IEA's World Energy Report: The End of Oil as We Know It, Part 2
There will be an energy crisis in the near future that will make anything we've experienced so far seem like a pleasant memory.
"Tomorrow's [economic] expansion was collateral for today's debt."
-- Colin Campbell
For those unfamiliar with my work, the job I do most frequently is a combination of information scout (I connect dots) and analyst (I dig deep).
Let's head deeper into the World Energy Outlook (WEO) 2010 report. Here's my quick summary of the report.
- Between 2008 and 2035, total energy demand grows by 36%, or 1.2% per year; far less than the 2% rate of growth seen over the prior 27 years. (Note: This comes from the "New Policies Scenario," which is the middle scenario of three in the report. We'll discuss this one throughout.)
- Renewables will be contributing very little to the overall energy landscape, just 14% of the total, and this includes hydro.
- 93% of all the demand increase comes from non OECD countries (mainly China and India).
- Oil remains the dominant fuel (although diminishing in total percentage).
- The global economy will grow by an average of 3.2% per annum.
- It's time to cut demand for oil by raising prices (they recommend ending energy subsidies for fossil fuels as the mechanism).
- Conventional oil has peaked, and this is a permanent condition. All oil gains from here forwards will come from non-conventional sources and gas and coal-to-liquids programs.
So how does the IEA suppose that oil growth can slow down to a paltry 0.5%/year, see China and India increase their consumption massively, and still have everything balance out? We all know that China and India (et al) have been growing their oil consumption by massive percentages in the recent past, and there's some evidence that we can expect more of that behavior in the years to come.
There are enormous implications to that series of bullet points, if one stops to think about them in total. One glaring difficulty in all of this is that the IEA notes that China and India are going to consume nearly every drop of any potential future increases in oil production. Yet overall production is only going to grow by a meager 0.5% per year.
In fact, this was what India's Premier told the world on November 1, 2010:
Premier Manmohan Singh told India's energy firms on Monday to scour the globe for fuel supplies as he warned the country's demand for fossil fuels was set to soar 40 percent over the next decade.
The country of more than 1.1 billion people already imports nearly 80 percent of its crude oil to fuel an economy that is expected to grow 8.5 percent this year and at least nine percent next year.
So, yes, it's pretty much expected that China and India, et al., will be increasing their consumption by rates much (much) higher than 0.5%, which means, logically, that some other countries will have to consume at negative rates in order for the equation to balance.
And this is exactly what the IEA has modeled and proposed:
I want to draw your attention to the green circles that I placed on there. Yes, you are reading that right. To balance everything out, the IEA has modeled the OECD as actually decreasing its consumption of coal and oil by significant amounts (that's what a negative "incremental demand" requires: a decrease in current consumption). The difference is made up from a mix of renewables, biomass, nuclear, and natural gas.
Never has such a thing happened in the entire industrial history of the OECD. Never. There are no models or examples to follow here. No guidance is offered to suggest how such a monumental feat will be accomplished, beyond tossing a few more bucks at renewables, as if money alone could correct for vast differences in energy quantity and quality.
To suggest that the next 25 years for the OECD will be characterized by a significant reduction in the use of the two primary industrial fuels is an astonishing claim, and so it deserves to be carefully examined. But, speaking bluntly, this is not going to happen.
Any suggestion that the OECD is going to reduce its use of coal for electricity and oil for liquid fuels has to be accompanied by evidence of massive programs of investment towards energy transitioning that, truth be told, have to have been started a decade or more before the arrival of peak oil. Hinting that it might possibly be a good idea to move these renewable dreams to the drawing board after the advent of peak oil is akin to playing tunes on a sinking ship; at best, you are providing a captivating diversion.
Regardless, no such programs operating at appropriate scale are even remotely in sight.
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