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20 February 2013

Resource Crunch or Climate Change? Which keeps you awake at night?

One of the most interesting debates at last week's Corporate Sustainability Mastermind Group (CoSM) was which is the most pressing industry for business - maintaining a sustainable supply of raw materials, water and energy, or climate change? I must admit it was a little naughty of me instigating it as there is no simple answer, but sometimes I like being a bit naughty.

It's a tricky one because they're quite different issues:

A resource crunch can happen suddenly, the climate changes gradually;
A resource crunch will affect a business directly, but climate change impacts will occur over a wide geography and will hit some individuals and organisations more than others;
A resource crunch will have much more predictable impacts, climate change depends on lots of different factors;
A resource crunch is arguably simpler to address through substitution, whereas climate change requires concerted effort across the globe.
A resource crunch is much easier to understand and communicate than climate change;
A resource crunch is more difficult to argue against than climate change (although some do try).

It may be, of course, that given the relative ease of getting action on a resource crunch, the crafty sustainability practitioner may want to use that to get a foot in the door of the boardroom and other citadels of power, and then expand the sustainability conversation to cover other issues. Sometimes it pays to be a little bit naughty.

Tags: climate change, green jujitsu, peak oil, resource crunch

Posted by Gareth Kane no responses

21 August 2012

Musings on a Green Economy pt1: After the Crash

I'm officially on holiday for the next two weeks, but due to the size of the bump on my pregnant partner, we're holidaying at home - the dreaded "staycation". Because holiday is time for relaxation and reflection, I'm going to run a series of blog posts about how we get to a Green Economy. Here's the first.

When the run on Northern Rock bank started in 2007, signalling the start of the implosion of the over-inflated economy, I was in the South of England at a political conference. On the silent screens showing BBC24 around the venue, we watched images of queues outside Northern Rock branches in my adopted hometown of Newcastle and it was clear that something was very, very wrong.

About a year later, I was drafted onto a "task and finish" panel which had been tasked with drawing up a plan for what local Government could do in the North East of England to help rebuild the economy. In my opening remarks, I spoke about how I thought we should be looking at the crash as an opportunity not to put the economy back as it was, but as we'd like it to be - and I made the case for a green economy. This received appropriate murmurs of assent around the table, but as the panel listened to the invited 'experts' on economic recovery, I grew frustrated with the lack of any real ambition from anyone to change anything.

Five years on from the crash and the economy is, on the face of it, stagnating. However I am one of those who believes the UK economy is much stronger than the headline figures suggest and that we're just looking at what's left when you remove the debt-driven bubbles in the financial services and construction industries which gave us the illusion of wealth in the pre-crash era. But a big factor which most mainstream commentators seem to be ignoring is the price of oil. As I have argued before, it was probably the price of oil which forced up the cost of living and burst the debt bubble and according to Fatih Birol of the International Energy Agency, the continuing high price of oil is a big contributor to that economic stagnation. So it is not a question of 'green or growth', so much as 'green or stagnation.'

Many of you will be reading my analysis and thinking "Aha, but he's still working in the old economic paradigm of 'growth is good'" and you'd be right. We do need to take a step back and ask the most important question you can ever pose - "Why?" The current economic growth paradigm is like the proverbial shark - if it doesn't keep moving forward, it dies. Economic growth may not increase our standard of living, but economic decline destroys it. And of course there is a close correlation between economic growth (in terms of GDP) and carbon emissions/other environmental strains. The alternatives are 1. switch our main measure of well-being away from GDP, 2. move to a 'steady state' economy which is designed not to grow, or 3. make the decoupling happen.

My concern about a steady state economy is no-one has any experience of how to make this work nationally or internationally. In fact you could argue we have a steady state economy, and Germany and Japan have gone through their own recent periods of stagnation, and nobody seemed to enjoy the experience. A revolutionary approach cold backfire in a time of great uncertainty and instability.

