Home > Books and culture, Environment > Looking back at the Club of Rome

Looking back at the Club of Rome

May 8th, 2008

A point discussed on the blog recently is whether Limits to Growth actually predicted rapid exhaustion of critical natural resources, or whether this was a misrepresentation by much later critics. The text itself isn’t definitive, since it contains some projections showing rapid exhaustion and others (in which discoveries boost stocks by a factor of five) in which exhaustion takes place over a century or so, and also because the projections were revised in later editions. However, my memory is that both supporters and critics focused on the more extreme projections.

I have a couple of pieces of evidence to support this claim. First, I’ve put over the fold a piece by Matthew Simmons defending the Club of Rome and saying

Nowhere in the book was there any mention about running out of anything by 2000. Instead the book’s concern was entirely focused on what the world might look like 100 years later.

But Simmons’ case is undermined by the dust jacket at the beginning of his article which sells the book as ‘The headline-making report on the imminent global disaster facing humanity’. I think most readers buying a book that was sold like this would focus on the worst-case scenarios.

To support this interpretation, here’s a para from a 1979 book, Economics, environmental policy and the quality of life, by Baumol and Oates who begin their Chapter 7 with a reference to Limits to Growth

Certain recent studies have raised the spectre of complete exhaustion of some of the worlds critical resources. they tell us that in the absence of drastic countermeasures, within a matter of decades mankind is likely to run out of petroleum, natural gas and other vital fuels, to deplete virtually all the sources of various minerals such as mercury, copper and silver and to have cultivated essentially all remaining and still usable land. In brief, the world economy will be brought to the brink of catastrophe by hte exhaustion of natural resources.

Baumol and Oates also present in Chapter 9 a “Standard Run” from the World Model showing catastrophic collapse a little over halfway between 1900 and 2100, that is, right about now. Baumol and Oates, like most economists, are critical of Limits to Growth, but they aren’t rightwing anti-environmentalists by any stretch of the imagination. I think it’s fair to say that most readers at the time, whether they agreed with the Club of Rome or not, focused on predictions of imminent resource exhaustion, and not on what might happen in 2070


Of course, this doesn’t resolve the question of whether an analysis like that of Limits to Growth is going to be applicable in forthcoming decades. My view for which, I’ve given some of the reasons in the past (though I’ll obviously have to write more on this in the future.), is that exhaustion of mineral resources like oil is not going to be a serious problem. The real risk, exemplified by climate change, is that we will exhaust the assimilative capacity of the natural environment. This was a theme in Limits to Growth but not one that got a lot of attention at the time.

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  1. May 8th, 2008 at 18:11 | #1

    No arguments about climate change and the assimilative capacity of the natural environment.

    My view for which, I’ve given some of the reasons in the past (though I’ll obviously have to write more on this in the future.), is that exhaustion of mineral resources like oil is not going to be a serious problem.

    Well … I think we’re all about to find out whether peak oil is going to be a “serious problem” or not. We’ve had six years now of rising oil prices, and apart from the dip in early 2007, this chart is looking decidely exponential.

    All this while the world’s largest oil consumer is in recession (or near as dammit). God knows where crude will go if the US economy recovers.

    I’m wondering what explanation the peak oil debunkers will come up with next? We’ve had speculators, USD weakness, above ground factors, terrorism, geopolitical tensions, lack of investment in new capacity and exploration … anything but anything but geological factors.

    (BTW, the USD has been trading between 0.63 and 0.65 EUR for two months now, but oil is up around $15 in that time. So there goes the “oil is a US dollar story� line)

    ProfQ, do you dispute that eventually it will become uneconomic to extract oil from the Earth’s crust? i.e. the energy returned will be less than the energy invested.

    I assume that long before we reach that point you believe we will have transitioned to another source of energy and/or transportation technology. Yes?

    What I can’t get my head around is your belief (faith?) that the transition will not be painful. It seems to me that the price mechanism is inherently painful. The transition simply won’t take place until there is real pain at the bowser, and by “real pain”, I mean $5, $10, $20 a litre.

