Peak Everything

by Richard Heinberg

  This pattern of unrealistic optimism on the part of the official forecasting agencies has continued with regard to other countries, and thus probably, by extrapolation, to their forecasts for the world as a whole. So it might be unrealistic for the climate activists to give credence to such forecasts, or even to assume that the truth lies equidistant between the extreme resource estimates of the so-called optimists and pessimists.

  Parenthetically, both Peak Oil and Climate Change activists have reasons (though different ones) to regard ExxonMobil as an arch-foe. That company has consistently funded groups undermining public concern about Climate Change. And recently ExxonMobil has placed prominent magazine ads proclaiming that the global oil production peak is so far in the future that we need not worry about it. One ExxonMobil executive has been widely quoted as saying, “Peak oil theory is garbage.”

  Differing Recommendations

  These differences in perspective lead to somewhat divergent policy recommendations.

  For Climate Change analysts and activists, emissions are the essence of the problem, and so anything that will reduce emissions is viewed as a solution. If societies shift from using a high-carbon fossil fuel (coal) to a fuel with lower carbon content (natural gas), this is an obvious benefit in terms of climate risk — and a potentially easy sell to politicians and the general public, because it merely requires a change of fuel, not a sacrifice of convenience or comfort. And so, again, climate analysts tend to accept at face value official high reserves estimates and production forecasts — in this case, for natural gas.

  However, as with oil, production forecasts by the official agencies for natural gas supply have tended to be overly robust. For example, in the US the EIA issued no warning whatever of future domestic natural gas problems prior to the supply shortfalls that became painfully apparent after 2000, as prices more than quadrupled. Nevertheless, a few industry insiders had noted disturbing signs: companies were drilling at an accelerating pace in order to maintain production rates, and newer fields (which tended to be smaller) were depleting ever more quickly. By 2003 the US Energy Secretary was proclaiming a natural gas crisis. In the following three years, warm weather (perhaps due to Climate Change) and demand reduction (from the off-shoring of many industrial users of natural gas due to high domestic prices) led to a partial relaxing of prices and general complacency. However, US domestic production appears set to decline further, and likely at a rapid pace.

  For depletion analysts and activists, societal dependence on vanishing, non-renewable energy resources is the essence of the greatest dilemma that our society currently faces. We have created a complex, global economic infrastructure built to run on fuels that will start to become scarce and expensive very soon. From this perspective, natural gas is not a solution but an enormous problem: even if the global peak in gas production is 10 to 20 years away, regional shortages are already appearing and will continue to intensify. This means enormous risks for home heating, for the chemicals and plastics industries, and for electrical power generation. Natural gas is and will always be a fuel that is, for the most part, regionally traded (as opposed to liquid fuels, which are more easily shipped). Thus for many nations critical to the world economy — the US, Britain, and most of continental Europe — gas cannot serve as a “transition fuel.”

  Coal presents another controversial topic for both depletion and emissions analysts. Most members of both groups feel a keen need to articulate some politically palatable transition strategy so as to gain the ears of policy makers. If coal were entirely ruled out of the discussion, such a strategy would become more difficult to cobble together. However, the two groups tend to think of very different future roles for coal.

  Some emissions activists and analysts look to “clean coal” as a partial solution to the problem of Climate Change. “Clean coal” practices include gasifying coal underground, in situ, separating the resulting greenhouse gases (carbon dioxide and carbon monoxide), and then burying these in ocean sediments or old oilfields or coal-mines. This theoretically allows society to gain an energy benefit while reducing additions to atmospheric greenhouse gases.

  Many depletion analysts are skeptical of such “carbon capture” schemes, believing that when the world is mired in a supply-driven energy crisis, few nations will be adequately motivated to pay the extra cost (in both financial and energy terms) to separate, handle, and store the carbon from coal; instead they will simply burn whatever is available in order to keep their economies from crashing.

  Some depletionists see the world’s enormous coal reserves as a partial supply-side answer to Peak Oil. Using a time-proven process, it is possible to gasify coal and then use the resulting gases to synthesize a high-quality diesel fuel. The South African company Sasol, which has updated the process, is currently under contract to provide several new coal-to-liquids (CTL) plants to China and has announced a plant in Montana.

  CTL is not attractive to emissions analysts, however. While some carbon could be captured during the gasification stage (at a modest energy cost), burning the final liquid fuel would release as much carbon into the atmosphere as would burning conventional petroleum diesel.

  A few depletion analysts tend to take a skeptical view of future coal supplies. According to most widely-quoted estimates, the world has one to two hundred years’ worth of coal — at current rates of usage. However, factoring in dramatic increases in usage (to substitute for declining oil and gas supplies), while also taking account of the Hubbert peak phenomenon — extraction rates will inevitably begin to decline long before the coal actually runs out — and the fact that coal resources are of varying quality and accessibility leads to the surprising conclusion that a global peak in coal production could arrive as soon as a decade from now.1 That raises the question: does it make sense to place great hope in largely untested and expensive carbon sequestration technologies if the new infrastructure needed will be nearly obsolete so soon? Imagine the world investing trillions of dollars and working mightily for the next 20 years to build hundreds of “clean” coal (and/or CTL) plants, with the world’s electrical grids and transportation systems now becoming overwhelmingly dependent on these technologies, only to see global coal supplies dwindle. Would the world then have the capital to engage in another strenuous and costly energy transition? And what would be the next energy source?