In terms of replacing GDP, a number of 'happiness indexes' have sprung up which try to combine a whole range of factors into a single figure. The problem with such indicies is their complexity makes it very difficult to link them to particular policy interventions. I suspect a simple 'GDP plus' (or minus as the case may be) measure which factors out 'harmful' economic figures might be more practical in the short to medium term for managing the economy, with the happiness indicies used to monitor the wider health of society. And going back to the link between growth and carbon emissions - I can't help thinking we have never really tried to decouple the two and that the price of oil is now forcing us to do so.

So, GDP plus and rapid greening of the economy is my recommended remedy to repair the economy - next time, I'll be ruminating on some visions of what that green economy might look like - click here for pt2.

Tags: gdp, growth, low carbon economy, oil prices, peak oil

Posted by Gareth Kane no responses

17 August 2012

Objectivity is Subjective

One of the most frustrating things about this business is the politicisation of environmental issues, and how difficult this makes getting objective analyses. Whether you want a view on climate change, acid rain or peak oil, objectivity seems in short supply. Distorted graphs, cherrypicked data and straw man arguments are plastered across the web and much of the media.

For example I read a piece on peak oil this week which described the concept as "idiocy" as oil "will never run out" because long before it did, prices would rise and force investment in alternative energy sources. Er, that's peak oil theory you're agreeing with there, pal, if you bothered to find out what it actually is.

Readers of my books will have seen a version of these perceptions of the environment (the red ball) in a slightly different format. The three here are:

Individualist: believes the environment is robust and there to be exploited - the red ball will always roll back to the safe centre - typical of free marketeers and those who 'disbelieve' in climate change;
Hierarchist: believes the environment can be exploited within safe limits - the red ball is OK unless you push it too far - typical of Governments and scientists;
Egalitarian: believes the environment is fragile and should be protected at all costs - the red ball is doomed if you move it even slightly - typical of green pressure groups.

The problem with the extreme mindsets is that people tend to develop them and stick to them tribally, exaggerating data which supports their position and ignoring anything that disagrees with it - a phenomena known as confirmation bias. Conflict happens when the hierarchists start to see society nearing one of the safe limits - then from the viewpoint of the individualists, they start to look like the destested egalitarians and all hell breaks loose.

I find all this tremendously frustrating, as I'm basically a hierarchist and I'd really like to know where exactly we are in relation to, say, peak oil. It takes too long to check out every 'sceptical' argument from individualists or wild claim from egalitarians yourself (and I've been through a hell of a lot of them on climate change), so it comes down to trying to find someone you trust to be objective. So I have these rough rules of thumb:

Never trust a think tank or pressure group - you can tell what the Adam Smith Institute and Greenpeace's position will be on renewable energy before you open the report, so why bother?
Dismiss any argument derived solely from commentators - if anyone validates an argument using either James Delingpole's or George Monbiot's words (to pick two from opposite ends of the spectrum above) then I stick my fingers in my ears and sing "la, la, la";
Peer reviewed science is more reliable than non-peer reviewed science, but peer review in itself doesn't mean it is 'right';
Consensus of evidence is more important than consensus of opinion. The important point about climate change science is not so much that 98% of qualified scientists believe climate change is real and manmade, but that they can validate the theory using lots of different methods and evidence;
Analyses which acknowledge their own limitations and provide error bars etc are usually more reliable than those which don't;
Watch out for University press releases which are increasingly often exaggerating the findings of 'controversial' academic papers to make them more newsworthy (which is a disgrace and undermines the whole idea of scholarship);
Any piece which contains personal abuse should be disregarded, especially if evokes the Nazis.

Well that's my (subjective) view anyway.

Tags: climate change, climate change denial, peak oil, politics

Posted by Gareth Kane no responses

20 June 2012

Why Rio+20 and the G20 should be one meeting

Two big global jamborees at the same time: Rio+20 trying save the planet and the G20 in Mexico trying to save the global economy. Really they should all be meeting in the same place as to a large extent the same problem is causing both ecological destruction and the global slowdown - our addiction to fossil fuels. Countries should be listening to their own advisor, Fatih Birol, Chief Economist of the International Energy Agency who has said:

"When we look at the oil markets the news is not very bright. We think that the crude oil production has already peaked in 2006." (June 2011)

"Oil prices are a serious risk for the global economic recovery." (Feb 2011)

