The End of the Oilocene

19 02 2017

The Oilocene, if that term ever catches on, will have only lasted 150 years. Which must be the quickest blink in terms of geological eras…… This article was lifted from feasta.org but unfortunately I can’t give writing credits as I could not find the author’s name anywhere. The data showing we’ll be quickly out of viable oil is stacking up at an increasing rate.

Steven Kopits from Douglas-Westwood (whose work I published here three years ago almost to the day) said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programs. Nearly half of the industry needs more than $120,” he said”.

And if you don’t finish reading this admittedly long article, do not exit this blog without first taking THIS on board…….:

What people do not realise is that it takes oil to extract, refine, produce and deliver oil to the end user. The Hills Group calculates that in 2012, the average energy required by the oil production chain had risen so much that it was then equal to the energy contained in the oil delivered to the economy. In other words “In 2012 the oil industry production chain in total used 50% of all the energy contained in the oil delivered to the consumer”. This is trending rapidly to reach 100% early in the next decade.

So there you go…… as I posted earlier this year, do we have five years left…….?

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End of the “Oilocene”: The Demise of the Global Oil Industry and of the Global Economic System as we know it.

(A pdf version of this paper is here. Please refer to my presentation for supporting images and comments. )

In 1981 I was sitting on an eroded barren hillside in India, where less than 100 years previously there had been dense forest with tigers. It was now effectively a desert and I was watching villagers scavenging for twigs for fuelwood and pondering their future, thinking about rapidly increasing human population and equally rapid degradation of the global environment. I had recently devoured a copy of The Limits to Growth (LTG) published in 1972, and here it was playing out in front of me. Their Business as Usual (BAU) scenario showed that global economic growth would be over between 2010 -2020; and today 45 years later, that prediction is inexorably becoming true. Since 2008 any semblance of growth has been fuelled by astronomically greater quantities of debt; and all other indicators of overshoot are flashing red.

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One of the main factors limiting growth was regarded by the authors of LTG as energy; specifically oil. By mid 1970’s surprisingly, enough was known about accessible oil reserves that not a huge amount has since been added to what is known as reserves of conventional oil. Conventional oil is (or was) the high quality, high net energy, low water content, easy to get stuff. Its multi-decade increasing rate in production came to an end around 2005 (as predicted many years earlier by Campbell and Laherre in 1998). The rate of production peaked in 2011 and has since been in decline (IEA 2016).

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The International Energy Agency (IEA) is the pre-eminent global forecaster of oil production and demand. Recently it admitted that its oil production forecasts were based on economic projections rather than geology or cost; ie on the assumption that supply will always meet projected demand.
In its latest annual forecast however (New Policies Scenario 2016) the IEA has also admitted for the first time a future in which total global “all liquids” oil production could start to fall within the next few years.

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As Kjell Aklett of Upsala University Global Energy Research Group comments (06-12-16), “In figure 3.16 the IEA shows for the first time what will happen if its unrealistic wishful thinking does not become reality during the next 10 years. Peak Oil will occur even if oil from fracked tight sources, oil sands, and other (unconventional) sources are included”.

In fact – this IEA image clearly shows that the total global rate of production of “all hydrocarbon liquids” could start falling anytime from now on; and this should in itself raise a huge red flag for the Irish Government.

Furthermore, it raises a number of vital questions which are the core subject of this post.
Reserves of conventional “easy” oil have mostly been used up. How likely is it that remaining reserves will be produced at the rate projected? Rapidly diminishing reserves of conventional oil are now increasingly being supplemented by the difficult stuff that Kjell Aklett mentions; including conventional from deep water, polar and other inaccessible regions, very heavy bituminous and high sulphur oil; natural gas liquids and other xtl’s, plus other “unconventional oil” including tar sands and shale oil.

How much will it cost to produce all these various types? How much energy will be required, and crucially how much energy will be left over for use by the economy?

The global industrial economy runs on oil.

Oil is the vital and crucial link in virtually every production chain in the global industrial world economy partly because it supplies over 96% of global transport energy – with no significant non-oil dependent alternative in sight.

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Our industrial food production system uses over 10 calories of oil energy to plough, plant, fertilise, harvest, transport, refine, package, store/refrigerate, and deliver 1 calorie of food to the consumer; and imagine trying to build infrastructure; roads, schools, hospitals, industrial facilities, cities, railways, airports without oil, let alone maintain them.

Surprisingly perhaps, oil is also crucial to production of all other forms of energy including renewables. We cannot mine and distribute coal or even drill for gas and install pipelines and gas distribution networks without lots of oil; and you certainly cannot make a nuclear power station or build a hydroelectric dam without oil. But even solar panels, wind and biomass energy are also totally dependent on oil to extract and produce the raw materials; oil is directly or indirectly used in their manufacture (steel, glass, copper, fibreglass/GRP, concrete) and finally to distribute the product to the end user, and install and maintain it.

So it’s not surprising that excluding hydro and nuclear (which mostly require phenomenal amounts of oil to implement), renewables still only constitute about 3% of world energy (BP Energy Outlook 2016). This figure speaks entirely for itself. I am a renewable energy consultant and promoter, but I am also a realist; in practice the world runs on oil.

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The economy, Global GDP and oil are therefore mutually dependent and have enjoyed a tightly linked dance over the decades as shown in the following images. Note the connection between oil, total energy, oil price and GDP (clues for later).

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Click on image to enlarge

Rising cost of oil production

Since 2005 when the rate of production of conventional oil slowed and peaked, production costs have been rising more rapidly. By 2013, oil industry costs were approaching the level of the global oil price which was more than $100/barrel at that time; and industry insiders were saying that the oil industry was finding it difficult to break even.

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Click on image to enlarge

A good example of the time was the following article which is worth quoting in full in the light of the price of oil at the time (~$100/bbl), and the average 2016 sustained low oil price of ~$50/bbl.

Oil and gas company debt soars to danger levels to cover shortfall in cash By Ambrose Evans-Pritchard. Telegraph. 11 Aug 2014

“The world’s leading oil and gas companies are taking on debt and selling assets on an unprecedented scale to cover a shortfall in cash, calling into question the long-term viability of large parts of the industry. The US Energy Information Administration (EIA) said a review of 127 companies across the globe found that they had increased net debt by $106bn in the year to March, in order to cover the surging costs of machinery and exploration, while still paying generous dividends at the same time. They also sold off a net $73bn of assets.

The EIA said revenues from oil and gas sales have reached a plateau since 2011, stagnating at $568bn over the last year as oil hovers near $100 a barrel. Yet costs have continued to rise relentlessly. Companies have exhausted the low-hanging fruit and are being forced to explore fields in ever more difficult regions.

The EIA said the shortfall between cash earnings from operations and expenditure — mostly CAPEX and dividends — has widened from $18bn in 2010 to $110bn during the past three years. Companies appear to have been borrowing heavily both to keep dividends steady and to buy back their own shares, spending an average of $39bn on repurchases since 2011”.

In another article (my highlights) he wrote

“The major companies are struggling to find viable reserves, forcing them to take on ever more leverage to explore in marginal basins, often gambling that much higher prices in the future will come to the rescue. Global output of conventional oil peaked in 2005 despite huge investment. The cumulative blitz on exploration and production over the past six years has been $5.4 trillion, yet little has come of it. Not a single large project has come on stream at a break-even cost below $80 a barrel for almost three years.

Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said”.

The following images give a good idea of the trend and breakdown in costs of oil production. Getting it out of the ground is just for starters. The images show just how expensive it is becoming to produce – and how far from breakeven the current oil price is.

