Throughout the nineteenth century coal provided the cheap energy to drive factories. Being heavy, it generally made more sense to shift the raw material - like iron ore to build machines or materials used for manufacturing - to where the coal was rather than vice versa.
Industrial expansion throughout the nineteenth century therefore took place close to the coal fields of England’s West Midlands and North, South Wales and Central Scotland, the Ruhr Valley in Germany, etc.
Then, in the twentieth century, cheap energy was provided by oil. More potent and lighter, it was the perfect fuel for transportation. Coal could now be transported more easily, as could troops and tanks, trade, tourists and so on. From the First World War through the 20s and 30s, the car and the aeroplane went from miracles to mainstream.
In the twenty years after the Second World War, car ownership accelerated beyond the ability of urban planners to cope, leading to a reaction by planners towards unequivocally car-based patterns of urban development. Westerners started to fly away on holiday, and trade in food and goods went global. And lest we forget, a useful by-product of all this transport fuel are the plastics industry, fertilisers and a broad spectrum of other things that have become central to the modern world, forged in the post-war era.
First they laugh at you
‘Peak Oil’ has been a cause celebre among the green movement for some time, with roots reaching back to the oil shocks and subsequent self-sufficiency ethos of the 70s. Now, a succession of reports from mainstream institutions is calling time on the age of cheap oil. Firstly, the International Energy Agency in 2008 changed tack from consolidating national estimates of reserves to gathering direct empirical data. That year’s World Energy Outlook (http://www.worldenergyoutlook.org/2008.asp) started to hint at future percentage declines in oil output and a prospective time table for OPEC and Non-OPEC producers.
The UK Energy Research Council followed in October 2008 with a clear and clinical look at exactly what data was available and what assumptions could be made regarding global oil depletion (http://www.ukerc.ac.uk/support/Global%20Oil%20Depletion). This notes a ‘significant risk’ of oil production starting to decline by 2020, and the need for ‘serious consideration’ of the implications of this.
That same month, a report called The Oil Crunch was launched from a group of concerned businesses dubbed ‘the UK Industry Taskforce for Peak Oil and Energy Security’ (or ITPOES). This consists of engineering consultancy Arup, Virgin, Richard Branson’s airline and train company, Stagecoach, a bus company, Scottish and Southern, a traditional energy utility with a growing renewables portfolio, Solarcentury, a solar panel firm, and Foster + Partners, the architects. This looked at the impacts both for the global economy as a whole, and the specific infrastructure and networks the modern world is based on.
Their second report out last week (10th Feb 2010), produced in partnership with the London School of Economics, deepens the analysis of the economic implications of oil depletion in the wake of the credit crunch. They have been ramping up the pressure on governments to come clean about the possible effects this may have in the coming years and the potential steps that politicians should take.
Many voices have countered fear-mongering over oil depletion, perhaps for an inherent need not to scare the horses. Last week the boss of BP went on the radio maintaining that demand would fall faster than supply, supporting the plateau / gradual descent forecast rather than crunch forecast. The logic of supply and demand suggests attractive investment opportunities for new oil exploration and exploitation. On the other hand, transition to low carbon will produce radical reform of the demand side of the equation, which in turn may affect prices.
For the UK, the ITPOES report sees a hint of things to come with the depletion of oil from the North Sea and its possible effects on Sterling. This, they say, could have a significant impact on the way in which the UK economy will emerge from the recession. Within the next ten years an oil crunch could add to the problems of the credit crunch and climate change, with serious consequences for our way of life.
The first report from 2008 drew a number of interesting points about a post-carbon future. Firstly, many people including politicians and civil servants, business leaders and the public at large, have little awareness of the risks of global oil depletion. The crunch can come about not because all the oil in the world is gone but that the infrastructure and new investment needed to get it out cannot be delivered fast enough.
Next, there is also a significant risk that the problems of oil depletion will bite before alternatives can be brought into play. Thirdly, on a more upbeat note, cleantech solutions in the energy and transport sectors are likely to be classic ‘disruptive technologies’ that can knock out their predecessors very fast.
The 2008 report also neatly points out that whereas climate change policy may attempt a shift to a low carbon future over 40 years to 2050, the oil depletion agenda prompts a far more rapid mobilisation of alternative energy sources. If oil production declines slowly and steadily, then there is a 20 year timescale to re-engineer the world. Or if, for various reasons, production collapses, then we have more like 10 years.
The 2010 report, with its increased focus on issues of global economic stability, shortens this timescale even further, with the headline message that “oil shortages, insecurity of supply and price volatility will destabilise economic, political and social activity within five years” and that this should be a major priority for the new UK government to be formed after the 2010 election.
Running out of steam?
It therefore comes as no surprise that the US military is becoming a leading player when it comes to reducing the carbon footprint of its supply chains. A recent piece in The Economist, (Greenery on the March, 10th Dec 2009), discusses the cost in money and carbon of delivering the oil to drive a tank a mile through central Afghanistan or run the generators on a military base.
Supply chains in the nineteenth century were similar, with mules cargo predominantly consisting of food for the cavalry’s horses. Today, electric vehicles from tanks to ships, recharged from wind and solar renewables back at base, and insulated operations centres that need less air conditioning are being deployed or are in development. Strategy is already advancing as to who will get the last of the fossil oil (it’s the airforce it seems).