"Energy will become viciously more expensive and polluting if governments don’t promote renewable and nuclear power in the next two decades instead of burning coal." (World Energy Outlook, 2011)

"Oil prices remain a threat to the fragile global economic recovery. Even current prices are far too high for the current economic context. I'm concerned for Europe and I'm also very concerned that these high prices would hit the still hesitant and slow U.S. economic recovery.” (May 2012)

The IEA was set up to advise Western nations on energy policy after the oil shocks of the early 1970s. They are not some lefty green pressure group but hard nosed economic analysts. Dr Birol wouldn't make such pronouncements if he didn't believe they were true.

Yes, sceptics, might say, but alternatives to fossil fuels are too expensive. But this is short sighted - renewables technology will only get cheaper whereas fossil fuel prices, according to Dr Birol, are only going to rise. When will we jump trains to get on the one headed in the right direction?

Tags: economics, energy, low carbon economy, oil prices, peak oil, renewables

Posted by Gareth Kane no responses

25 April 2012

Make the Leap

Interesting article in the Guardian this morning from Maria van der Hoeven, executive director of the International Energy Agency saying clean energy is both feasible and necessary. This statement is ahead of today's Clean Energy Ministerial, a meeting of ministers and representatives of nations that account for 80% of world energy demand. She says:

The world's energy system is being pushed to breaking point, and our addiction to fossil fuels grows stronger each year. Many clean energy technologies are available, but they are not being deployed quickly enough to avert potentially disastrous consequences.

The ministers meeting this week have an incredible opportunity before them. It is my hope that they heed our warning of slow progress and act to seize the security, economic and environmental benefits clean energy transition can bring.

As I've said quite a lot recently, we have got to get across three basic properties of a sustainable future: that it is necessary, feasible and desirable. Necessary because climate change and resource depletion are eroding our quality of life, feasible in that we have the technologies and the policy instruments required and desirable in that we can have clean, secure energy for ever. If only we can let go of the past and embrace the future.

This applies to individual businesses as well as the globe - you either compete in the race to sustainability or get left forlornly at the starting line. Management gurus talk about the 'burning platform' - the analogy of survivors of the Piper Alpha oil platform disaster who disobeyed orders and jumped into the freezing water far below them. Their choice was definite death or probable death and they took the latter option. The move to sustainability is nowhere near as stark a choice as that faced by those poor men - people often use the also grim 'boiling a frog' metaphor of getting caught out by creeping change. But I have it on good authority that frogs don't actually get caught out by the rising temperature - when it gets too hot, they hop off. We need to show similar judgement - let go of the past and make the leap before it's too late.

Tags: change, energy, peak oil, renewable energy, resources, sustainability strategy

Posted by Gareth Kane no responses

30 March 2012

Are we stuck in an oil price doom loop?

I'm reading The Third Industrial Revolution by Jeremy Rifkin - I'll post a review here in the next few weeks - but in the first section he makes a persuasive argument that everytime the global economy tries to rally, the demand for oil pushes its price up, smothering the green shoots.

The graph below shows Brent and West Texas Intermediate oil prices. You can see how they shot up to a peak in 2008 before crashing as the global financial markets went into meltdown. But the prices have rallied again staying above the $100 mark which seemed so impossible pre 2008. This has lead to periodic warnings from the International Energy Agency amongst others that we will never get out of the mire if prices are that high. The big question is: how much is oil price a symptom and how much is it a cause of financial woes? This is rarely part of the current political discourse in the UK which has recently been focussing on tax on snacks. Are we hiding from the truth and squandering opportunities to break out of this loop?

The loop poses a real challenge. Money is tight, oil prices are stifling growth, so where are we going to find the investment to break free? Clearly it would have been better to be investing in the boom years, but we are where we are. I think the answer can be seen in Southampton - where a distributed energy system has developed over 21 years, expanding organically - and in Woking - where an innovative energy services company financing system has allowed enormous investment in local energy generation - and more recently in Birmingham.