  2. MH
    May 8th, 2008 at 20:18 | #2

    JQ, Ihave found Herman E Daly’s use of the a ‘Jevonian’ curve to explore the limits to growth and to rephrase the concept of the PP curve quite useful. I agree any dire prediction of imminent resource exhaustion is confounded by ingenuity and luck, for example I would argue that Malthus had it right but could not foresee the green revolution that applied aritificial fertilizers and then plant genetics to address the very real falling soil fertility issues that were limiting agricultural output. I am persuaded by the peak oil argument that recoverable petroleum resources have plateaued and the AGW arguments as well. I am also find the Club of Rome approach to what is achievable or possible with pop growth projections somewhat tantalising as well. But, as the climate change debate has shown I have absolutely no confidence in our (humans that is) ability to pull an internationally workable cooperative rabbit out of the hat because unless western nations downsize our resource demands we have no moral right to ask developing and poor nations to downsize their aspirations and they will not. My fear is that we will resort to our usual process of fighting for it until we reach a state of mutual annihilation or exhaustion. I also agree the adaptive capacity of the planet is the key and the portents here are very depressing indeed. My view is that we go hell for leather to protect OZ because everyone else is going to hell in a handbasket.

  3. rog
    May 8th, 2008 at 20:45 | #3

    The Club of Rome argument is intrinsically totalitarian and socialist by nature;

    “..we have now arrived at a minimum set of requirements for the state of global equilibrium. They are:

    1. The capital plant and the population are constant in size.The birth rate equals the death rate and the capital investment rate equals the depreciation rate.

    2. All input and output rates–birth, death, investment, and depreciation–are kept to a minimum.

    3. The levels of capital and population and the ratio of the two are set in accordance with the values of the society.They may be deliberately revised and slowly adjusted as the advance of technology creates new options.

  4. Hermit
    May 8th, 2008 at 20:54 | #4

    Herman Daly’s views were discussed at length on The Oil Drum http://www.theoildrum.com/node/3941
    Daly argues that ultimately we have no choice but to aim towards a steady state economy based on renewable resource cycles. Here in the Lucky Country we seem to have an ambivalent attitude whereby water is indeed finite but mineral exports are boundless.

    Basically I see no easy way through most of the severe constraints that lie ahead.

  5. May 9th, 2008 at 09:34 | #5

    I’m amazed John Q is STILL arguing over this…. I replied to a similar post on this illustrious blog some two years ago (I was recently reminded), and since then the price of oil has easily tripled (I could check exactly how much but can’t be bothered), Russia has seemingly peaked out, Cantarell’s (and the whole of Mexico) production is in free fall, and all the data I see clearly shows that the year in which the daily average production was highest was 2005.

    OPEC is saying it will not increase production because it wants to keep its oil for posterity (HAH!!) more like they can’t pump any faster it seems to me, and modeling done on the oil drum expertly depicts how oil exporting countries will not be exporting AT ALL within about nine or ten years. Australia’s situation is even worse, we may be totally out of imported oil within maybe five or six years. http://anz.theoildrum.com/node/3657

    So John, pray tell, where will YOU get your petrol then…? I really want to know.

  6. wizofaus
    May 9th, 2008 at 10:29 | #6

    Thanks for that Simmons article John, I hadn’t seen it before.

    It does strike me that to claim “exhaustion of mineral resources like oil is not going to be a serious problem” you didn’t read the article all that thoroughly, or that you at least need to provide some very firm rebuttals to it.
    Further, oil is not just some “mineral resource”.
    I’m not worried about “mineral resources” running out either – resources don’t go away, they’re still here on the planet, available to be used and re-used. But energy is entirely different.
    Without energy nothing is possible, and energy once used cannot be re-used, due to basic laws of physics. If we can’t find significant new supplies of energy, coupled with significant methods in which to use our existing supplies more efficiently, then we will hit a very substantial limit to growth.
    There’s little reason to suppose it will be permanent (as there’s plenty of physically available energy in uranium and renewable sources) but very good reason to be concerned that we will fail to build the infrastructure to harness that energy fast enough. Partly this is due to public attitudes towards nuclear power, and an expectation of always-available cheap energy, but it’s also due to the extremely long pay-off times that many new energy forms present. Over a hundred year period, a massive wind+solar thermal farm spread across all of Australia would probably be capable of supplying base-load energy to the whole country cheaper than continuing to build burn coal: but nobody costs things over hundred year periods, so the only things that get built are those that are the most profitable over a 10, or at best 15 year period. Thus the very real risk is that just at the point we realise that we’ve run out of the cheap forms of energy, economies flounder and there is no longer the capital available to start building infrastructure to harness and distribute more expensive forms of energy.