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Click on image to enlarge

It is important to note that the “breakeven cost” is much less than the oil price required to sustain the industry into the future (business as usual).

The following images show that the many different types of oil have (obviously) vastly different production costs. Note the relatively small proportion of conventional reserves (much of it already used), and the substantially higher production cost of all other types of oil. Note also the apt title and date of the Deutsche Bank analysis – production costs have risen substantially since then.

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The global oil industry is in deep trouble

You do not need to be an economist to see that the average 2016 price of oil ~ $50/bbl was substantially lower than just the breakeven price of all but a small proportion of global oil reserves. Even before the oil price collapse of 2014-5, the global oil industry was in deep trouble. Debts are rising quickly, and balance sheets are increasingly RED. Earlier this year 2016, Deloitte warned that 35% of oil majors were in danger of bankruptcy, with another 30% to follow in 2017.

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Click on image to enlarge

In addition to the oil majors, shrinking oil revenues in oil-producing countries are playing havoc with national economies. Virtually every oil producing country in the world requires a much higher oil price to balance its budget – some of them vastly so (eg Venezuela). Their economies have been designed around oil, which for many of them is their largest source of income. Even Saudi Arabia, the biggest global oil producer with the biggest conventional oil reserves is quickly using up its sovereign wealth fund.

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It appears that not a single significant oil-producing country is balancing its budget. Their debts and deficits grow bigger by the day. Everyone is praying for higher oil prices. Who are they kidding? The average BAU oil price going forward for business as usual for the whole global oil industry probably needs to be well over $100/bbl; and the world economy is on its knees even at the present low oil price. Why is this? The indicators all spell huge trouble ahead. Could there be another fundamental oil/energy/financial mechanism operating here?

The Root Cause

The cause is not surprising. All the various new types of oil and a good deal of the conventional stuff that remains require far more energy to produce.

In 2015, The Hills Group (US Oil Engineers) published “Depletion – A Determination of the Worlds Petroleum Reserve”. It is meticulously researched and re-worked with trends double checked against published data. It follows on from the Hills Group 2013 work that accurately predicted the approaching oil price collapse after 2014 (which no-one else did) and calculated that the average oil price of 2016 would be ~$50/bbl. They claim theirs is the most accurate oil price indicator ever produced, with >96% accuracy with published past data. The Hills Group work has somewhat clarified my understanding of the core issues and I will try to summarise two crucial points as follows.

Oil can only be useful as an energy source if the energy contained in the product (ie transport fuel) is greater than the energy required to extract, refine and deliver the fuel to the end user.

If you electrolyse water, the hydrogen gas produced (when mixed with air and ignited), will explode with a bang (be careful doing this at home!). The hydrogen contained in the world’s water is an enormous potential energy source and contains infinitely more energy (as hydrogen) than humans could ever need. The problem is that it takes far more energy to produce a given amount of hydrogen from water than is available by combusting it. Oil is rapidly going the same way. Only a small proportion of what remains of conventional oil resources can provide an energy surplus for use as a fuel. All the other types of oil require more energy to produce and deliver as fuel to the end user (taking into account the whole oil production chain), than is contained in the fuel itself.

What people do not realise is that it takes oil to extract, refine, produce and deliver oil to the end user. The Hills Group calculates that in 2012, the average energy required by the oil production chain had risen so much that it was then equal to the energy contained in the oil delivered to the economy. In other words “In 2012 the oil industry production chain in total used 50% of all the energy contained in the oil delivered to the consumer”. This is trending rapidly to reach 100% early in the next decade.

At this point – no matter how much oil is left (a lot) and in whatever form (many), oil will be of no use as an energy source for transport fuels, since it will on average require more energy to extract, refine and deliver to the end-user, than the oil itself contains.

Because oil reserves are of decreasing quality and oil is getting more difficult and expensive to produce and transform into transport fuels; the amount of energy required by the whole oil production chain (the global oil industry) is rapidly increasing; leaving less and less left over for the rest of the economy.

In this context and relative to the IEA graph shown earlier, there is a big difference between annual gross oil production, and the amount of energy left in the product available for work as fuel. Whilst total global oil (all liquids) production currently appears to be still growing slowly, the energy required by the global oil industry is growing faster, and the net energy available for work by the end user is decreasing rapidly. This is illustrated by the following figure (Louis Arnoux 2016).

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The price of oil cannot exceed the value of the economic activity generated from the amount of energy available to end-users per barrel.

The rapid decline in oil-energy available to the economy is one of the key reasons for the equally rapid rise in global debt.

The global industrial world economy depends on oil as its prime energy source. Increasing growth of the world economy during the oil age has been exactly matched by oil production and use, but as Louis’ image shows, over the last forty years the amount of net energy delivered by the oil industry to the economy has been decreasing.

As a result, the economic value of a barrel of oil is falling fast. “In 1975 one dollar could have bought, on average, 42,348 BTU; by 2010 a dollar would only have bought 6,946 BTU” (The Hills Group 2015).

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This has caused a parallel reduction in real economic activity. I say “real” because today the financial world accounts for about 40% of global GDP, and I would like to remind economists and bankers that you cannot eat 0000’s on a computer screen, or use them to put food on the table, heat your house, or make something useful. GDP as an indicator of the global economy is an illusion. If you deduct financial services and account for debt, the real world economy is contracting fast.

To compensate, and continue the fallacy of endless economic growth, we have simply borrowed and borrowed, and borrowed. Huge amounts of additional debt are now required to sustain the “Growth Illusion”.

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In 2012 the decreasing ability of oil to power the economy intersected with the increasing cost of oil production at a point The Hills Group refers to as the maximum affordable consumer price (just over $100/bbl) and they calculated that the price of oil must fall soon afterwards. In 2014 much to everyone’s surprise (IEA, EIA, World Bank, Wall St Oil futures etc) the price of oil fell to where it is now. This is clearly illustrated by The Hills Group’s petroleum price curve of 2013 which correctly calculated that the 2016 average price of oil would be ~$50/bbl (Depletion – The Fate of the Oil Age 2013).

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In their detailed 2015 study The Hills Group writes (Depletion – A determination of the world’s petroleum reserve 2015);

“To determine the affordability range it is first observed that the price of a unit of petroleum cannot exceed the value of the economic activity (generated by the net energy) it supplies to the end consumer. (Since 2012) more of the energy from petroleum was being committed to the production of petroleum than was delivered to the consumer. This precipitated the 2014 price decline that reduced prices by 50%. The energy delivered to the end consumer will continue to decline and the end consumer maximum affordability will decline with it.

Dr Louis Arnoux explains this as follows: “In 1900 the Global Industrial World received 61% of the gross energy in a barrel of oil. In 2016 this is down to 7%. The global industrial world is being forced to contract because it is being starved of net energy from oil” (Louis Arnoux 2016).

This is reflected in the slowing down of global economic growth and the huge increase in total global debt.

Without noticing it, in 2012 the world entered “Emergency Red Alert”

In the following image, Dr Arnoux has reworked Hills Group petroleum price curve showing the impending collapse of thermodynamically driven oil prices – and the end of the oil age as we know it. This analysis is more than amply reinforced by the dire financial straits of the global oil industry, and the parlous state of the global economy and financial system.

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Oil is a finite resource which is subject to the same physical laws as many other commodities. The debate about peak oil has been clouded by the fact that oil consists of many different kinds of hydrocarbons; each of which has its own extraction profile. But conventional oil is the only category of oil that can be extracted with a whole production chain energy surplus. Production of this commodity (conventional oil) has undoubtedly peaked and is now declining. The amount of energy (and cost) required by the global oil industry to produce and deliver much of the remainder of conventional reserves and the many alternative categories of oil to the consumer, is rapidly increasing; and we are equally rapidly heading toward the day when we have used up those reserves of oil which will deliver an energy surplus (taking into account the whole production chain from extraction to delivery of the end product as fuel to the consumer).