These example show it can be done and for the time being we might just have to start small and grow. But we could have lots of entrepreneurs and forward looking companies initiating lots of these small projects. Innovation is key - not just in technology, but in finance and, dare I say it, public/private partnerships. But more than anything else, we're going to have to face up to the fact we have a problem.

Tags: distributed energy, district heating, finance, oil prices, peak oil

Posted by Gareth Kane 2 responses

9 January 2012

Resilience

Just this weekend, my partner and I were chatting about the UK petrol protests of 2000 (it's laugh a minute in our house sometimes...). At the time my partner was working in Poland for a week and couldn't believe my reports from home - empty petrol stations, empty roads, no fresh fruit in the supermarkets and semi-panic buying of staple foods - all within a couple of days of fuel depots getting picketed. This small action had a massive impact on business, communities and individuals. It was a graphic demonstration of how vulnerable our modern economy is to quite minor events.

As chance would have it, Chatham House has released a report today suggesting our economy has taken 'just in time' to an extreme, leaving it vulnerable to low-probability/high-impact events like the Icelandic volcano, the Japanese earthquake and the 2004 tsunami. But, the report notes, there are also concerns about the resilience to high-probability/incremental impact environmental issues like climate change, resource depletion and water pressures.

We are seeing the pressures of unsustainability across the economy with energy prices having a higher impact on the economy than Government spending cuts. The big question for individual organisations is "are we resilient to these sudden and long term events?"

The subsidiary questions are:

What will rising energy bills do to our business?
What will scarcity of resources like rare earth metals do to our business?
What will scarcity of water do to our business?
What would legislation designed to protect or ration natural resources do to our business?
What would the impact of more extreme weather events be on our business?
Are our data and other resources safe from, say, increased flood risk?
Do we have contingency plans in place for, say, expected lack of travel?

Of course the flip side to this is providing resilience to others as a business offering. As the effects of climate change and resource depletion ratchet up, this will be a growing market.

Tags: climate change, peak oil, resilience, resources

Posted by Gareth Kane no responses

30 November 2011

Is our obsession with the cuts blinding us to the oil shock?

The BBC's Evan Davis made a very interesting point when interviewing Labour's Shadow Chancellor Ed Balls this morning on Radio 4. Trying to wrongfoot Balls, the economically astute Davis stated that the 1% impact on consumer spending from Chancellor George Osbourne's cuts was much smaller than the 1.5% impact from what he called the 'oil shock'.

I was, ironically, driving to a client's site at the time and nearly swerved off the road. I have always believed that oil prices were hurting the recovery, but I didn't realise just how much an effect they were having.

We have pages and pages of newsprint and hour after hour of broadcast on the political battle between Osbourne and Balls over public spending, but almost nothing on oil prices. If Davis is right, and he most probably is, we are barking up the wrong tree. If we want to get the economy running again, weaning ourselves off our addiction to oil ~~should~~ must be much higher up the agenda.

Tags: economics, low carbon economy, oil prices, peak oil, politics

Posted by Gareth Kane no responses

31 May 2011

Time to up our game!

The International Energy Agency (IEA) is fast becoming the scariest organisation in the world - almost every press release contains extraordinarily bad news - that peak oil probably occurred back in 2006, that the price of oil is going to undermine any global economic recovery and, now, that 2010 saw record carbon emissions making hitting the 2°C target almost impossible. While there's a strong temptation to hide our head in the sand in the face of such a stark warning, the only sane response is to up our game.

Here's a mini-manifesto for progress:

1. Stop finger pointing: sustainability is everybody's responsibility - Governments, business, the media, civil society and individual citizens. Playing the blame game just slows us down, waiting for others to act will get us nowhere, sitting on a high horse is for pompous fools;

2. Be practical: let's bin the political ideology, sacred cows and conspiracy theories that clog both sides of the environmental debate and do what works;

3. Be ambitious: for all the posturing, most environmental improvements are merely incremental. Let's stretch ourselves and use ingenuity, determination and vision to get us out of the hole we're digging for ourselves;

4. Be prepared to pull the plug. Face up to the fact we're going to have to stop doing some stuff - sustainability is not just about starting to do good stuff, but phasing out bad stuff;

5. Relish the challenge and enjoy the ride. If others see you enjoying making your household, your neighbourhood, your organisation or the whole world a better place, they're far more likely to join in.

