Why we don’t want to believe in peak oil and climate change?

1. The Growth Delusion: Why we don’t want to believe in peak oiland climate change? Bob Lloyd

2. First a review of peak oil since my “End of Oil” Seminar in 2005 • April 2005 oil was US$45/barrel having risen from around US$20 per barrel in 2002 • World Consumption had been increasing at about 3% per annum for the past few years • Reaching 85 million bbl/day in early 2005 • Forecasts from major agencies predicted a long term price to 2030 of around $20 per barrel • The NZ government official policy was that peak oil was at least as far away as 2037

3. What has happened • Oil hit just over US$135 per barrel late May 2008 – equivalent to 8% of world GDP or US$4 trillion per annum • Consumption has been stalled at around 86 million barrels per day (March 86.7 million bbs/day IEA) • Long term price forecasts to 2030 have risen to around US $55 per barrel !!! • Global financial markets are under pressure • There is a global food crisis brought about by a spike in grain prices, bio-fuels and market speculation • The cost of just about everything is increasing

4. Otago Daily Times

5. Crude Oil prices $135 May 2008 $135 $70 $20 $10

6. OPEC warns oil could reach $200 (April 2008) • Opec, the oil producing cartel, has warned that the price of crude could keep rising to reach $200 a barrel in a few years. OPEC president Chakib Khelil

7. Grain prices

8. Metal prices

9. Metal prices and fertiliser

10. IN 2005 I suggested • Oil consumption would peak between 2005 and 2018 • This has now narrowed to between 2008 and 2012 • Once we pass the peak we will have halving times rather than doubling times • As the cost of oil increases the cost of everything would increase

11. May 2008 Oilwatch monthly

12. Colin Campbell’s latest scenario puts peak oil back to 2008 2008 Colin’s EUR for conventional oil = 1.9T bbls All liquids 2.5T bbls

13. Hubbert on growth • Hubbert realised in 1949 that we needed to move from fossil fuels to renewable resources if mankind was to keep its high energy use intact and the population and our consumption etc • It was perfectly evident then • More so in the 1970s when “The Limits to growth” came out

14. Hubbert’s 1949 paper in Science “Energy from Fossil fuels” TRANSITION

15. Oil Consumption We have used around 1.2 trillion barrels of oil from a total of somewhere between 2 trillion barrels (pessimists) and 3 trillion barrels (optimists) • The optimists and the pessimists are now closing in on around 2.5 trillion barrels of total liquids • Control theory suggests that to reach a transition to non-fossil energy sources, for a system with considerable inertia, action must be taken long before the fossil fuel peak otherwise a collapse in energy use is inevitable.

16. Robert Hirsh ( author of the Hirsh report to the US dept of Energy 2005) • Hirsh 2008 suggests (Energy Policy) a 1% decrease in oil consumption will give a 1% decrease in GDP and the big fields may give declines of up to 8–16% annually, which, if valid on a world scale, would be economically catastrophic. • He recently (CNBC May 2008) said flat out that new technologies and new drilling won't solve the peak oil problem, and that we should expect (in the US) $12-15/gallon gasoline followed by rationing. • This could equate to $ 8 / litre petrol in NZ !!!!

17. Can Renewables save us ?- The embodied energy argument • Crystalline silicon PV has an energy payback time of around 2 years (EROEI of around 10) • Plus storage and transmission --another 2 years • That means that in the next 20 years we would have to spend 20% of current energy consumption PER ANNUM to produce RE systems to end up with 100% RE by 2030 or half this amount to end up with 50% RE • If we allow growth at 3 % PA !!!

18. Climate change • Plus at the same time we are coming to the realisation that we will not be able to rely on coal as a substitute energy source due to CO2 emissions • And that climate change will produce devastating climatic, ecological and economic consequences ( Stern, Hanson, IPCC)

19. WHY? Why have we let the world get to a situation whereby the inertia of the global system will make mitigation of these problems, in time to avert an energy decline , difficult or impossible ?

20. My Answers • A tragedy of the commons • See “The commons revisited the tragedy continues” • Because peak oil and climate change are taken as a threat to economic growth • And economic growth is defended with religious zeal. BOB

21. Growth wins • Proponents of non-growth have been mercilessly attacked by the proponents of growth over the last two decades and have essentially been outcast and marginalised. • It is now difficult to suggest anything other than growth as a solution to world problems eg “Washington Consensus” • A word has even been invented for never ending growth “sustainable development” • We must develop sustainably- said often enough it becomes almost believable

22. In the Developed world • The relatively recent idea of unlimited economic growth originated from the corporate imperative for profits that arose out of the industrial revolution. • The industrial revolution was able to deliver growth due to cheap energy and improving technology • Growth was given legitimacy by the free market economists • Milton Friedman was the driving force from the 1970s “the social responsibility of business is to increase its profits”

23. Give me more

24. Growth will help the poor by creating wealth for all

25. However! More seriously: The UN food agency says more than 800 million people face food deprivation amid rising prices [Reuters May 2008]

26. In the Developing world • Growth is seen as an ethical argument • The developed countries have done it now its our turn • If you are in poverty, any further increase in population, means if the economy doesn’t grow many will likely die.

27. Cheap Oil • One of the reasons the fabulous growth of the 20 C has been possible is OIL. Oil and the other fossil fuels have powered growth mostly because of the generous EROEI for such fuels (estimated at around 35:1 for the current mix of world oil supply) – Charles Hall et al Spindletop 1901

28. Energy Returned On Energy Invested Ref hall et al 2008

29. Indefinite growth • It seems obvious from a physical perspective that growth cannot occur indefinitely in any bounded system • Yet growth is not seen as a limiting factor by much of society today • We all seem to want growth Why ?

30. How has the belief in something so seemingly irrational and dangerous as unlimited growth in a finite world happened? Our belief in Growth as a non negotiable axiom A belief as strong as religion

31. Finally: Peak oil and climate change together • We are now seeing an interesting interaction between peak oil and climate change • As the cost of oil rises, governments are becoming reticent to put mitigation measures in place that would further affect their “growth” in GDP • It seems to me that climate change mitigation will not be a viable option for the world until we extricate ourselves from the Growth Delusion

32. Questions?