The Global Oil Industry is one of the most advanced and efficient in the world and further efficiency gains will be minor compared to the scale of the problem, which is essentially one of oil depletion thermodynamics.

Humans are very good at propping up the unsustainable and this often results in a fast and unexpected collapse (eg Joseph Tainter: The collapse of complex societies). An example of this is the Seneca Curve/Cliff which appears to me to be an often-repeated defining trait of humanity. Our oil/financial system is a perfect illustration.

Debt is being used to extend the unsustainable and it looks as though we are headed for the “Mother of all Seneca Curves” which I have illustrated below:

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Because oil is the primary energy resource upon which all other energy sources depend, it is almost certain that a contraction in oil production would be reflected in a parallel reduction in other energy systems; as illustrated rather dramatically in this image by Gail Tverberg (the timing is slightly premature – but probably not by much).

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Energy and Money

Fundamental to all energy and economic systems is money. Debt is being used to prop up a contracting oil energy system, and the scale of money created as debt over the last few decades to compensate is truly phenomenal; amounting to hundreds of trillions (excluding “extra-terrestrial” amounts of “financials”), rising exponentially faster. This amount of debt, can never ever be repaid. The on-going contraction of the oil/energy system will exacerbate this trend until the financial system collapses. There is nothing anyone can do about it no matter how much money is printed, NIRP, ZIRP you name it – all the indicators are flashing red. The panacea of indefinite money printing will soon hit the thermodynamic energy wall of reality.

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The effects we currently observe such as exponential growth in debt (US Debt alone almost doubled from $10 trillion to nearly $20 trillion during Obama’s tenure), and the financial problems of oil majors and oil producing countries, are clear indicators of the imminent contraction in existing global energy and financial systems.

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The coming failure of the global economic system will be a systemic failure. I say “systemic” because for the last 150 years up till now there has always been cheap and abundant oil to power recovery from previous busts. This era is over. Cheap and abundant oil will not be available for recovery from the next crunch, and the world will need to adopt a completely different economic and financial model.

The Economics “profession”

Economists would have us believe it’s just another turn of the credit cycle. This dismal non-science is in the main the lapdog of the establishment, the global financial and corporate interests. They have engineered the “science” to support the myth of perpetual growth to suit the needs of their pay-masters, the financial institutions, corporations and governments (who pay their salaries, fund the universities and research, etc). They have steadfastly ignored all ecological and resource issues and trends and warnings such as LTG, and portrayed themselves as the pre-eminent arbiters of human enterprise. By vehemently supporting the status quo, they of all groups, I hold primarily responsible for the appalling situation the planet faces; the destruction of the natural world, and many other threats to the global environment and its ability to sustain civilisation as we know it.

I have news for the “Economics Profession”. The perpetual growth fantasy financial system based on unlimited cheap energy is now coming to an end. From the planet’s point of view – it simply couldn’t be soon enough. This will mark the end of what I call the “Oilocene”. Human activities are having such an effect on the planet that the present age has been classified by geologists as a new geological era “The Anthropocene”. But although humans had already made a significant impact on natural systems, the Anthropocene has largely been defined by the relatively recent discovery and use of liquid fossil energy reserves amounting to millions of years of stored solar energy. Unlimited cheap oil has fuelled exponential growth in human systems to the point that many of these are now greater than natural planetary ones.
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This cannot be sustained without huge amounts of cheap net oil energy, so we are inescapably headed for “the great deceleration”. The situation is very like the fate of the Titanic which I have outlined in my presentation. Of the few who had the courage to face the economic wind of perpetual growth, I salute the authors of LTG and the memory of Richard Douthwaite (The Growth Illusion 1992), and all at FEASTA who are working hard to warn a deaf Ireland of what is to come and why – and have very sensibly been preparing for it! We will all need a lot of courage and resilience to face what is coming down the line.

Ireland has a very short time available to prepare for hard times.

There are many things we could do here to soften the impact if the problem was understood for what it is. FEASTA publications such as the Before The Wells Run Dry and Fleeing Vesuvius; and David Korowicz’s works such as The Tipping Point and of course, The Hills Group 2015 publicationDepletion – a determination of the worlds petroleum reserve , and very many other references, provide background material and should be required urgent reading for all policy makers.

The pre-eminent challenge is energy for transport and agriculture. We could switch to use of compressed natural gas (CNG) as the urgent default transport/motive fuel in the short term since petrol and diesel engines can be converted to dual-fuel use with CNG; supplemented rapidly by biogas (since we are lucky enough to have plenty of agricultural land and water compared to many countries).

We could urgently switch to an organic high labour input agriculture concentrating on local self-sufficiency eliminating chemical inputs such as fertilisers pesticides and herbicides (as Cuba did after the fall of the Soviet Union). We could outlaw the use of oil for heating and switch to biomass.

We could penalise high electricity use and aim to massively cut consumption so that electricity can be supplied by completely renewable means – preserving our natural gas for transport fuel and the rapid transition from oil. The Grid could be urgently reconfigured to enable 100% use of renewable electricity within a few years. We could concentrate on local production of food, goods and services to reduce transport needs.

These measures would create a lot of jobs and improve the balance of payments. They have already been proposed in one form or another by FEASTA over the last 15 years.

Ireland has made a start, but it is insignificant compared to the scale and timescale of the challenge ahead as illustrated by the next image (SEAI: Energy in Ireland – Key Statistics 2015). We urgently need to shrink the oil portion to a small fraction of current use.

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Current fossil energy use is very wasteful. By reducing waste and increasing efficiency we can use less. For instance, a large amount of the energy used as transport fuels and for electricity generation is lost to atmosphere as waste heat. New technological solutions include a global initiative to mount an affordable emergency response called nGeni that is solely based on well-known and proven technology components, integrated in a novel way, with a business and financial model enabling it to tap into over €5 trillion/year of funds currently wasted globally as waste heat. This has potential for Ireland, and will be outlined in a subsequent post.

To finance all the changes we need to implement, quickly (and hopefully before the full impact of the oil/financial catastrophe really kicks in), we could for instance create something like a massive multibillion “National Sustainability and Renewable Energy Bond”. Virtually all renewables provide a better (often substantially better) return on investment compared to bank savings, government bonds, etc; especially in the age of zero and negative interest rate policies ZIRP, NIRP etc.

We may need to think about managing this during a contraction in the economy and financial system which could occur at any time. We certainly could do with a new clever breed of “Ecological Economists” to plan for the end of the old system and its replacement by a sustainable new one. There is no shortage of ideas. The disappearance of trillions of fake money and the shrinking of national and local tax income which currently funds the existing system and its social programmes will be a huge challenge to social stability in Ireland and all over the world.

It’s now “Emergency Red Alert”. If we delay, we won’t have the energy or the money to implement even a portion of what is required. We need to drag our politicians and policy makers kicking and screaming to the table, to make them understand the dire nature of the predicament and challenge them to open their eyes to the increasingly obvious, and to take action. We can thank The Hills Group for elucidating so clearly the root causes of the problem, but the indicators of systemic collapse have for many years been frantically jumping up and down, waving at us and shouting LOOK AT ME! Meanwhile the majority of blinkered clueless economists that advise business and government and who plan our future, look the other way.