This isn't going to be easy, but as the great philosopher Billy Ocean once sang, when the going gets tough, the tough get going.

Tags: climate change, iea, peak oil, sustainability

Posted by Gareth Kane one response

3 May 2011

Worried about Peak Oil? You might be 5 years too late.

In the last week, UK newspapers have been dominated by two pieces of news - the Royal Wedding and the death of Bin Laden - both picked over in meticulous detail plumped out with the filler that the press adds to abide to its 'bigger story => more ink' rule. As a result of all that attention, another much more important, if less sensational, story has been largely missed. The chief economist at the International Energy Agency told Australian TV last Thursday that we hit Peak Oil back in 2006 (source Irish Times).

Peak oil, for those who don't know, is when the maximum amount of oil is being extracted. After the peak, oil production generally declines quickly (following the bell shaped Hubbert Curve), pushing prices up, particularly if demand keeps rising. The impact of this cannot be understated. Our entire modern economy is predicated on oil being cheap. If oil prices rise, so do the prices commodities like plastics, metals and food, never mind the price of petrol at the pump. At a time the world is recovering from a massive financial jolt, this could hurt. A lot.

Peak oil will drive change in a way that a less tangible threat like climate change cannot. Soaring prices will push energy efficiency and low carbon energy production to the fore. Saudi Arabia is reported to have recently invested $100bn in low carbon energy technologies (source FastCompany) - a nation built on oil, now looking to the sun. Maybe the rest of us - society, governments and industry - should take heed.

Tags: energy efficiency, news, peak oil, renewable energy

Posted by Gareth Kane one response

7 March 2011

The Politics of Oil

This weekend the global oil situation finally made its way onto the front pages of the UK press with, for example, The Guardian's report on Energy Secretary Chris Huhne calling for the UK to wean itself off oil and fast. By chance I've been reading Andrew Marr's excellent 'A History of Modern Britain' and came across this apposite paragraph:

One could write a useful political history which did not move beyond the dilemmas of energy supply. We can follow it from the winter of 1947 when the frozen coal stocks blew Attlee off course, through the oil-related shock of Suez and the destruction of Eden, to Heath's double confrontation with the miners, ending in his defeat in 1974, the rise of Scottish nationalism fuelled by North Sea oil, and then the epic coalfield confrontation between Margaret Thatcher and Arthur Scargill taking the story up to today's arguments about global warming and gas dependency on Russia. The simple fact of a small and crowded island energy dependent in an uncertain world has toppled prime ministers and brought violent confrontation to the streets.

Marr could have added many more in here - the rise of Al-Qaeda out of the murky world of the Saudi oil world, Saddam Hussein's original invasion of Kuwait - and many would say the US war on Iraq in 2003, the near bankruptcy of Russia by the oligarchs and a whole host of grubby, bloody little conflicts and kleptocracies all around the world.

Back here in the UK, being Energy Secretary used to be an extremely important role in Government, but it seemed to be relegated to the lower tiers during the North Sea oil and gas boom in the 1980s. Given the way oil prices and unrest are going, this could suddenly be reversed. Knowing Chris Huhne - a very shrewd operator - he's fully aware of the political risks and opportunities. In my opinion he's singing the right tune, but he's got the Herculean task of getting the Treasury to listen if he's going to succeed.

Tags: low carbon economy, oil prices, peak oil, politics

Posted by Gareth Kane no responses

23 February 2011

Are you prepared for an oil shock?

Yesterday I was writing a piece on major problems in the oil industry for The Sustainability Forum (it should go up today or tomorrow it's here). I was listing the various problems - the price hitting $108 a barrel, oil companies fleeing Libya, the IEA saying the price of oil was hitting global recovery etc, etc. This on top of the wikileaks revelation that Saudi oil reserves had been overstated by 40%, the BP oil spill, continuing debate about the onset of peak oil and suggestions that coal may stay so cheap for long.

What is pertinent for this blog is how should individual companies respond?