  Other low-grade fossil fuels, such as tar sands, oil shale, and heavy oil are also problematic from both the depletion and emissions perspectives. Some depletion analysts recommend full-speed development of these resources. However, the energetic extraction costs for them are usually quite high compared to the energy payoff from the resource extracted. Their already-low energy profit ratio (also known as the energy returned on energy invested, or EROEI) would be compromised still further by efforts to capture and sequester carbon, since, as with coal, these low-grade fuels have a high carbon content as compared to natural gas or conventional oil. Currently, natural gas is used in the processing of tar sands and heavy oil; from both an energy and an emissions point of view, this is rather like turning gold into lead. Many depletionists point out that, while the total resource base for these substances is enormous, the rate of extraction for each is likely to remain limited by physical factors (such as the availability of natural gas and fresh water needed for processing), so that synthetic liquid fuels from such substances may not help much in dealing with the problem of oil depletion in any case.

  Supply Side, Demand Side

  By now a disturbing trend becomes clear: the two problems of Climate Change and Peak Oil together are worse than either by itself. Strategies that are proposed to keep lights burning and trucks moving while reducing emissions are questionable from a depletionist point of view, while most strategies to keep the economy energized as oil and gas disappear imply increasing greenhouse gas emissions. As we will see, the closer we look, the worse it gets.

  As noted above, both groups need to design a survivable energy transition strategy in
order to sell their message to policy makers. Carbon emissions come from burning depleting fossil fuels, the primary energy source for modern societies. Thus both problems boil down to energy problems — and energy is essential to the maintenance of agriculture, transportation, communication, and just about everything else that makes up the modern global economy.

  With regard to both problems there are only two kinds of solutions: substitution strategies (finding replacement energy sources) and conservation strategies (using energy more efficiently or just doing without). The former are politically preferable, as they do not require behavioral change or sacrifice, though they tend to require more planning and investment. The least palatable option, from a political standpoint, is also the quickest and cheapest — doing without (curtailing current usage). We have gotten used to using enormous amounts of energy at unprecedented rates. If we had to use much less, could we maintain the levels of comfort and economic growth that we have become accustomed to? Could we even keep the lights on?

  Several questions become critical: How much of a reduction in energy supply will be imposed by the peaking of production of oil, natural gas, and coal? How much will be required in order to minimize Climate Change? And how much of that supply shortfall can be made up for with substitution and how much with efficiency, before we have to resort to curtailment?

  Climate analysts agree the world needs to reduce emissions considerably. In 1996 the European Environment Council said that the global average surface temperature increase should be capped at a maximum of two degrees Celsius above pre-industrial levels, and that to accomplish this the atmospheric concentration of carbon dioxide (CO2) will have to be stabilized at 550 parts per million (the current concentration is 380 ppm, though the addition of other greenhouse gases raises the figure to the equivalent of 440 to 450 ppm of CO2). But recent studies have tended to suggest that, in order to achieve the two degree cap, much lower CO2 levels will be needed. One study by researchers at the Potsdam Institute for Climate Impact in Germany concluded that — again, to keep the temperature from increasing more than two degrees Celsius — the atmospheric concentration target should be 440 ppm of CO2 equivalents, implying that the atmospheric concentration of greenhouse gases will need to be stabilized at current levels. But, to make the challenge even more difficult, it turns out that the biosphere’s ability to absorb carbon is being reduced by human activity, and this must be factored into the equation; by 2030, this carbon-absorbing ability will have been reduced from the current 4 billion tons per year to 2.7 billion. Thus if an equilibrium level of atmospheric carbon is to be maintained through 2030, emissions will have to be reduced from the current annual level of 7 billion tons to 2.7 billion tons, a reduction of 60 percent. It is hard to imagine how, if that translated to a 60 percent reduction in energy consumption, it could mean anything but economic ruin for the world.

  Depletion analysts look to about a two percent per year decline in oil extraction following the peak of global oil production, with the rate increasing somewhat as time goes on. Coal extraction, following the production peak, will probably decline more slowly, at least for the first decades. Regional natural gas decline rates will be much steeper. The dates for global production peaks for these fuels are of course still a matter for speculation; however, it is reasonable to estimate that we might see a 25 to 45 percent decline in energy available to the world’s growing population over the next quarter-century as a result of depletion.

  Everyone would be happy if it were possible simply to substitute renewable sources of energy for oil, coal, and gas, and both depletion activists and climate activists support the expansion of most renewable energy technologies, including solar and wind. But there are realistic limits to the scale at which renewables can be deployed, and to the speed with which this can be accomplished.