In 1972 “The Limits to Growth” warned of the consequences of growing reliance on the finite resource called “oil” and of the suicidal economics mantra of endless growth. The challenge Ireland will soon face is managing a fast economic and energy contraction and implementing sustainability on a massive scale whilst maintaining social cohesion. Whatever the outcome (managed or chaotic contraction), we will soon all have to live with a lot less energy and physical resources. That in itself might not necessarily be such a bad thing provided the burden is shared. “Modern citizens today use more energy and physical resources in a month than our great-grandparents used during their whole lifetime” (John Thackera; “From Oil Age to Soil Age”, Doors to Perception; Dec 2016). Were they less happy than us?

PDF of this article
Powerpoint presentation

Featured image: used motor oil. Source: http://www.freeimages.com/photo/stain-1507366

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Is our future our past?

7 07 2016

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At ten months, Chock the ox is already earning his keep around the farm. Photo: Steven French Family.

If there’s one thing most post peak oil commentators have given too little consideration to it’s how goods will be moved and how farms will function in our scary and fast approaching future.

Sure there’s the fraternity that talk about bicycles and walking and they’re on the right track, particularly if you’re lucky or wise enough to reside in a city or village.

However a means of energy or transport that doesn’t involve some form of technical reliance such as electric cars, high speed rail, nuclear power, wind turbines, solar panels or waver power, seems to be strangely missing from the dialogue. Certainly low-tech conveyances such as barges and sailing ships occasionally get a mention, and rightly so. But when the blindingly obvious is mentioned eyes often glaze over.

Horsepower

The one thing that’s almost always overlooked is using animals for transport and farm work.

Pretty much until the early 1900s it was animal power that kept civilization going. Yet today, a little over a half century since many rural people still used animal power, using animals to produce actual horsepower seems unimaginable.

Yet, a snapshot of 1900 could be a view of our future.

Back to the future

I’m lucky enough to live on the island of Tasmania, one of the seven states of Australia.

Much of Tasmania is highly fertile and we have a great climate. Although Tasmania may seem remote, our farmers have always been as keen to modernize in ways akin to our farming cousins in the US. The widespread adoption of tractors for farming happened here around the time of World War II.

But the time that I really want to focus on is the 1930s, when my parents were growing up and most farmers still relied on horses. The maternal side of my family farmed only a couple of miles away. Both families’ lifestyles and farming methods were similar and would have been typical of almost everyone who worked the land in those days. They had:

  • No electricity
  • No telephone
  • No internal combustion engine on the property

My dad’s parents did have a car but my mother’s family never drove. Nan and Grandpa never had a driver’s license even though they farmed another property a fifteen minute bike ride away.

A good living

The point is that they enjoyed a good standard of living, certainly by the standards of the 1930s but also, I suspect, by today’s standards. There was a vibrant social life centered around the little township of Whitemore, with several sporting teams and social functions usually held two or three nights a week. These people were not country yokels by any means. They were articulate and well traveled. Their farms were highly productive. And they used virtually no petroleum.

Yes, they had a little kerosene for their lanterns, and maybe grease and oil were used to lubricate moving parts on the horse-drawn equipment. But their use of petroleum was pretty much nonexistent compared with today.

There was a train-line not too far away and the children rode their bikes to the station to catch a steam-train to high school, a 45 minute trip. Nowadays the local children catch a bus for a one hour trip to their nearest high school. Much of the farm produce was delivered to the railway station by wagon where it was transported to markets.

Their water supply was pumped from the well thanks to a windmill and a hand pump.

Man and beast alone

Paddocks were plowed, worked and sown with horses. At harvest time horses pulled binders which tied the crops into sheaves. The sheaves were later forked onto horse drawn wagons and made into huge stacks not too far from the farmyard. During early winter a wood-fired traction engine (steam-engine) pulled a drum from farm to farm. A drum is a huge threshing machine which took 15 men to operate. It was belt-driven from the traction engine’s flywheel and it threshed the grain from the straw. These drums were still working around Tasmanian into the 1950s. They can still be seen in operation at some of our historic farming field days.

The point that I’m belaboring and repeating is that these farms used almost no petroleum, were highly productive, and farming families and laborers enjoyed a good standard of living.

Could we return to this style of living and farming? The answer is yes, but with some not-insurmountable difficulties.

Ramping up to face the effects of peak oil

First the number of heavy horses required would take decades to breed up. Also there are very few people around with the ability to work heavy horses. It’s a skill that I suspect not everyone has the ability to acquire. An ill trained or poorly driven horse is dangerous and it can take years to learn the skill necessary to work a horse properly.

The answer is oxen (we call them bullocks here in Australia). There’s no shortage of cattle and they are much more placid and easier to train than horses. Also their harness requirements are minimal and they are easy to feed and maintain. The only downside is that oxen are slower than the horse but hey, that’s not so bad, is it?

Up until the mid 1800s all animal power on farms was supplied pretty much by oxen, although the farmer may have had a light horse for riding or to pull a cart. In most American Western movies and TV shows horses are pulling the covered wagons that made up the wagon trains. In actuality, these covered wagons were mainly drawn by oxen. Possibly a slower but certainly a more sensible option, ox could pretty much live off the land they were passing through and didn’t suffer from many off the health issues of the horse.

Could oxen save the day? Quite possibly. Cuban President Raul Castro recently called for ox to be used as beasts of burden as a way for the economically strapped communist country to ramp up food production while conserving energy.

Ramping up food production – conserving energy – a cash strapped economy – falling oil supply? Sounds familiar? How long before a leader of the western world pleads for a solution to the same problems? Or have they already but are looking in the wrong direction?

–Steven French for Transition Voice





What it would take for the US to run on 100% renewable energy

11 06 2015

The internet never ceases to amaze me as a source of hopium.  This article on vox, Here’s what it would take for the US to run on 100% renewable energy, manages to knock the wind out of the techno-utopian belief that we could run Business as Usual with renewables, even though it totally misses the most important point about why it can’t be done…....

It sets the scene with:

It is technically and economically feasible to run the US economy entirely on renewable energy, and to do so by 2050. That is the conclusion of a new study in the journal Energy & Environmental Science, authored by Stanford scholar Mark Z. Jacobson and nine colleagues.

Jacobson is well-known for his ambitious and controversial work on renewable energy. In 2001 he published, with Mark A. Delucchi, a two-part paper (one, two) on “providing all global energy with wind, water, and solar power.” In 2013 he published a feasibility study on moving New York state entirely to renewables, and in 2014 he created a road map for California to do the same.

This road map looks like this:

jacobson-us-renewables-2015At least, this road map shows a decline in total energy use over the period to 2050, which is fine, we absolutely have to reduce energy consumption.  Except of course I think we need to do this by at least 90%, but who’s splitting hairs…?

The author, , then goes on to explain what is required to do this:

The core of the plan is to electrify everything, including sectors that currently run partially or entirely on liquid fossil fuels. That means shifting transportation, heating/cooling, and industry to run on electric power.

Electrifying everything produces an enormous drop in projected demand, since the energy-to-work conversion of electric motors is much more efficient than combustion motors, which lose a ton of energy to heat. So the amount of energy necessary to meet projected demand drops by a third just from the conversion. With some additional, relatively modest efficiency measures, total demand relative to BAU drops 39.3 percent. That’s a much lower target for WWS to meet.

Fine……. so far.