The first questions to ask concern your exposure. Are you dependent on logistics, business travel or commodities from overseas? Do you use oil based raw materials? Are you an energy intensive business? If oil prices stay above $100 a barrel, how does that affect the your long term viability? What about $150?

Once you have an idea of the risk, you can look for solutions: eg avoiding travel through teleworking, sourcing local or bio-based raw materials, alternatively fuelled vehicles, more efficient vehicles, smarter distribution and route planning, backloading of freight vehicles, eco-driving lessons for drivers, swapping to sea and/or train and electronic distribution (eg MP3s).

Don't stick your head in the sand here - even if a huge new source of cheap oil is found, most of the measures above will still cut your cost base, making you more competitive. You really can't lose.

Tags: low carbon economy, oil prices, peak oil, risk, transport

Posted by Gareth Kane no responses

9 February 2011

Is the peak oil cat out of the bag?

Interesting article buried in the Guardian this morning - one of the Wikileaks cables concerned a 'reliable source' at Aramco, the Saudi national oil company, who reportedly said that Saudi Arabia would struggle to maintain current levels of oil production.

I was surprised that this was in the business pages as it is a potentially explosive political and economic issue - after all, oil is the lifeblood of our modern economy. The current situation is:

Oil production outside the Middle East has 'peaked';

The Middle East countries claim they can maintain production, but the transparency of their reporting leaves much to be desired.

So, if the cable's source is correct, and Saudi Arabia has 40% less reserves than it claims it has, then we really could be at the end of the age of oil as a dominant energy source. If global production has peaked - as many believe - or will peak in 2012 - as the cables suggest - then oil prices will surge. Recent research has suggested that coal won't remain a cheap alternative for long either.

The risk of peak oil/coal is fast becoming another compelling reason for organisations and individuals to aggressively cut their dependence on fossil fuels.

Tags: coal, peak oil

Posted by Gareth Kane no responses

7 June 2010

We all must go Beyond Petroleum, not just BP

Finally BP seem to be getting a grip, quite literally, on the source of the Gulf of Mexico oil spill. But with its stock value plunging by a third, the threat of multi-billion pound clean up operation and talk of criminal charges, the company must be wishing that they'd lived up to their ill-fated "Beyond Petroleum" slogan from the turn of the millennium.

For the question remains, what on earth were they doing drilling almost a mile below the waves, anyway? Why, for that matter, are vast tracts of Canadian sands being dug up and squeezed for a few drops of oil? Is it because oil is becoming an increasingly scarce resource? Is this peak oil writ large?

And let's not forget climate change. I always say that in any environmental debate the laws of physics always win. And so, despite the relative disappointment of Copenhagen, the fuss of the UEA e-mail leak and a single rogue statement on glaciers in an IPCC report, the world keeps warming. In fact, the 12 months to April 2010 were the warmest 12 months as far back as we can reliably measure. This puts paid to all the nonsense talk of global cooling in the 'denialosphere' and puts carbon cuts back on the urgent section of the to do list.

The answer is obvious. We've got to wean ourselves off fossil fuels and onto clean, safe and reliable renewable energy. This will require efficiencies to deliver, and a whole new way of thinking about energy: smart grids, anaerobic digestion of organic wastes, wind farms, solar energy, and whole new ways of living and working: teleworking, teleconferencing, buying quality rather than quantity, buying services rather than 'stuff'.

There is a growing belief that business should not only respond to this agenda, but drive it forward. The opportunities for innovation are immense: new products, new services, new technologies, new business models. Those that grasp this will prosper, those that cling to the old certainties will flounder. It's decision time.

Tags: bp, climate change, green business, oilspill, peak oil, renewable energy, sustainability

Posted by Gareth Kane one response

26 November 2009

M King Hubbert & Peak Oil Theory

If anyone is interested in the background to the concept of peak oil, I've just posted a profile of the godfather of peak oil, M King Hubbert, on Green Gurus. The profile covers recent controversies.

A future edition of The Low Carbon Agenda will look at peak oil and its implications for the industry of the future.

Tags: green gurus, m king hubbert, peak oil

Posted by Gareth Kane no responses

11 November 2009

Is there a peak oil cover up?

