Securing the UK's Energy Future (for us)

One thing leads to another. The APPGOPO report covered in the previous post refers to the first report by the UK Industry Taskforce on Peak Oil & Energy Security (ITPOES) on "The Oil Crunch: Securing the UK's Energy Future", which has been out for half a year, but I hadn't come across before.

The impact of peak oil isn't hard to anticipate. It's not a volume constriction, it's a price constriction (putting aside for the moment complications like EROEI and carbon impacts). We are more than halfway through the "easy oil". If demand exceeds supply of easy oil, as it will soon once economies start to grow again, the marginal supplies will come from increasingly expensive producers, which will drive up prices dramatically. Costs of carbon and the recursive effect on prices of low EROEI from more marginal production will exacerbate the price-impact. The threat is that we won't be able to afford to do many of the things that were fundamental to our economy, not that the oil couldn't be made available for a while longer if we could afford it. But it may feel like an insufficiency of oil, there not being much difference in practice between "not enough" and "not enough that we can afford".

What won't we be able to afford? Simple: road and air transport.* These two forms of transport are almost completely dependent (99%) on oil, and conversely, the vast majority of our oil consumption (75%) goes to transport (12% goes to non-energy uses like petrochemicals and plastics, less than 0.5% goes to electricity production, and the rest goes to heat). We could relatively easily replace oil in the other energy sectors, but on the road and in the air, we are not remotely ready for the dislocation of high oil prices.

So what do this small group of corporations, who have appointed themselves our spokesmen on this issue, have to say? Their assessment of the risk is well done, but (as usual when a handful of corporations get together on a mission) the solutions they favour are not.

"Peak oil is about much more than transport" (p.28). What a surprise. A group that contains a VILE company, a solar-panel supplier, two businesses in the construction sector, a search-engine provider (???), and three public-transport operators think that peak oil means we need more government intervention in lots of areas that have little to do with peak oil. For instance, they think we need much more solar power (and support to deliver it). They think we need much more (subsidy for) wind and nuclear power (coincidentally, Scottish & Southern Energy, their VILE-company member, has substantial plans for wind and nuclear). We need massive efforts to encourage (read: support) energy-efficient construction. And, on the transport front, we need greater emphasis on (support for) bus and rail public-transport options. The latter is not unreasonable (if self-interested and marginal), and they also promote some more obvious and sensible solutions for the long-run, like increased use of electric transport options, but they have a wilful determination to ignore the technical challenges, they have no suggestion for something as key as international air transport (other than that we shouldn't have any more of it), and they have lots of suggestions for stuff that is marginal at best but which happens to be of interest to their members. 

Their wilful ignorance of technical challenges, blind optimism, and enthusiasm for the irrelevant (if not downright unhelpful) reaches its peak with their espousal of a 100% renewable-energy objective (p.6).

"The renewables industry is confident that 100% renewables energy supply is possible in 20-40 years, according to the overwhelming consensus of participants at the Tenth Forum on Sustainable Energy, held in Barcelona in April. They should be given the opportunity to prove it."

This is backed up later (p.39) by reference to a number of studies (by renewables enthusiasts) claiming to show that 100% renewables is feasible.

100% renewables may be feasible in the long-run (and necessary, as geological resources get harder to exploit). And heading in that direction may well be wise, so long as it is done through solution-neutral price signals rather than by picking "winners". But, if we want to head aggressively for this option in the short-term, we will have to cut our energy consumption to a small fraction of what it is today, and change our modes of behaviour to live a somewhat random life ruled by the vagaries of the weather.

To suggest that we can somehow switch to a 100% renewable system for all our energy needs (electricity, heat and transport) without major costs and changes to our way of life is absurd. The resource limits on reliable renewables (biomass, tidal and geothermal), and the intermittency challenges of the other renewable technologies are routinely underestimated by renewables enthusiasts, who have grand plans (based on computer models, hope, economic illiteracy and the magic power of vast government subsidy) for how we will get round these problems. They repeatedly confuse electricity and energy, and forget that we aren't likely to be powering passenger airplanes with electricity any time soon, nor going very far or fast in our electric road vehicles given the current state of battery technology and availability of the materials needed to produce them, nor heating many of our buildings with power from windmills and solar panels. These remote technical possibilities affect precisely those parts of our energy-use that are most exposed to the impacts of peak oil. In time, we will discover technical and economic solutions to some of this, but we don't know what they will be, they are some way off, and some of it will require us to adapt to the new constraints rather than technology adapting to allow us to carry on as before. Meanwhile, ITPOES predict further tightness in the oil market from around 2013. There is a dislocation between the timeframes and scopes of problem and solution.

They follow their advocacy of a 100% renewables objective with the following:

"Nuclear decisions should be taken rapidly, and government should ensure that uncertainties over the nuclear renaissance should not act as barriers to the mobilisation of energy efficiency and renewables."

No need. A government that followed their advice in the previous paragraph would already have said no to nuclear. Who do they think will build a nuclear power station, regardless of the policy treatment of nuclear, if the government is committed to a 100%-renewable future? Who is the nuclear producer going to sell power to, when all energy needs are already being met by renewables? It is targets like 100% renewables (or even a lesser target like 30% renewable electricity, which still requires a capacity in excess of total electricity demand at many times of year) that introduce the deterrence and uncertainty to investment in other forms of energy infrastructure. What we really need, if we are to reduce uncertainties and barriers to investment, is the abolition of targets, caps, obligations, and other micro-managing interventions that, by complicating future projections and financial models, significantly increase the sovereign risk faced by investors. And anyway, what has this got to do with peak oil? Nuclear power will not be filling the gap left by tightening oil supplies from 2013. It's not a transport fuel, and the new power stations won't be ready before 2018 at the earliest.

Another demonstration of the report's partiality is in their explanation of the decline in oil consumption from 2005 to 2007, following years of gradual escalation. The report suggests (note 55) that this can be put down to a drop in non-energy use (no explanation why) and domestic consumption, which "could well be due to warmer weather (with a bit of help from improvements in energy efficiency)". No mention of the effect that a rising oil-price may have had, nor of the role of low oil-prices in increasing consumption before that. That would require the participants to admit that demand for energy is not as inelastic as is often claimed; that would risk governments abandoning the micro-managing measures that they adopt on the assumption that simple price-based mechanisms will be ineffective on inelastic demand; and that would risk real progress being made on our fossil-fuel dependency, threatening the margins and volumes of companies who had relied on the micro-managing measures to embed their market power and to achieve no meaningful efficiencies that might damage their sales.

* Non-energy use is also under threat, but the alternatives for some petro-chemical technologies are clearer and closer to market, and the problem is of a different order of magnitude.