So how could the economy be electrified on this ambitious timeline? Brace yourself:

Heating, drying, and cooking in the residential and commercial sectors: by 2020, all new devices and machines are powered by electricity. …

Large-scale waterborne freight transport: by 2020–2025, all new ships are electrified and/or use electrolytic hydrogen, all new port operations are electrified, and port retro- electrification is well underway. …

Rail and bus transport: by 2025, all new trains and buses are electrified. …

Off-road transport, small-scale marine: by 2025 to 2030, all new production is electrified. …

Heavy-duty truck transport: by 2025 to 2030, all new vehicles are electrified or use electrolytic hydrogen. …

Light-duty on-road transport: by 2025–2030, all new vehicles are electrified. …

Short-haul aircraft: by 2035, all new small, short-range planes are battery- or electrolytic-hydrogen powered. …

Long-haul aircraft: by 2040, all remaining new aircraft are electrolytic cryogenic hydrogen … with electricity power for idling, taxiing, and internal power….

Electrolytic cryogenic hydrogen?  My eyes glazed over here……….

Here’s what the paper says:

Power plants: by 2020, no more construction of new coal, nuclear, natural gas, or biomass fired power plants; all new power plants built are WWS.

2020 is just FIVE YEARS away………  but who’s counting?

…to meet most energy demand with wind and solar, you have to radically overbuild electrical generation capacity. To wit: the authors estimate that total US energy demand in 2050 will average 2.6 terawatts. To produce that much energy, they propose building power plants with a total of 6.5 TW of capacity. By way of comparison, the US currently has about 1.2 TW of installed electric generation capacity, so this plan would involve expanding generation capacity fivefold in 35 years.

Here’s what that would require:

… 328,000 new onshore 5 MW wind turbines (providing 30.9% of U.S. energy for all purposes), 156,200 off-shore 5 MW wind turbines (19.1%), 46,480 50 MW new utility-scale solar-PV power plants (30.7%), 2,273 100 MW utility-scale CSP power plants (7.3%), 75.2 million 5 kW residential rooftop PV systems (3.98%), 2.75 million 100 kW commercial/government rooftop systems (3.2%), 208 100 MW geothermal plants (1.23%), 36,050 0.75 MW wave devices (0.37%), 8,800 1 MW tidal turbines (0.14%), and 3 new hydroelectric power plants (all in Alaska).

That will meet average demand. Then you need 1,364 additional new CSP plants and 9,380 50 MW solar-thermal collection systems (“for heat storage in soil”) “to produce peaking power, to account for additional loads due to losses in and out of storage, and to ensure reliability of the grid.”

Is that realistic? asks Roberts……

Uh, no says Roberts….. No it isn’t. The authors inadvertently give away the game:

We do not believe a technical or economic barrier exists to ramping up production of WWS technologies, as history suggests that rapid ramp-ups of production can occur given strong enough political will. For example during World War II, aircraft production increased from nearly zero to 330,000 over five years.

The phrase “given strong enough political will” is open-ended enough to allow virtually anything through. But what would create this political will, equal to what gripped the US in the wake of the Pearl Harbor attack? The authors don’t say much about it, other than a hopeful note at the end that their quantification of the benefits of such a transition “should reduce social and political barriers to implementing the roadmaps.”

But here’s the key thing for me.  exactly how would the US build an increasing quantity of renewables, growing year after year, while reducing fossil fuel use, year after year, at the same time..?  And we all know how much fossil energy it takes to build all those wind turbines…..

Something major would have to be abandoned.  Like maybe the US military?  After all, once the Arabs’ oil is no longer needed, it won’t need ‘defending’!  Dream on.  This is no Pearl Harbor.  This is civilisational change…..  and the only other time we’ve had change on this scale was when…..  fossil fuels were discovered and exploited!  I’m definitely not holding my breath, but you already knew this.





We will never again have as much energy as now – it’s time to adapt

5 03 2015

LOOK…..  it’s not just me anymore, the concept might be going viral soon…!

The Conversation

By Patrick Moriarty, Monash University

In the year 1800, the world used only about 10 million tonnes of coal – renewable energy, mainly biomass, dominated world’s energy supply.

By 2013, fossil fuels together supplied more than 11 billion tonnes of coal equivalent, or 87% of global commercial energy. Renewable energy sources supplied under 9% and nuclear power the remainder.

In the coming decades, fossil fuel depletion and the need to respond to climate change will ensure that fossil fuel use will fall. Because it is unlikely that either renewable or nuclear energy can take over the dominant role fossil fuels presently enjoy, I argue that the energy available to humanity will decline, and we will need to adapt to a lower energy future.

Fossil fuels’ twin constraints

The likely future production profile for fossil fuels is controversial. Nevertheless, even the International Energy Agency now accepts that peak production for conventional oil has already occurred. One recent study even argues that if business-as-usual fossil fuel use continues, combined use could peak in a decade or so.

Unconventional fossil fuel resources are probably large. However, their monetary, environmental, and carbon dioxide costs per unit of energy delivered are much larger than for conventional fuels, limiting their future use.

Especially in the US, much hope has been placed on unconventional (tight) gas, extracted by fracking. But a recent study of tight gas fields casts doubt on this optimism. Actual gas production could in future be much lower than official US forecasts. It could even peak in the next decade or so, then decline rapidly.

If the world does take climate change seriously, we would then have to leave most fossil fuels in the ground, which would be bad news indeed for fossil fuel corporations.

Could nuclear energy fill the gap?

Global nuclear output locally peaked in 2006, and was still below that value in 2013. Nuclear’s share of global electricity peaked at 17% in 1993, and by 2013 had fallen to 11%. Even the US Energy Information Administration doesn’t expect much improvement; they forecast average annual growth of 2.5% for nuclear power globally out to 2040, compared with 1.5% for all energy sources.

A key problem in rapidly expanding nuclear output is an ageing reactor fleet – in mid-2013 the weighted average age for reactors was 28 years, and rising. Over 190 nuclear plants (45%) worldwide have operated for 30 years or more. Given this ageing nuclear fleet, much new construction will be needed merely to replace retiring plants, and will not add to net capacity.

Nuclear energy is also very expensive. The cost of a 1000 megawatt plant in the US in 2009 was estimated at US$9 billion. Decommissioning old plants adds a further heavy cost, and could take decades.

The UK government now estimates that clean-up costs for the Sellafield reprocessing plant alone will be £80 billion. And despite nearly 60 years of commercial nuclear power, no permanent waste disposal repositories are in operation.

A final point. Uranium reserves may not be sufficient to support for long even a modest upturn in nuclear power, should it ever occur.

Renewable energy: essential but limited

The world has a variety of renewable sources available. Bio-mass and hydro-power are the two leading ones, but wind, geothermal, tidal and solar energy all presently contribute to global energy supply.

The only abundant renewable sources are wind and solar energy (and Australia is well supplied with both), but both are intermittent energy sources: they don’t generate without wind or sunlight. Hence reliance on renewables, not only for electricity but for other energy uses, will require conversion and storage of these intermittent energy sources.

This need for conversion and storage will raise renewable costs for each unit of energy delivered to the consumer. There is however, a further problem. Obviously, for any energy source to be viable, it must produce more energy output than the various energy inputs needed to construct and operate it – the energy ratio must be much greater than one. This ratio is already lower for renewable than for fossil fuel sources, and the need for energy storage and conversion will further lower it.

All energy sources have environmental costs, including renewable energy. Those for large hydro systems are well-known. Bio-energy crops such as ethanol from corn compete with crops grown for food for water and fertile soils. The adverse effects of these two renewable sources are better-known mainly because their output is highest.

Our low-energy future

The world will eventually have to rely again on renewable energy sources, just as it did at the start of the fossil fuel era around 1800. There is a big difference this time: in 1800 the world’s population was only about a billion. Today it is 7.3 billion, and still rising. We’ll never again have the high-energy society of the carbon civilisation.

Instead we’ll have to prepare for a low-energy future. Improving technical efficiency of energy use can help, but so far has not prevented global energy use from steadily rising.