  Not all depletion or emissions activists support the large-scale development of biofuels (ethanol, butanol, and biodiesel), which are the only realistic renewable replacements for liquid transport fuels, because of the low EROEI entailed in making these fuels, and because these substitutes imply worrisome tradeoffs with food production.

  Some depletionists and some climate analysts recommend expanding nuclear power, arguing that technological advances could make it a safe and affordable alternative. Others argue against it, noting that high-grade ores will be depleted in 60 years, and that the entire nuclear cycle of mining, refining, enrichment, plant construction, and so on (excluding fission itself ) is carbon intensive. One analysis suggests that, from the mid-2020s, the task of clearing up all past and future nuclear wastes will require more energy than the industry can generate from the remaining ore.2

  Then comes the equity issue. A few nations have benefited disproportionately from fossil fuels. If “developing” nations that have not yet had that opportunity are now required to forgo it, they will understandably perceive this as grossly unfair. They are unlikely to agree to dramatically reduce their own carbon emissions (i.e., fossil fuel consumption) unless already-industrialized nations lead the way and reduce theirs proportionally more. Also, it’s necessary that at least a few of the “developing” nations — the ones that are rapidly industrializing now — be brought on board any global emissions or depletion agreement for it to have real meaning, as they have the economies with the fastest growth in energy demand. The prime example: while for practical purposes Americans will probably continue to lead the world in per capita fossil fuel use for some time, China has overtaken the US as the world’s foremost national emitter of greenhouse gases.

  Theoretically, the fairest solution, from an emissions point of view, would be to assign each living human an equal per capita right to emit carbon, and to create a market for those rights, so that continued disproportionate fossil fuel consumption by already-industrialized nations would entail substantial payments to less-industrialized nations. Fairness would also imply a steeper rate of reduction in fossil fuel consumption by the heavier users — a cut in emissions of considerably more than 60 percent.

  However, to ask industrialized nations to share their wealth with less-industrialized nations while the former are engaged in a partially self-imposed energy famine seems highly problematic. What politician could demand the extra sacrifice? What public would vote for such a policy?

  Where does this leave us? Let’s assume that the more pessimistic critical analyses of both groups are correct. That is, let’s say that a 60 percent reduction in emissions is needed within 25 years, that natural gas will not be available in sufficient quantities to serve as a transition fuel, that “clean” coal will not help much, that low-grade fossil fuels will not make up for shortfalls in oil production, that CTL production will remain marginal, that renewables will not come on line in sufficient quantity or soon enough, that nuclear power won’t come to the rescue — and that modest contributions from these sources added together will not come close to making up for shortfalls from oil, gas, and coal depletion or from the voluntary phasing out of carbon fuels.

  If this turns out to be the case, we may face a staggering need for energy efficiency and curtailment. Neither group wants this as its political platform.

  Common Ground

  As we have seen, there are understandable reasons for some climate activists to ignore the arguments and priorities of depletionists, and vice versa. Dealing with only one of the two problems is much easier than confronting both. But our goal must be to deal with reality, rather than merely our preferred image of reality, and reality is complicated. Our world faces the interacting impacts not only of Peak Oil and Climate Change, but also of water scarcity, overpopulation, over-fishing, chemical pollution, and war (among others). In the end, there are too many of us using too much too fast, while competing for dwindling resources.

  What would it take to solve all of these problems at once? A good start would be to require a global across-the-board 2 to 5 percent per year reduction in fossil fuel consumption and the provision of substantial financial and tec
hnical aid by industrialized nations to less-industrialized nations in creating as much of a renewable energy infrastructure as is possible. But to the patient (the main fossil fuel users) this medicine might seem worse than the disease. A grand plan like this has almost no chance of gaining political backing.

  Realistically, we are left with the customary policy tools meant to ameliorate the world’s ills piecemeal: emissions and depletion protocols, tradeable quotas, emissions rights, import and export quotas, carbon taxes, and cap-and-trade mechanisms.

  Thus for practical reasons it is probably inevitable that, to a certain extent at least, emissions and depletion activists will continue to pursue their separate policy goals. But it makes sense for the two groups to be informed by one another, and to cooperate wherever possible.

  It is fairly obvious why such cooperation would benefit the depletionists: Climate Change is already a subject of considerable international concern and action, whereas Peak Oil is still a relatively new topic of discussion. This is partly because Climate Change fits well with the environmentalists’ previous pollution-centred campaigns.

  But how would such cooperation aid emissions activists?

  In a word: motivation. As discussed earlier, emissions activists appeal to an ethical impulse to avert future harm to the environment and human society, while the Peak Oil issue appeals to a more immediate concern for self-preservation. In extreme circumstances, the latter is unquestionably the stronger motive. Strong motivation will certainly be required in order for the people of the world to undertake the enormous personal and social sacrifices required in order to quickly and dramatically reduce their fossil fuel dependency. Sustainability and equity are issues that are hard enough to campaign on in times of prosperity; when families and nations are struggling to maintain themselves due to fuel shortages and soaring prices, only massive education and persuasion campaigns could possibly summon the needed support.