Peak OilOpportunities and Challenge

at the end of Cheap Petroleum

Richard Heinberg Scripps College

September 18, 2006

The Challenge

of Peak Oil

Richard HeinbergOil Independent Oakland Task Force

May 3, 2007

Post Carbon Institute

Chevron:

“Oil production is in decline in 33 of the 48 largest oil producing countries, yet energy demand is increasing around the globe as economies grow and nations develop.” www.willyoujoinus.com

Global Oil Discoveries

ExxonMobil 2003

How serious a problem is this?

Peaking of World Oil Production: Impacts, Mitigation, & Risk Management

Robert L. Hirsch, SAIC, Project Leader (commissioned by US Department of Energy, February 2005)

EXECUTIVE SUMMARYThe peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.

GAO Report on Peak Oil

• Released April 2007; conclusions:

• Did not attempt a time estimate; forecasts of peak range from 2005 to 2030

• The risks are serious and growing

• At best, the US can replace 4% of its liquid fuels with alternatives by 2015

• Secretary of Energy should establish a federal Peak Oil strategy

What are the Alternatives?

• Liquids from Natural Gas (Fischer-Tropsch)

• Liquids from Coal

• Biofuels

• Hydrogen

• Electrified transport

• Conservation

Post Carbon Institute

0

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1950 2000 2050 2100

Worldwide possible coal production M toe

OECD North America

China

LA

OECD Pacific

OECD Europe

SouthAsia

East Asia

FSU

subbituminous

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bituminous

bituminous

bituminous

bituminous

lignitelignite

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Year

WEO 2006: Reference scenario

WEO 2006: Alternative policy scenario

Post Carbon Institute

A second coal study… From “The Future of Coal” report to the European

Commission from the Institute for Energy (in draft)

• “[T]he world could run out of economically recoverable … reserves of coal much earlier than widely anticipated.”

• “The amount of actual recoverable coal is … less than the widely published estimates of reserves.”

• “[C]oal might not be so abundant, widely available and reliable as an energy source in the future.”

Ethanol to the rescue? “Even if all of the 300 million acres

(500,000 square miles) of currently harvested U.S. cropland produced ethanol, it wouldn’t supply all of the gasoline and diesel fuel we now burn for transport, and it would supply only about half of the needs for the year 2025. And the effects on land and would be devastating.”

--“The False Hope of Biofuels: For Energy and Environmental Reasons, Ethanol Will Never Replace Gasoline” (James Jordan and James Powell, Washington Post, July 2, 2006)

Hydrogen cars…when?• Hydrogen is not an energy source

• There are significant storage problems

• Spending money on hydrogen research tends to take investment capital away from the development of primary renewable energy sources

• Electricity is a more practical carrier in most cases

A liquid fuels crisis?

• Because of impending supply constraints for natural gas and coal, “Peak Oil” is not just a liquid fuels crisis, but the beginning of an across-the-board energy crisis.

• This must inform our strategy: fuel switching will not help much, and attention must be paid to electricity supply.

Post Carbon Institute

Evaluating energy options• Energy return on investment

• Size of resource

• Infrastructure requirement

• Convenience of use

• Environmental impact

• Renewability

• Scalability

• Location of resource

Conservation: Efficiency and Curtailment

• Like alternative energy sources, conservation (efficiency) requires investment.

• Investments yield diminishing returns.• However, at least in the initial stages,

efficiency is almost always cheaper than new supply options.

• Curtailment is the cheapest option of all, but requires changes in habits and expectations.

Post Carbon Institute

Areas for application of conservation strategies…

• Agriculture

• Transportation

• Space heating and cooling

• Urban design, permitting, zoning

• Tax and incentive policies

• Lighting

• Manufacturing

Transportation: Electrify it!

Rail and light rail—the best long-term options for motorized land transport of freight and people

Post Carbon Institute

What does “green” mean?

In some ways, it makes sense to use carbon emissions as the measure of both the problem and potential solutions, since

• Carbon emissions are the primary driver of climate change, and

• Climate change is the worst environmental problem facing us.

What does “green” mean?

However, exclusive use of the carbon emissions metric can be misleading:

• It ignores fuel supply problems

• It leads to false solutions like hydrogen, nuclear, biofuels, “clean” coal, and carbon offsets

• There is no substitute for energy literacy!

Opportunities amidst Crisis

• Jobs helping individuals, businesses improve energy efficiency

• More labor needed in agriculture

• Opportunities for strategic investment in alternative energy industries, electric and public transport

• The end of cheap international transport means the renewal of local manufacturing

Post Carbon Institute

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