Using less energy means less use of equipment — vehicles, air-conditioning, and other household appliances. Buildings will need to use passive solar energy more for heating, cooling, and even lighting, and generate some power from rooftop solar systems. Gardens could grow more fruit and vegetables. Households in dry regions can install tanks for rainwater.

What changes are needed for cities and their transport systems? For transport we must shift from our obsession with vehicular mobility to a focus on accessibility. Public transport will need to increase its share of a much smaller vehicular travel task. Activities will need to be more localised. Non-motorised modes can then be a major form of urban travel.

So we’ll need social efficiency improvements – we’ll need to rediscover ways of satisfying our needs with less use of energy-using devices. We can learn from earlier generations – how did they cope with far lower energy levels? We might even have something to learn from the more creative practices of presently low-energy societies.

The Conversation

This article was originally published on The Conversation.
Read the original article.





Australia headed for energy crisis……

12 07 2014

The news coming in regarding Australia’s energy security are getting more and more worrisome.  Add to that the fact we will soon be totally out of oil, and you have to wonder “what next?”.  We are seemingly led by total morons who have no idea what they are doing, consider money to be far more valuable than energy, and in the process are leading this country to rack and ruin…..  How long we have left before all our chickens come home to roost is anyone’s guess, but the mining industry is already starting to sack people (and we haven’t even hit Peak Mining yet..), [official] unemployment is back up to 6%, and it’s high time the people of Australia got rid of the idiots in charge…..

Matt Mushalik

Matt Mushalik

Energy Super Power Australia’s East Coast running low on affordable domestic gas

In July 2006 then Prime Minister Howard declared Australia an energy super power. 2 years earlier his energy white paper set the framework for unlimited gas exports while neglecting to set aside gas for domestic use. It is a bitter irony that at the 10th anniversary of this energy white paper we read that gas shortages in the Eastern market will result in price increases and that there is not even enough cheap gas for gas fired power plants which are supposed to replace dirty coal fired plants or serve as a back-up for renewable power. Wrong decisions a decade ago (or even earlier) now come to the attention of the public as price rises hit the pockets of consumers.

And what has been completely forgotten is that natural gas is the only alternative transport fuel to replace oil. Conventional oil peaked in 2006 (Yes, Prime Minister, under your watch), US shale oil is likely to peak before 2020 and the Middle East is disintegrating in front of our TV eyes faster than energy and transport planners can change their perpetual-growth mindset. An energy equivalent of 5 LNG trains is needed to replace all oil based fuels in Australia. This gas is locked away in long term export contracts. Well done. Les jeux sont faits.

(1)          Recent events

Electricity providers return to coal-fired power as natural gas export revenue soars

3/7/2014
The rising international price of natural gas is causing electricity providers to return to coal-fired power, with Queensland among the first to make the move.

Fig 1: Tarong power station in Queensland

University of Queensland energy analyst Dr Liam Wagner says the rising price will push other power companies to make similar decisions.

“Gas-fired electricity is becoming more expensive; gas in Australia is going to become more expensive with exports,” he said.

“In the future we’re going to have less gas because it’ll be far more expensive to burn it here and the gas producers will be able to make more money overseas.”
http://www.abc.net.au/news/2014-07-03/electricity-providers-return-to-coal-fired-power-as-natural-gas/5567252

Nation will be paying the bill for poor energy policy

30/6/2014
The government, unlike other governments around the world, allowed unfettered access to global markets. The building of the export gas terminals will push the prices for gas inexorably up towards world prices. Indeed, wholesale gas prices are widely forecast to more than double to match international prices.

Many in the gas industry are calling for the rapid development of environmentally suspect coal seam gas fields in NSW to counter higher prices. This policy simply will not work as prices on the East Coast are now linked to world prices. No amount of domestic production will change this dynamic.
http://www.smh.com.au/comment/electricity-and-gas-prices-why-youre-paying-more-20140629-zspp1.html

As we can see in the following report, AGL is proud to have connected the domestic market to the Asian market to make quick profits, instead of developing a plan which would use gas domestically in the medium and long-term to maximise economic benefits for the local industry. The quarry mentality continues. The expected shortages are presented as an argument for even more coal seam gas.

AGL raises spectre of gas rationing if gas shortages are not tackled, it tells the NSW Government

17/3/2014
Gas shortages will lead to rationing along with job losses, especially in Sydney’s west, energy utility AGL has warned as it intensifies pressure on the NSW government to allow the development of gas projects in the state that tap gas trapped in coal seams.
http://www.smh.com.au/business/agl-raises-spectre-of-gas-rationing-if-gas-shortages-are-not-tackled-it-tells-the-nsw-government-20140316-34vgr.html

This is the report:

AGL Applied Economic and Policy Research

Solving for ‘x’ – the New South Wales Gas Supply Cliff

March  2014

“During this discovery and appraisal phase, it was evidently clear to resource owners that the east coast gas market was not sufficiently large enough to enable the monetisation of reserves in suitable timeframes and at the scale necessary to maximise profit, and so developing an export market for natural gas in the form of LNG was a logical strategic solution. Not only would it result in the rapid expansion of aggregate demand, but would also have the benefit of linking domestic gas prices, historically ca $3 per gigajoule (/GJ), to the north Asian export market price of ca $6-9/GJ equivalent ex-field ‘netback price’ over the medium term(p 2)

“On Australia’s east coast over the period 2013-2016, we forecast that aggregate demand for natural gas will increase three-fold, from 700 PJ to 2,100 PJ per annum, while our forecast of system coincident peak demand increases 2.4 times, from 2,790 TJ to 6,690 TJ per day. This extraordinary growth is being driven by the development of three Liquefied Natural Gas plants at Gladstone, Queensland”.  (p 1)

“Almost simultaneously, a non-trivial quantity of existing domestic gas contracts currently supplying NSW will mature. Much of that gas has been recontracted to LNG producers in Queensland – thus creating a gas supply cliff in NSW. Compounding matters, recent policy developments have placed binding constraints over the development of new gas supplies in NSW”(p 1)

Fig 3: NSW gas supply cliff lead to price increases

http://aglblog.com.au/wp-content/uploads/2014/03/No.40-Solving-for-X-FINAL.pdf

These developments are a bitter irony given that the public has been told many times that Australia’s gas resources are abundant. All LNG export contracts were presented as great achievements.

(2)  Wrong decisions 12 years ago

Although LNG exports to Japan had started in 1989 (20 years contracts with 8 power and utility companies signed in 1985), the 2002 LNG deal with China was Howard’s first main contribution towards a poor energy policy.

Australia Wins China LNG Contract

8/8/2002
John Howard: “I am delighted to announce that today I have been advised by the Chinese Premier Zhu Rongji that Australia’s Northwest Shelf Venture has been chosen by China to be the sole supplier of liquefied natural gas (LNG) to its first LNG project in Guangdong province.”
http://australianpolitics.com/news/2002/08/02-08-08.shtml

5 months earlier, John Akehurst, Woodside’s Managing Director, warned in a report with mixed messages:

Mar 2002

Challenges for Australia

Australia has large gas reserves which have the potential to meet a much larger proportion of Australia’s energy requirements, including liquid petroleum requirements (via CNG, LNG, Gas to Liquids). Gas for oil substitution would deliver significant greenhouse benefits and help Australia meet its Kyoto target. Increased LNG exports would partly offset the cost of rising liquids imports and help address their impact on the balance of payments.  (p 8 )

However, greater use of gas will require substantially more investment in gas production and pipeline infrastructure. Without such investment, south eastern Australian gas markets will, within a few years, face possible gas shortages. Major consumers will find it more difficult to secure long term supply contracts on sufficiently competitive terms (p 9)

Fig 4: Superimposition Akehurst forecast with actual production

LNG export projects and gas-based value adding projects are needed to underpin the cost of bringing new gas supply sources to shore and to justify the initial investment. These types of projects compete on world markets (primarily with projects in Asia) and the provision of an internationally competitive investment environment including fiscal terms is a key driver. (p 10)
www.aspo-australia.org.au/References/Akehurst%20ABARE%202002.pdf

Of course one cannot have it both ways. To replace petrol and diesel in Australia one would need the energy equivalent of 5 LNG trains.

