Wednesday, 7 November 2007

IEA - energy needs gargantuan - Coal only way to go

Today's four trend signaling important news:
  1. Next 10 years critical for global energy supply
  2. Energy agency urges higher oil inventories
  3. Coal in 3 nations could undo much of world's efforts
  4. Surge in oil prices not just speculation
In plain English:
  • we are running low on our inventories (short term interim storage)
  • we are running out of production capacity (oil to use)
  • growth of consumption is too fast (we can't meet demand)
  • price is going through the roof (breaking historical inflation adjusted price within year or two?)
  • coal use is increasing in developing countries (800 new coal power plants in next 20 years)
  • in addition coal use may need to be increased to mitigate part of oil shortfall (more coal)
  • all of this is likely to put the climate into a really bad state (coal is a killer for climate)
  • we are (have?) running out of time on energy transition & the climate (minor corrections and industry self-regulation won't be sufficient anymore)
Now, this is all old news for those who follow the news with any diligence.

Why this is news today, is because the normally conservative International Energy Agency (IEA) is now saying the same.

In short, the time for peak oil denialists and climate laggards has basically ran out.

What are the options available?

  1. Cut energy consumption radically, cut GHG emissions radically, initiate an ordered powerdown, instantiate the Rimini Protocol and start planning for a no-growth economy.

  2. Cut energy consumption radically, move to super-high efficient technology at historical record speed, do NOT move the energy savings into new economic endeavors (i.e. cut down on absolute energy consumption as well), install carbon capture on all existing and new coal plants at a speed & cost that seems unimaginable (without increasing electricity costs painfully), find not-yet-existing oil alternatives and scale them up fast, move growth radically more from material manufacturing sector to service and immaterial goods sector.

  3. Risk everything. Business-as-usual. Hope the markets will fix everything and that we will rebound fast from whatever chaos we find ourselves in. Brace for and learn to live with climate and energy chaos in the interim.
Now, both of these options are daunting in size and if the current indication about climate/energy predicament is any indication of the transformation speed required, then the time is also very precious commodity.

It seems that now we are again standing at a fork in the road. Which way do we go? If history is any indication, BAU (Business As Usual) it will be, perhaps with some resources wars thrown in (this is common at the end of commodity bull cycles when finance markets start to cough).

Whatever the choice, we must choose or reality will do the choosing for us.
"Reality is that which, when you stop believing in it,
doesn't go away.
" - Philip K. Dick