  7. May 9th, 2008 at 11:17 | #7

    wizofaus is absolutely correct about the recyclability of minerals, and the critical importance of energy to do work. However, there is nowhere near enough Uranium to keep business as usal operating. I’ve seen calculations done where if the entire electric capacity of the first world was replaced with nukes, Uranium would last SIX YEARS! Furthermore, the quality of U ore, like oil, is fast decreasing, and the amount of fossil energy required to mine it becomes truly staggering, like this:

    BHP Billiton mine ‘will use half the state’s electricity
    Article from JEREMY ROBERTS, THE AUSTRALIAN
    March 27, 2008 09:20am

    BHP Billiton will reportedly need nearly half the state’s current electricity supply to power its vastly expanded Olympic Dam mine.

    It’s a completely different ballgame, having to ‘create’ one’s energy converters as opposed to simply digging fuel out of the ground. Apart from anything else, oil/gas/coal are also used as feedstockto manufacture things as diverse as fertiliser, plastics, drugs, computers, roads, textiles….. the list is very long, and you cannot do any of those things with renewables or nukes.

  8. wizofaus
    May 9th, 2008 at 11:44 | #8

    Mike, that might be true when speaking of high-grade proven reserves of uranium, but there really is plenty of uranium on the planet. Using the latest reactor technology, with full enrichment and reprocessing, if we really had to, we could power the entirely planet off uranium alone. The EROEI of uranium is stupendously high, even for quite-difficult-to-extract sources.

    FWIW, I’m not proposing this as solution, and there are lots of reasons to be wary of it (one that’s rarely considered is the amount of additional entropy it would add to the earth’s biosphere), but realistically it’s not going to happen anyway.

  9. May 9th, 2008 at 11:58 | #9

    Thus the very real risk is that just at the point we realise that we’ve run out of the cheap forms of energy, economies flounder and there is no longer the capital available to start building infrastructure to harness and distribute more expensive forms of energy.

    Come on wiz, ProfQ has already demonstrated that if we convert all our energy needs over solar it will only cost 0.00001% of GDP spread over 40-odd years, and in 2050 I’ll have 10c less in my pocket than I otherwise would have.

    There is the minor problem that pretty much anything we build (like er, vast solar power stations) requires huge oil inputs, and those oil inputs might cost a tad more in coming years, like two, three or four orders of magnitude.

  10. jquiggin
    May 9th, 2008 at 12:17 | #10

    Carbonsink, please read the policy regarding snark. If you had an argument, as opposed to assertion, on this point, you could have presented it in the post to which you refer.

    On your final sentence, are you really suggesting that the price of oil is likely to rise ten-thousandfold? That seems pretty brave to me.

  11. jquiggin
    May 9th, 2008 at 12:18 | #11

    Mike, there’s no real problem as regards textiles, plastics and similar uses. Supplies of coal are effectively boundless and these uses don’t require burning it.

  12. wizofaus
    May 9th, 2008 at 12:20 | #12

    Carbonsink, even if it was true that doing such a conversion would be so ridiculously cheap and easy, it’s no guarantee it would get done. It’s human nature to leave things until the last possible moment to fix them, and then to fix them with the cheapest possible solution, without worrying too much about having to find another fix 20 or 30 years later. I’m sure there’s good evolutionary reasons for this, but it’s working seriously against us right now.