(3)          Howard’s flawed Energy White Paper June 2004

Fig 5: excerpt from Howard’s June 2004 energy white paper

This white paper just rationalises decisions already made earlier by formulating following policy principles  (p 53)

  • Commercial decisions should determine the nature and timing of energy resource developments, with government interventions being transparent and allowing commercial interests to seek least-cost solutions to government objectives (e.g. environment, safety or good resource management objectives).
  • Government objectives should generally be driven by sector-wide policy mechanisms rather than impose inconsistent requirements on individual projects/private investors.

And on page 128:

Australia’s gas reserves are sufficient for more than 100 years at current production levels, or more than 200 years of current domestic consumption. Furthermore, prospects for finding and proving up more gas are good, subject to finding markets. However, the location of Australia’s major gas reserves—to the north and north-west —compared with major demand locations—to the south-east—is sometimes raised as an issue (see Figure 6 and 3 in Chapter 2—Developing Australia’s Energy Resources).”

Note the term “At current production levels” which of course is irrelevant when LNG exports are doubled or tripled.

Fig 6: Map of oil and gas resources in the EWP 2004

Fig 7: Map of gas pipelines in EWP 2004

http://pandora.nla.gov.au/pan/10052/20050221-0000/www.dpmc.gov.au/publications/energy_future/docs/energy.pdf

The Geoscience Report “Oil and Gas Resources in Australia 2004 writes: Natural gas has a current “life” estimated at 65 years, but past estimates have been as low as 39 years (in 1993) and as high as 76 years (in 2001). These estimates include all resources and production in the JPDA with Timor-Leste.”

Fig 8: Geoscience Australia’s reserve to production ratios

http://www.ga.gov.au/image_cache/GA8550.pdf

The EWP 2004 continues to argue:

“Predictions are made that supplies of gas to major urban markets will run short in the next decade, as production in the Cooper Basin and Bass Strait declines. This has resulted in calls for financial support towards the building of major pipelines from either the Northern Territory (to access gas from Sunrise and other Timor Sea fields), Papua New Guinea or north-west Australia (to access gas from either Carnarvon or Browse Basins). While reserves of gas in existing fields close to southeast markets are declining, this does not represent an energy security concern.

Exploration is occurring in the south-east and is resulting in new discoveries and development, such as in the Otway Basin. The development of coal seam methane is also increasing supplies of gas in the region. In addition, holders of the large remotely located gas reserves are actively seeking markets to monetise these reserves. These efforts include actively investigating pipeline projects for bringing supplies of gas from north and north-west sources, as well as seeking LNG export sales in Asian markets. The number and activity of these competing proposals provide a degree of confidence that these supplies will become available once economic, noting that this will in all likelihood occur at higher price levels than those currently enjoyed in some south-eastern markets.

Given the size and placement of gas reserves relative to current and future gas demand, gas supply is not likely to become an issue for the short to medium term. Pre-empting market outcomes in these circumstances is unlikely to add significantly to energy security, but could inflict significant costs by precluding less costly options (such as further development of the Gippsland and Otway basins or coal seam methane).”

http://www.efa.com.au/Library/CthEnergyWhitePaper.pdf

The task of building North/West-East gas pipelines was not pro-actively followed up by State and Federal governments but dropped altogether in favour of exports. No wonder this laissez-faire approach went wrong.

CO2 emissions

The EWP 2004 argues:

“The shape of future international action on climate change is unclear, but the potential costs of future adjustments and long life of energy assets makes it prudent to prepare for the future.” ( p 131)

LNG development could increase Australia’s energy emissions by around 1 per cent of energy sector emissions. However, to the extent that exported Australian gas replaces more greenhouse intensive energy in the importing country, global emissions may decrease as a result of Australian gas production  (p 137)

This is just an argument in favour of LNG exports while none of the LNG contracts included a clause that coal fired power plants equivalent to the energy content of the gas should be decommissioned in the destination country. The above example of Queensland going back to coal shows that not even in Australia the job of using gas to reduce emissions is taken seriously.

(4) Energy super power declared in 2006

17/7/2006
The Prime Minister has outlined his vision for energy and water, saying the nation has the makings of an energy superpower.
http://www.abc.net.au/news/2006-07-17/howard-outlines-energy-superpower-vision/1803744

(5) Actual gas production

Let’s have a look at gas production statistics

Fig 9: Australia’s gas production 1977-2013

 Data are from APPEA: http://www.appea.com.au/?attachment_id=5192

We see peak gas in the Cooper basin between 1999 and 2002 at around 260 bcf. Right at that peak, Howard failed to pursue building a gas pipeline to connect Western offshore gas with Eastern gas markets.  While LNG exports on the West coast surged, the East coast remained on a bumpy production plateau.  Western Australia has a 15% Domgas policy but also did not introduce gas as a transport fuel. As WA’s LNG gas goes out the window, Queensland and NSW are forced to go for environmentally questionable coal seam gas.

Fig 10: Australia’s LNG exports

The first 3 trains (2.5 mt pa each) mainly supply Japanese utilities, while the Guangdong contract (3.3 mt pa over 25 years) required train 4 (4.4 mt pa)

(6) Conventional gas depletion in NSW, Victoria and South Australia

The Australian Energy Market Operator (AEMO) estimates in its Gas Statement of Opportunities 2013 that current conventional 2P reserves would be depleted by the mid of the next decade.

Fig 10: Depletion of conventional gas reserves (2P) in the South East

“Under the modelled production-cost conditions, consumption of Denison Trough 2P reserves occurs first in 2019. Consumption of Otway Basin 2P reserves begins in 2020, and it is completely consumed by 2023. Bass and Cooper basin conventional 2P reserves are consumed in 2025. Gippsland 2P reserves are consumed in 2026. The 2P CSG reserves in Queensland are sufficient to supply demand until the end of the 20-year outlook period.”

Fig 11: Gas shortfalls in the South East

 “Additional 3P reserves and 2C resources are available in the Otway, Bass, Gippsland, and Cooper basins. The 3P/2C reserves in the Bass, Gippsland, and Cooper basins are sufficient to ensure supply until the end of the 20-year outlook period, provided current transmission and production limitations remain unchanged. The 3P/2C reserves in the Otway Basin are only sufficient to ensure supply until 2028 or 2029, depending on the level of support the southern states receive from production in the north.

Given its role in supplying demand in Adelaide, Melbourne, and Sydney, the Otway Basin reserves consumption is a significant event, with substantial infrastructure investment required to manage changing system flows.”

http://www.aemo.com.au/Gas/Planning/Gas-Statement-of-Opportunities

(7) Domgas Alliance report

Australia Domestic Gas Policy Report (Nov 2012)

History has proven that countries with large resource endowment do not automatically gain an economic competitive advantage over countries that do not have such surplus endowment of resources. Exporting countries have to take the necessary precautions to avoid what are known to economists as the Natural Resource Curse and Dutch Disease. Australia’s large LNG export boom, that is well underway, has the capacity to trigger both of these symptoms and the subsequent regrets.

