The Oil Drum: Local

Report authors: Luís de Sousa and Euan Mearns

Part 3 of IEA WEO 2008 analyzes the expected impact of fossil fuel combustion upon climate change.

Page 382: As emissions of greenhouse gases build up in the atmosphere faster than natural processes can remove them, their concentrations rise. The Reference Scenario puts us on a path to doubling the aggregate concentration in CO2 equivalent terms by the end of this century, entailing an eventual global average temperature increase up to 6 ºC.

Rather surprisingly, IEA WEO 2008 does not provide any data on fossil fuel reserves and production forecasts to 2100 to back up this claim. Instead, it chooses to rely upon fossil fuel reserve figures underlying the Intergovernmental Panel on Climate Change (IPCC) models. Furthermore, using MAGICC (climate temperature model), and the default climate sensitivity constants, we are unable to reproduce the outcome of as much as a 6 ºC increase.

Using a CO2 emissions scenario based on our 2008 Olduvai Assessment combined with MAGICC, we estimate that global average temperatures may peak at around 1.6ºC above 1990 values toward the end of this century. Other climate models may produce temperature outcomes higher or lower than this.

With the recent financial turmoil, many companies and industries are finding themselves in deteriorating financial straits. Yesterday the CEOs of the 'Big Three' auto makers testified before Congress on why they should be the latest recipients of taxpayer funds, specifically a $25 billion injection from the government to keep their businesses afloat. At the same time, renewable energy infrastructure buildout is facing similar problems. 66 out of 262 approved wind farms have either been outright canceled or postponed. Some tough choices will likely have to be made. It has been our historical political trajectory to put out immediate fires and neglect smoke on the horizon. But at what point, if ever, is there an 'a-ha' (or 'uh-oh') moment, when we collectively realize we don't have the resources to continue ALL businesses. Some entire industries can, should and will fail.

Below the thread are some brief comments, and an open thread on the automobile industry bailout situation.

"Hummer?"	"or Light and Heat?"

Who is the International Energy Agency? According to its website:

The International Energy Agency (IEA) acts as energy policy advisor to 28 member countries in their effort to ensure reliable, affordable and clean energy for their citizens. Founded during the oil crisis of 1973-74, the IEA’s initial role was to co-ordinate measures in times of oil supply emergencies. As energy markets have changed, so has the IEA. Its mandate has broadened to incorporate the “Three E’s” of balanced energy policy making: energy security, economic development and environmental protection. Current work focuses on climate change policies, market reform, energy technology collaboration and outreach to the rest of the world, especially major consumers and producers of energy like China, India, Russia and the OPEC countries.

With a staff of around 190, mainly energy experts and statisticians from its 28 member countries, the IEA conducts a broad programme of energy research, data compilation, publications and public dissemination of the latest energy policy analysis and recommendations on good practices.

If the IEA acts as policy advisor, it is clearly involved in many matters of political importance. One question a person might ask is whether the IEA is able to separate its political role from its data analysis role. Is there an energy policy Chinese Wall? Also, there are many other tugs on anyone who provides forecasts to others (consistency with past forecasts, explainable changes due to outside causes, forecasts in line with what the clients want).

Given these issues, one might ask whether the IEA can really be expected to be objective. Is there any auditor looking over the IEA's shoulder? Is there any other outside independent agency looking out for the accuracy of the forecasts?

Report authors: Euan Mearns, Samuel Foucher and Rembrandt Koppelaar

This chart is from a section of the IEA publications called key graphs and appears in Chapter 11, p250 as Figure 11.1.

Chapter 10, p 243 of IEA WEO 2008 says this:

On this basis, we estimate that the average observed decline rate worldwide is 6.7%. Were that rate applied to 2007 crude oil production the annual loss of output would be 4.7mmbpd.

So it seems reasonable to expect the decline rate on currently producing fields shown above should be 6.7%. Not so. The decline rate in the chart above seems to be much closer to 4%. So what's going on here? There's more below the fold.

