The number of elected representatives at State and Federal level who have mentioned peak oil in parliamentary speeches must be getting close to double figures!

Speech to Parliament
Ms Rachel Nolan MP - Member for Ipswich
13th March 2008

Ms NOLAN (Ipswich—ALP):

On Monday night in Ipswich two local engineers, Steve Posselt and Stuart McCarthy, in conjunction with the Ipswich Chamber of Commerce and Industry and Ipswich Green—an organisation of which I am a cofounder—ran an Ipswich leaders forum to outline to the community the serious challenge of sustainability.

Their timing could not have been better. Today the price of a barrel of West Texas crude oil passed through the $US110 mark. This is the highest price oil has ever reached, either in current or inflation adjusted terms.

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The price surge is a result of a culmination of rising demand, flat production and falling inventories, but there is a simpler way of describing what is happening. It is called peak oil. Peak oil advocates have always argued that we would only recognise the peak of world oil supply when it was passed—that is, we would only see it for sure in the rear-vision mirror.

Well, the view in the rear-vision mirror is becoming increasingly clear. In November 2006 the world produced 85.5 million barrels or crude per day. No month since has surpassed that total. During 2007 world oil production declined to 84.6 million barrels per day. Around the world, nation by nation, oil production has peaked and declined.

The USA peaked at 9.6 million barrels per day in 1970 and now produces 5.1 million barrels per day. Venezuela peaked in 1970, the UK peaked in 1999, and Norway and Australia both peaked in 2000.

The Energy Watch Group in Germany recently analysed world data and suggest that we are past the world’s peak. They calculate that world supply will now decline by seven per cent per year, falling to 58 million barrels per day by 2020. There is no way known that production of biofuels such as ethanol can plug such an enormous and growing gap. Even putting aside the record grain prices we are already seeing as arable land is transferred from food to fuel production the simple fact is that there is not enough land on the planet to grow the liquid fuel volume which we require today.

Aldous Huxley once said that ‘human beings have an almost limitless capacity to take things for granted’. When it comes to oil and our use of it, that is certainly true. Lester Brown in his Plan B 3.0 set out the challenge thus—

The challenge for our generation is to build a new economy, one that is powered largely by renewable sources of energy, that has a highly diversified transport system and that reuses and recycles everything. And to do it with unprecedented speed.

The Ipswich leaders’ forum set out that challenge for our community. It is a serious challenge and one that we must all seriously pursue.

Download speech as a PDF from Rachel Nolan’s website.

Andris Piebalgs continues this Friday his blogging on bio-fuels, addressing some of the concerns expressed by the readers of the last blog-entry.

I agree that a radical change in consumer behavior is needed if we want Europe to be more energy efficient. At the same time, as policy makers we have to come up with policies that are based on present day realities. And the reality is that most Europeans are living and working in big cities and using modern means of transport. It would be unrealistic to impose sanctions on car producers and users if no alternatives are provided.

Before continuing I can’t but express once more my joy in seeing EU’s leaders having such a close interaction with their citizens. More bio-fuel talk under the fold.

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Crossposted at the European Tribune.

In Europe, we use less than 2 percent of our cereals production for biofuels, so they do not contribute significantly to higher food prices in the European context. Even if we reach our 10% biofuels target by 2020, the price impact will be small. Our modeling suggests that it will cause a 8 to 10% increase in rape seed prices and 3 to 6% increase in cereal prices. Increase in the price of the latest has very small influence on the cost of bread. It makes up around 4 per cent of the consumer price of a loaf.

[...]

We need to use first-generation biofuels as a bridge to the second generation biofuels using lignocellulosic materials as a feedstock. With this in mind, the Commission within the forthcoming review of the Common Agricultural Policy will urge the farmers to invest more in short rotation forestry crops and perennial grasses which are the most typical feedstocks for advanced biofuels.Over the past 30 years, Europe’s farmers have stood accused, through their association with the Common Agricultural Policy, of over-producing and dumping their surpluses with the aid of massive export subsidies on over supplied world markets, therefore depressing market prices and contributing massively to poverty and starvation in poor countries. That criticism has now been reversed. The charge now is that EU biofuel policy will contribute to third world poverty by driving food prices up. My impression from this debate sometimes is that we the Europeans know best what is good for people in developing world. Let them speak for themselves.

