Rand Corporation. The Hirsch Report (titled "Peaking of World Oil Production: Impacts, Mitigation and Risk Management") concludes that price signals will arrive at least ten years too late to enable a gentle, market-led transition away from oil to other energy sources. The report describes Peak Oil as an "unprecedented" challenge for modern societies, and describes economic, social, and political risks if preparation is not undertaken soon enough, or on adequate scale.

Let me read you a few sentences from the Hirsch Report:
The problems associated with world oil production peaking will not be temporary, and past "energy crisis" experience will provide relatively little guidance. The challenge of oil peaking deserves immediate, serious attention, if risks are to be fully understood and mitigation begun on a timely basis. Mitigation will require a minimum of a decade of intense, expensive effort, because the scale of liquid fuels mitigation is inherently extremely large. Intervention by governments will be required, because the economic and social implications of oil peaking would otherwise be chaotic.
The report also concludes that the costs of preparing too late for global oil peak would far outweigh those of preparing too early.

The worst-case scenario for the impact of global production peak is very bad indeed. As I mentioned earlier, we are extremely dependent on oil for transportation, agriculture, plastics, and chemicals. In each area, we are already seeing serious impacts resulting from current prices in the $60-per-barrel range. For example,

    Currently tens of thousands of farmers are agonizing over whether they can afford to plant next year’s crop, given high fuel and fertilizer costs.
  • Chemicals and plastics industries are already hard hit: In the chemistry industry alone, more than 100 plants have closed and more than 100,000 jobs have been lost just this year.

  • In the airline industry, 40 percent of revenues go to pay for jet fuel; most U.S. air carriers are already in bankruptcy or nearing that situation.

  • Home heating costs are projected to be 40-50% higher this winter than last.

As prices go even higher, and with actual scarcities of fuel, people will experience difficulties commuting, and the maintenance of our far-flung food distribution systems may become problematic.

On top of all this, oil is a strategic resource: as supplies become scarce, there is increasing likelihood of international conflict.

To avoid the worst-case scenario we must begin today to reduce our dependence on oil. The effort must have top priority. It must focus primarily on reducing demand, and only secondarily on producing large quantities of alternative transportation fuels.

A global Oil Depletion Protocol would reduce price volatility and competition for remaining supplies, while encouraging nations to move quickly to wean themselves from petroleum. In essence, the Protocol would be an agreement whereby producing nations would plan to produce less oil with each passing year (and that will not be so difficult, because few are still capable of maintaining their current rates in any case); and importing nations would agree to import less each year. That may seem a bitter pill to swallow.

However, without a Protocol -- essentially a system for global oil rationing -- we will see extremely volatile prices that will undermine the economies of all nations, and all industries and businesses. We will also see increasing international competition for oil likely leading to conflict; and if a general oil war were to break out, everyone would lose. Given the alternatives, the Protocol clearly seems preferable.

National governments, local municipalities, corporations, and private individuals will all need to contribute to the effort to wean ourselves from oil, an effort that must quickly expand to include a reduction in dependence on other fossil fuels as well.

All of this will constitute an immense challenge for our species in the coming century. We will meet that challenge successfully only if we begin immediately.
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