Of those reading this website in the early days, many expected that by 2008 the world would begin to look like a different place. Perhaps they made some personal changes and hoped that information and facts about energy/environment would gain a societal tipping point and engender some tectonic shifts on global energy policy. Standing here (or sitting) today, it is apparent that in the past 3 months we have gone from the mild fire of high oil prices (hot, but pretty to watch), into the frying pan of a systemic international financial crisis. But under the surface, recent events are accelerating our energy crisis in stealth mode: supply side investments are being crimped due to low commodity prices, and investment capital is available at a premium if at all. On the demand side: people in the US are financially strapped, but gasoline at under $2 a gallon, (arguably the scarcest input into societies' future - see GasBuddy Map here), is paradoxically the most affordable item on the weekly shopping list!

Humans, governments, and Americans have a long history of putting out short term fires while simultaneously increasing the risks for long term systemic conflagrations. In the coming week we are going to continue our review of the IEA WEO report with posts on Decline Rates, Megaprojects, Saudi Arabia, Belief Systems/Economics, Reserves, Natural Gas, and more. There is no data or analysis below the fold today, just a list of questions for our readers about where we stand, what can be done, what should be done, and who should be doing it.

Yesterday, on the basis of press reports, I noted that the new EU Energy Strategy was depressing, if predictable. But today, the strategy was actually posted on the EU's website (you can find it here, with all supporting documents) and, reading it, I find it much less offensive than the press makes it to be.

For one, beyond an early reference to the current goals of "sustainability, competitiveness and security of supply", there is not a word about competition and market mechanisms in the whole Memo on the Strategic Energy Review (pdf). Not one. I was amazed. In fact, this memo, beyond a bit of fluff that can easily be ignored, is almost sensible!

Let me get you through it.

Barack Obama has said that energy is going to be one of his top priorities. I believe he is completely sincere about this and that energy will get a lot of attention early on in his administration. I believe he is committed to moving the U.S. toward energy independence and a greener energy future. However, one can recognize energy as an important priority, yet sharply differ on the policy direction that is needed. For instance, some may have energy as a high priority because they feel that gasoline is too expensive. Their priority may be to keep gasoline prices low so people's budgets aren't adversely impacted by their fuel bills. Some can see energy as a top priority, and yet promote solutions like suing OPEC for more oil.

On the other hand, someone else may see energy as a top priority, but think low gasoline prices are not the solution, but instead a big part of the problem. This is the nature of my disagreement with some aspects of Obama's energy plans: We broadly agree on the big picture, but differ on how to get there. And since I recently heard him say “I may not agree, but I will listen”, here is my attempt to highlight what I feel are the flaws in his energy proposals.

Stuart McCarthy from ASPO Australia has done himself proud with a solid submission to Infrastructure Australia.

Download the full report: Peak Oil and Australia's National Infrastructure: Submission to Infrastructure Australia. The Executive Summary is reprinted below.

Last night on the Change.gov website, the major 'categories' for the transition administration included the usual headings: 'Commerce', 'Defense', 'Education', etc. But there was a curious entry in the list: "Energy and the Environment", (which is no longer there). My eyes expected to see "Energy" and "Environment" under separate headings. (Todays listing of cabinet positions is now identical to the current admininistrations.) But for a brief, heart pounding moment, I thought this might be a sneak preview into a sea change in the way policy leaders see the world, one unified Cabinet position, linking two critically interconnected areas, Energy and the Environment. I expect it was a snafu, or I misunderstood what I was seeing. As such, this brief post is not about advocating or predicting such a cabinet position will emerge. But as we go forward in these challenging Liebigs Law times, such a cabinet position might be the first step in recognition both of limits, and of the wide boundary impacts of our internalize profits / externalize costs social system. Of course there are risks with such a union...

Senator Barack Obama won. Results are now becoming available on how representation in the House and Senate is changing. The Democrats have added seats in both houses.

What impact do you expect these changes to have on energy policy in the year ahead? What legislation do you expect to actually get passed?