    Er, oil isn’t ever going to cost 4 orders of magnitude more. Major demand destruction would kick in even at 1 order of magnitude. 4 orders of magnitude implies petrol at something like $10000/L.

  13. wizofaus
    May 9th, 2008 at 12:26 | #13

    (And yes, if someone said 10 years ago that major demand destruction would kick in if oil increased in price by an order of magnitude, they’d've been wrong. But there’s a big difference between petrol going from 50c/L to 1.50/L and it going from 1.50/L to 4.50/L.)

  14. wizofaus
    May 9th, 2008 at 12:30 | #14

    And yes, assuming that petrol prices roughly triple for every 10 fold increase in the price of oil, then a 10000 fold increase in the price of oil gives “only” $120/L for petrol. Which is never going to happen, unless somebody invents cars that can do 500km/L.

  15. wizofaus
    May 9th, 2008 at 12:32 | #15

    Actually, even just 200km/L would probably be good enough. I wonder what the mass of a car would have to be for this to be possible.

  16. John Theodorou
    May 9th, 2008 at 12:37 | #16

    …exhaustion of mineral resources like oil is not going to be a serious problem…
    Except that oil is not just another commodity, it’s the master resource that underpins the entire economic system.. Oil became this by virtue of its ease of extraction, transportation, storability and applicability for a myriad of uses, and at a very cheap price. Nothing can compare, or is even remotely viable, which can power the worldwide fleet of vehicles necessary to drive modern trade and industry.

  17. May 9th, 2008 at 12:43 | #17

    To obtain in one year the amount of energy contained in one cubic mile of oil (which is what is currently used), you’d need to produce either:

    A) 32,850 wind turbines each year for 50 years
    B) 91,250,000 solar panels each year for 50 years
    C) 52 nuclear power plants each year for 50 years
    D) 4 Three Gorges Dams each year for 50 years
    E) 104 coal-fired plants each year for 50 years

    In other words, it’s basically impossible to replace the energy we get from oil with any of the existing alternatives. Just think how much
    oil (and other resources) that would be required just to build that stuff.

  18. May 9th, 2008 at 12:47 | #18

    John, I don’t hold the same optimistic views you hold regarding coal reserves. You ought to read http://www.energywatchgroup.org/files/Coalreport.pdf

  19. wizofaus
    May 9th, 2008 at 12:51 | #19

    I don’t see why we physically couldn’t build 52 nuclear power plants a year, but politically, it’s highly doubtful.

    32,850 wind turbines a year sounds very doable too – after all we build millions of cars every year.

  20. jquiggin
    May 9th, 2008 at 13:03 | #20

    And there’s certainly no feasibility problem with building 100 coal-fired plants a year, or with mining the coal to fuel them. But of course, it would be disastrous to burn that much carbon, unless we can find a CCS method that works on an unlimited scale.

    The problem, as I am getting tired of pointing out, is not too little fossil fuel, it’s too much.

  21. wizofaus
    May 9th, 2008 at 13:16 | #21

    I think building 100 coal-fired plants a year would be politically pretty difficult too – China’s pollution problems from all that coal are ulimately going to prevent it from continuing it’s 25+ a year rate.
    The amount of environmental destruction that would be necessary to mine all that coal is pretty mind-blowing too.
    Further, if we really went that route, “peak coal” could actually arrive pretty soon, which would make it economically unviable.

    And just because we have too much fossil fuel overall doesn’t mean we don’t also have a problem with diminishing supplies of cheap hydrocarbons.

  22. jquiggin
    May 9th, 2008 at 13:19 | #22

    “Nothing can compare, or is even remotely viable, which can power the worldwide fleet of vehicles necessary to drive modern trade and industry.”

    This is just plain wrong. Gas can compare, is in fact superior in a wide range of uses, and is widely used for motor transport. Electricity (which may be generated in many different ways) is also superior to oil in many uses, and substitutable in many others, including motor transport.

    About the only use for which liquid fuel is essential is aviation, and even here it is perfectly possible to use alternatives to oil (Branson’s biodiesel effort was a stunt, but it proves the point).