[...]

And let’s not forget that oil is a finite commodity, and high oil prices are one of the main factors making food more expensive, particularly in poor countries.

The most important questions raised in the previous log entries were left unattended. Here’s a simple accounting exercise to get a real sense of proportion:

The EU consumes today roughly 20 Mb/d of Oil. Of that about two thirds are used in Transport, make it 13 Mb/d. Assuming that EU’s Transport use remains unchanged up to 2020 that turns the target to something like 1.3 Mb/d.

Ethanol has an energy density of about 60% of gasoline, biodiesel is somewhat better, so make it 75%. Thus to replace those 1.3 Mb/d of Oil, about 1.75 Mb/d of bio-fuels are needed ( 1.3/0.75 ).

Ethanol production in temperate climates has an EROEI below 2:1, biodiesel about 4:1. Oil’s EROEI differs markedly from place to place (offshore versus onshore, etc) but 10:1 is a general enough mark. Accounting for EROEI, the useful energy the EU gets from Oil is about 1.2 Mb/d. To match that useful energy, total bio-fuels production has to rise to 2.1 Mb/d ( 1.2/0.75/0.75 ).

Corn crops yield about 3500 litres of ethanol per hectare per year (that’s 9.5 litres per hectare per day). With sugar cane in the tropics that number goes up to 6000 (16,5 litres per hectare per day). But for bio-diesels the numbers are considerably lower, around 1250 litres per hectare per year (3,5 per hectare litres per day).

Using 159 litres for a barrel, 2.1 Mb correspond roughly to 333 Ml (mega-litre). Using again the most optimistic figure for the temperate regions, the EU needs to allocate thirty five million (35 000 000) hectares to bio-fuels production.

I live in a state that has an area of less than 9 million hectares. Germany has an area just over 35 million hectares.

All that dark green area producing ethanol in 2020?

Good or evil? Friend or foe? This kind of wording doesn’t fit in my Engeneering/Architecture dictionaries. Bio-fuels are not an option, it’s all a matter of numbers.

Data sources:

Ethanol fuel

Biodiesel

The EROEI of ehtanol

Previous coverage of Andris Piebalgs blog:

Andris Piebalgs on Bio Fuels

Piebalgs on European Energy Security

Andris Piebalgs’ Blog

Luís de Sousa
TheOilDrum:Europe

Now for some wise words from the readers of The Oil Drum…

Sydney Goes Dark for Earth Hour

A lightning show was the brightest part of Sydney’s skyline during Earth Hour, which began at 8 p.m. when the lights were turned off at the city’s landmarks. Most businesses and homes were already dark as Sydney residents embraced their second annual Earth Hour with candlelight dinners, beach bonfires and even a green-powered outdoor movie.

This is a guest post by Rob Dietz and Brian Czech. Rob Dietz is the executive director of the Center for the Advancement of the Steady State Economy (CASSE). He received a master of science degree in environmental science and engineering from Virginia Tech and an undergraduate degree in economics and environmental studies from the University of Pennsylvania. Brian Czech, the founder of CASSE, is also a professional biologist in civil service and an adjunct professor of Ecological Economics at Virginia Tech. Czech has a Ph.D. in Renewable Natural Resources ( University of Arizona, 1998) and is the author of “Shoveling Fuel for a Runaway Train”. (note: Herman Daly, who helped me choose my Phd path, first wrote about the steady state economy in 1977 - he is on CASSE’s board)

When pundits, talking heads, and government officials debate policies related to oil consumption (e.g., gasoline taxes), they invariably ask, “Will it hurt economic growth?” This statement could be broadened to a whole range of policy debates on the environment, from climate change to endangered species. But since this is the Oil Drum, let’s stick with the topic of oil and economic growth.