Global businesses, consumers or policy-makers considering making the shift to low carbon need no longer be concerned that the prime motivation is doing what’s best for your children’s children, the good of the planet, or moral rectitude. Now, it is economic self-interest and national security that are the rising concerns. Both the general public and politicians to the right find these arguments far more compelling reasons for a behaviour change.
Ironically, all this brings us right back to where we started. If we want a lesson from history as to what our towns and cities might look like in a post-oil future we only need return to Copenhagen.
After the oil crises of the 1970s, when the price of oil quadrupled in a short space of time, the government of Denmark made the long term decision to reduce its reliance on foreign oil. Over the course of 25 years, energy efficient buildings, decentralised heat and power and a cycle-centred approach to urban movement have all helped make the capital Copenhagen one of the cleanest and greenest cities on Earth.
Public transport, generous cycle lanes, and even the creation of ‘cargo cycles’ (multi-wheeled, wide axel push bikes capable of replacing the car for the school run or weekly shop, see www.christianiabikes.com) have lowered carbon emissions from transport. As an added bonus, historic squares long demoted to hosting car-parks have been reclaimed as popular public spaces.
An unremarked minor tragedy of the UN climate conference is that it took place in December, when Scandinavia is dark and cold. When a major international conference next comes together to consider the issues of oil depletion, climate change and a post-carbon world, it should go to Copenhagen in the spring or summer instead.
Then they fight you
The leaders of the relatively small country of Denmark could see through their ambitions for a low carbon future with comparative ease. In the USA, by contrast, a major fight that hit the papers last September shows deep schisms opening up in the US economy. As reported in the New York Times (http://www.nytimes.com/2009/09/30/opinion/30wed3.html?_r=1) various large corporations are starting to quit the US Chamber of Commerce over its antagonistic approach to carbon reduction. Lobbyists from the carbon incumbents are pitted against cleantech pioneers keen to usher in a new dawn of low-carbon, disruptive technologies.
Looking ahead to the world of 2020 or 2025 we can expect things to be enormously different. Looking back a similar length of time to 2000 or 1995 shows how much society can be changed by new technology. The real problem may be just how a low carbon transition might start to take shape over the next five years. The report from Arup and the UK Taskforce for Peak Oil and Energy Security makes it clear that a post-carbon future may need to be brought into being far faster than expected by the recent frameworks of climate policy.
The mix of planned public policy and leaving the market at large to work it out is a key and complex question. A balance between the two will be the reality of course, and this is a theme that must be returned to in more depth. However, on the topic of oil depletion - and its close correlation with the dynamics of the natural gas industry, central to the UK’s domestic heating infrastructure - the growth of new consumers in emerging economies, and the impact on the poorest consumers both in the UK and elsewhere, are highlighted as key aspects to watch out for. On the first point, whilst oil demand is level or falling in OECD countries, it is rising across non-OECD countries. On the second, rising fuel costs will cause a rise in the prices of food and other consumer goods.
The actual point of ‘peak oil’ is predicted as being 95 million barrels a day, by 2015 (10 million barrels per day above the 2008 level). The reports recommendations include requiring central and local government, and businesses to devise contingency plans, and the continuation or increase in support for the sustainable transport policies by government going forward.
Then you win
Some of what is needed is already sketched out in principle - in Labour’s Low Carbon Transition Plan, which breaks down targets by sectors such as transport, energy and so on. Government is also supporting innovation in sectors such as electric vehicles with the West Midlands recently identified as a low-carbon transport innovation sector, following from a similar initiative centred around Newcastle and Sunderland.
In the pure private sector, without the need for government pilot schemes, Sunderland’s Smith Electric Vehicle firm, established in the 1920s, is running at full capacity making electric trucks and vans for firms ranging from telecoms utilities like BT to international courier firms like DHL. Recent partnerships with Ford indicate that innovative British companies like this are set to take a leading role in a future world in which carbon is constrained not just because of a need to stop polluting the climate system, but also because there simply won’t be enough of the old black gold to go round.
Seeing any topic in isolation is a threat for policy making if it misses the fundamental interdependencies that exist in reality. Investors backing oil and gas exploitation founded on high oil prices, or the emerging markets investment funds backing cleantech will be in dynamic opposition, and the results are likely to be unpredictable. I have always been inclined towards the optimistic view of progress, but I suspect we may well be in for an extremely turbulent time.
Anthony Alexander
14-02-10
www.anthonyalexander.info
International Energy Agency, World Energy Outlook, December 2008
http://www.worldenergyoutlook.org/2008.asp
UK Energy Research Council: Global Oil Depletion - October 2009
http://www.ukerc.ac.uk/support/Global%20Oil%20Depletion
UK Industry Taskforce on Peak Oil and Energy Security: The Oil Crunch 2008 and 2010 reports
http://peakoiltaskforce.net
Copenhagen’s Cargo Cycles
www.christianiabikes.com
Way Behind the Curve, September 29th, 2009
http://www.nytimes.com/2009/09/30/opinion/30wed3.html?_r=1
http://www.theengineer.co.uk/news/low-carbon-cars-for-midlands/1000950.article
http://www.smithelectricvehicles.com/