Until recently I've been agnostic about 'peak oil' - I've been in the "we'll only know when it happens" camp, but as the issue has moved steadily from the fringe to centre stage, I've started siding with the peak oil brigade. Last year International Energy Agency Chief Economist Fatih Birol stated that production could "plateau" by 2020 and a recent report by the UK Energy Research Centre concluded that a peak could occur before 2020. But then yesterday The Guardian reported allegations that the IEA has been exaggerating the future reserves of oil under pressure from "the US". One insider stated "we've already entered the peak oil zone".

There is one good reason for this cover-up (if that's what it is) - to stop panic buying and even resource related conflict, but I suspect that denial and inertia are the dominant drivers. In particular, the oil industry has a massive vested interest in avoiding talk of a peak. If reserves are seen to be depleting then shareholders will dump their shares - the 2004 reserves scandal nearly did for Shell. The sensible thing to do would be to diversify quickly into new energy technologies. The sort of cash that Big Oil could pump into renewables and efficient technology could drive us quickly to a low carbon economy, resilient to both climate change and peak oil, but instead they seem wedded to pursuing expensive and destructive forms of oil extraction like tar sands. If I were an investor, I'd start backing a different horse - and indeed investment in renewables exceeded that of fossil fuel exploration in 2008.

There's a great political opportunity here. The resistance to cutting carbon emissions in the US and elsewhere is mainly based on a suspicion of the political motives of the green lobby ("an excuse to raise taxes", "eco-communism", "red-green alliance" etc). If the world wants to maintain its standard of living once oil has peaked, we'll need those low carbon technologies anyway, irrespective of your views on climate change evidence. John Kerry has been promoting the business opportunities green innovation to persuade reluctant US politicians to sign up to President Obama's climate change bill. Maybe he should ask them "what will your voters say if you let the pumps run dry?" instead.

Tags: barack obama, climate change, iea, peak oil

Posted by Gareth Kane no responses

23 October 2009

The risk of oil price rises

Very interesting speech this week by John B Hess of oil exploration company Hess Corporation at the somewhat unsubtly titled "Oil and Money" conference in London. He caught the attention of the audience by declaring "The price of $140 per barrel oil was not an aberration; it was a warning." He went on to say that demand was outstripping supply and while production had either peaked or plateau'd ouside OPEC, it was still unlikely that we would hit a target of keeping global warming below 2°C while oil prices soar. Bleak indeed.

The oil price risk is one I communicate to my clients - if if you can handle current energy prices - what happens if they soar? Oil going above $100 a barrel was unthinkable a few years ago, but it went way over in the spring of 2008 and appears to be on its way back. This is a serious risk for many businesses and organisations - are you ready for it? Resilience is a term I'm pinching from the Transition movement - is your organisation resilient to the risks ahead?

Tags: oil prices, peak oil, risk

Posted by Gareth Kane no responses

12 October 2007

Oil price at record high - is this the beginning of the end?

With the BBC reporting that oil prices are staying near the record high set in September, the 'peak oil' debate has started again.

'Peak Oil' is the theory that we are nearing the economic limit of oil exploration and extraction, beyond which the cost of extracting the fuel will soar. Estimates of when the peak will occur range from now (Association for the Study of Peak Oil and Gas) to 2037 (US Govt advisors). Others reject the idea that peak oil is happening at all, such as Deborah White, senior energy analyst at Societe Generale in Paris (quoted by the BBC) who said "We don't endorse the idea at all."

The difficulty is that the oil & gas supply is a function of many different factors: politics (see Russia switching off Ukraine's gas supply in 2005), economics, geology (where the gas & oil is and in what quantities) and technology (what was uneconomic last year could be economic today). Apart from the geology, these factors are interrelated, unpredictable and may combine in unexpected and sudden ways.

If it is happening, we will be forced to decarbonise our economies swiftly. The only problem is, we won't probably know until long after it has started. If it isn't, then we should do it anyway for climate change and security of supply reasons.

Tags: climate change, oil prices, peak oil

Posted by Gareth Kane one response

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