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Peak Oil and Economic Growth: Where Do We Go From Here?

Oil and the economy are clearly and inextricably linked. Many analysts call oil the engine of economic growth. Certainly U.S. oil consumption patterns and economic output have experienced similar upward trends over the decades (see graph). It is difficult to find anything produced or consumed in the U.S. economy that doesn’t require oil as an input to its life cycle. It logically follows that changing oil prices or altering oil consumption patterns will affect economic growth. That’s why people (although probably not enough) worry about peak oil. They fear that the age of economic growth will come to an end.

The real issue, though, is whether economic growth is a desirable goal to begin with! Economic growth is simply an increase in the production and consumption of goods and services. It is driven by increasing population and increasing per capita consumption, and is typically indicated by increasing gross domestic product (GDP). Theory and evidence suggest that continued growth is actually “uneconomic” or costly to society . Ecological footprint analysis shows that the global economy is consuming 30 percent more resources than the Earth can regenerate each year , a deficit that cannot be maintained for long.

If the growth paradigm is unsustainable and harmful to the environment and future generations, why is society still pursuing it? First, growth was a blessing for much of history, and it is difficult to change from something that worked in the past. Second, powerful interests from corporations to government agencies to universities have a stake in the growth economy and promote it doggedly, sometimes resorting to fallacious concepts and propaganda that confuse and mislead the public. Finally, and perhaps most importantly, society lacks knowledge of the sustainable alternative to economic growth.

The sustainable alternative is the steady state economy, which is characterized by stabilized (mildly fluctuating, that is) population and per capita consumption. The steady state economy is fully capable of meeting human needs and providing a high standard of living for all citizens. Such an economy aims for better, not bigger; quality, not quantity. It focuses on strengthening communities rather than making and using ever more stuff – including oil.

In a steady state economy, societies can redevelop local networks for commerce rather than misallocating precious energy resources. Changing the economic goal to a gradual transition toward a steady state economy is the best way to ensure ecological health and true wealth for this and future generations. In fact, a sober consideration of thermodynamics and basic ecological principles tells us it’s the only way.

Economic growth will end one way or another. Classical economists believed that after a period of expansion, the economy would stabilize. Current ecological economists have updated the theory, but largely reached the same conclusion – that a steady state economy of sustainable scale is a desirable scenario for society. Peak oil has the power to stop economic growth and even cause economic contraction. If economic growth is going the way of the passenger pigeon (or numerous other species that have been lost to economic growth), shouldn’t we attempt to make the transition on our terms? Why wait until our behavior and policies produce disastrous consequences? The sooner we get to work on the transition, the more we can avoid the pain of a forced transition. Peak oil is the messenger telling us it’s high time to change the economic goal.

For more information, please visit the website of the Center for the Advancement of the Steady State Economy (CASSE) at , where you can sign the only position on economic growth available on the Web.

Rob Dietz
Executive Director, Center for the Advancement of the Steady State Economy
rob_dietz@steadystate.org

Brian Czech
President, Center for the Advancement of the Steady State Economy
brianczech@juno.com

Now for some wise words from the readers of The Oil Drum…

Russian Oil Output to Fall for First Time in a Decade

“Two years ago, we said the growth rate was falling, and we said this was bad for Russia, remember?” Trutnev said in televised remarks after a government meeting in Moscow today. “Now we’re saying the production rate is falling this year. This is not a bogeyman, unfortunately, this is real,” Trutnev said, without giving a specific forecast.

The Global Wind Energy Council (GWEC) is forecasting that the global wind market will grow by more than 155 percent, reaching 240 gigawatts (GW) of total installed capacity by 2012. With both the U.S. and the Chinese markets growing at a much faster rate than expected a year ago, the emergence of significant manufacturing capacity in China will have a more important impact on the growth of the global markets.

Southern California Edison (SCE) has launched one of the largest solar installations in the U.S. SCE plans to install up to 250 megawatts (MW) of advanced solar photovoltaic (PV) generating technology on 65 million square feet of roofs of Southern California commercial buildings.