Gas resource rich countries rely on a comprehensive menu of interventions and gas regulations and policies in order to protect the national interest and the best interest of the general public regarding the use of indigenous gas production. Benchmarking illustrates that Australia does not manage its gas resources adequately to ensure that gas explorers and production companies operate in a manner that is consistent with a vibrant domestic gas market.

Gas resource rich countries, regions and continents generally export gas only after they first develop their own domestic gas market into a vibrant one that has very high gas consumption rates per capita and a high gas penetration in the total primary energy supply. To do otherwise destroys value and effectively de-industrialises the exporting region.

Australia needs to have sufficiently comprehensive policies and regulations in place in order to control and manage the export of raw commodities. Simply relying on market forces without comprehensive guidelines and controls to mitigate inequitable market power is one extreme while nationalising all resources is the other extreme. Neither of these scenarios has proven to serve the public interest very well.

http://www.domgas.com.au/pdf/Media_releases/2012/Australia%20Domestic%20Gas%20Policy%20Final%20Report.pdf

(8) Gas price outlook

The following graph from the Eastern Australian Domestic Gas Market Study by BREE, Department of Industry, shows Energy Quest’s doubling of gas prices by the end of this decade.

Fig 12: Gas prices will double

http://www.industry.gov.au/Energy/EnergyMarkets/Documents/EasternAustralianDomesticGasMarketStudy.pdf

Summary:

Decisions on excessive LNG exports have been made more than 10 years ago and are irreversible. They continued ever since – irrespective of which State or Federal governments were in power –and will lead to yet more LNG exports.  Consumers will have to pay higher gas prices for having elected these governments.  Another regret will come in the next years when it becomes clear that gas is needed as transport fuel.

Fig 13: Glimpse into the future: truckies protest drive around  Canberra’s Capital Hill

Previous articles on this website on gas

9/5/2012    Queensland plans to export more than 10 times the gas NSW needs (part 3)
http://crudeoilpeak.info/queensland-plans-to-export-more-than-10-times-the-gas-nsw-needs-part-3

6/5/2012   Howard’s wrong decisions on offshore gas exports start to hit transport sector now
http://crudeoilpeak.info/howards-wrong-decisions-on-offshore-gas-exports-start-to-hit-transport-sector-now

13/10/2011    NSW gas as transport fuel. Where are the plans?
http://crudeoilpeak.info/nsw-gas-as-transport-fuel-where-are-the-plans

11/10/2011   Australia’s natural gas squandered in LNG exports
http://crudeoilpeak.info/australias-natural-gas-squandered-in-lng-exports





The 5 key elements of sustainable transport

13 04 2014

The 5 key elements of sustainable transport, or rather ‘so called’ sustainable transport makes for interesting reading.  Some of this info doesn’t really make much sense to me…. like the C intensity of different flights (business and economy, short and long) as a function of emissions per kilometre.

Interestingly, the difference between a ‘small car’ (a car that can only do 35MPG is NOT a small car!  But then, this is written in/for the USA….) and a grid charged electric car is only 15g CO2e/km, or just 9%.  By that measure, the Suzuki Alto I drove in Tasmania emits far less than an electric car, unless that car is 100% solar recharged.  And then I’m doubtful, because since we now know solar has a shockingly low ERoEI, it might be even closer than we think.  I’m also surprised cycling’s numbers are as high as they are shown here.  Does a cyclist really consume a whole lot more food than a motorist?

The article also states “People who live in cities have lower transport emissions.  Fuel economy may be lower in city traffic but that is more than made up for by the fact that city dwellers drive far less.”  Well that depends……  since moving from the city to the country, I’ve actually halved how much I drive!  Then it continues with “In 1950 less than 30% of the world’s population lived in cites, by 2010 that figure was over 50%, and by 2030 it is expected to surpass 60%. This natural trend to urbanization is a huge opportunity to for lowering both distance travelled per person and the carbon intensity of that travel.”  Whoever wrote this has obviously no idea cities will eventually be abandoned for being too far from their food sources, and due to the fact that when grids go down, none of the lifts will work!  Nor the sewerage……..

Shrink That Footprint

sustainabletransport

Transport is responsible for around a seventh of greenhouse gas emissions globally. Of these emissions almost two thirds are the result of passenger travel while the rest is due to freight.

So passenger travel is a big deal for climate.

In the chart above, which comes from our new eBook Emit This, we compare carbon intensity of different types of passenger transport on a per passenger kilometre basis.  Using it we can explain some elements important to the development of a sustainable transport system.

1) Fuel Economy

Our chart today compares the carbon intensity of different transport modes, per passenger kilometre.  The better fuel economy gets the lower emissions go.  If you just look at the cars you’ll see the large car (15 MPG) has emissions almost three times that of the hybrid car (45 MPG).

By improving fuel economy we can get the same mileage while generating fewer emissions.  Something that is achieved by making engines more efficient, vehicles lighter and bodies more aerodynamic.  But even then combustion engines remain relatively inefficient and produce emissions at the tailpipe, so improving them is really just a stop-gap en-route to sustainable transport.

2) Occupancy

The cheapest and simplest way to lower the carbon intensity of a passenger kilometre is to stick more people in the vehicle.  In each of the figures above car occupancy is assumed to be an average of 1.6 passengers (including the driver).  But most cars are designed for 5 people.

If you take a look at the bus examples the importance of occupancy becomes even more stark.  The local bus example has emissions seven times higher than the school bus.  While there routes may vary a little they are both diesel buses.  The main difference is that the school bus has very high occupancy.

With notable exception of flying public transport tends to have quite low carbon emissions, due largely to having relatively high occupancy.

3) Electrification

In the absence of breakthroughs in second generation biofuels electrification is the most important pathway to low carbon transport.

Electric cars using low carbon power have footprints less than half that of the best hybrid, even after you account for their larger manufacturing footprint.  Right down the bottom of our chart is the high-speed EuroStar rail which used low carbon French electricity. Though not on our chart the lowest carbon transport on earth is probably electrified public transport in a place like Norway where electricity generation is almost carbon free.

While there is a natural tendency to obsess about the electrification of cars, there are lots of interesting innovations occurring in the electrification  of rail, motorbikes, scooters and bikes.

4) Pedal power

They may be a bit low tech for some, but when it comes to carbon emissions bicycles are pretty cutting edge.  Even when you account for the foodprint of excess energy used when cycling, the humble bike is incredibly low carbon.

Bikes have obvious limitations around speed and distance, but for short trips in places with good infrastructure they are hard to beat in terms of carbon. They also have a great synergy with public transport systems like intercity rail.

5) Urbanization

Each of the first four elements we have described above refers to improving the carbon intensity of transport.  But emissions are a function of both how we travel and how far we travel.  One thing that tackles both of these issues is the trend towards urbanization.

People who live in cities have lower transport emissions.  Fuel economy may be lower in city traffic but that is more than made up for by the fact that city dwellers drive far less.  Electrification of public transport is more economic and practical in cities.  Occupancy on public transport systems is much higher.  And access to infrastructure for both cycling and walking is often better.

In 1950 less than 30% of the world’s population lived in cites, by 2010 that figure was over 50%, and by 2030 it is expected to surpass 60%. This natural trend to urbanization is a huge opportunity to for lowering both distance travelled per person and the carbon intensity of that travel.

Those are our five elements of sustainable transport: fuel economy, occupancy, electrification, pedal power and urbanization.

Check out our free new eBook Emit This for more ideas on getting more life out of less carbon.

Source: Shrink That Footprint. Reproduced with permission.