    That doesn’t prove there is no problem, but it does show that any analysis which claims that oil (as opposed to fossil fuel in general) is essential to modern society is valueless.

  23. wizofaus
    May 9th, 2008 at 13:22 | #23

    Just to clarify, by “peak coal” I mean the year in which we can extract the maximum amount of coal, measured by its net energy return. AIUI, this has already passed in the U.S. Despite there being 100′s of years worth of coal left, for each of those years, there will be ever-so-slightly-less net energy available from the coal that is dug up each year. On that basis, the U.S. can’t realistically increase its coal-based energy supply, without importing coal (which it does).

  24. wizofaus
  25. John Theodorou
    May 9th, 2008 at 13:34 | #25

    …exhaustion of mineral resources like oil is not going to be a serious problem…
    Except that oil is not just another commodity, it’s the master resource that underpins the entire economic system.. Oil became this by virtue of its ease of extraction, transportation, storability and applicability for a myriad of uses, and at very cheap price. Nothing can compare, or is even remotely viable, which can power the worldwide fleet of vehicles necessary to drive trade and industry.

    This is just plain wrong. Gas can compare, is in fact superior in a wide range of uses, and is widely used for motor transport. Electricity (which may be generated in many different ways) is also superior to oil in many uses, and substitutable in many others, including motor transport.
    Gas is not as easy to transport or store as petrol, which raises the cost of the final product. One of the reasons oil became the master resource was it was cheap, easily transportable and storable.

    From where does the electricity come from? In the main fossil fuels. On what does the electricity infrastructure rely on? Oil, for petrol and diesel to fuel the vehicles and machinery necessary to build and maintain it.

    About the only use for which liquid fuel is essential is aviation, and even here it is perfectly possible to use alternatives to oil (Branson’s biodiesel effort was a stunt, but it proves the point).
    What alternatives are around which do not ultimately rely on an oil-fueled industrial infrastructure to manufacture and support it?

    That doesn’t prove there is no problem, but it does show that any analysis which claims that oil (as opposed to fossil fuel in general) is essential to modern society is valueless.
    It is not valueless since over 90% of modern world transportation is solely reliant on oil.

  26. May 9th, 2008 at 13:48 | #26

    “About the only use for which liquid fuel is essential is aviation, and even here it is perfectly possible to use alternatives to oil (Branson’s biodiesel effort was a stunt, but it proves the point).”

    Give me a break……. the whole bio-fuel saga is already turning into a food shortage disaster…

  27. May 9th, 2008 at 13:58 | #27

    Sorry, gas CANNOT compare with oil. weight for weight it only contains ~ 2/3 the energy, and not being a natural liquid is far more difficult, the proof being that LNG ships are few and far between (most owned by the Japanese who saw the writing on the wall much earlier than us) costing ~300 million bucks a pop and requiring 2 1/2 years to build.

    Furthermore, any LNG facility is a ticking time bomb, with the capacity to explofile:///home/mike/Desktop/aspo.2007.oil.gas.annotated.2.gif
    de with the same intensity as a nuke. Building terminals has now been knocked back in both California and Boston…. nobody wants one in their backyard! Besides, gas WILL run out, just like oil. ASPO in their last newsletter brought Peak Oil and Gas forward to NOW….

  28. May 9th, 2008 at 14:06 | #28

    Sorry, that was meant to be a URL, not a link to my desktop! Try this http://www.peakoil.org.au/aspo.2007.oil.gas.annotated.2.gif

  29. May 9th, 2008 at 14:09 | #29

    http://www.energybulletin.net/43823.html

    Published on 7 May 2008 by The Oil Drum. Archived on 7 May 2008.
    The U. S. electric grid: will it be our undoing?

    Quite a few people believe that if there is a decline in oil production, we can make up much of the difference by increasing our use of electricity–more nuclear, wind, solar voltaic, geothermal or even coal. The problem with this model is that it assumes that our electric grid will be working well enough for this to happen. It
    seems to me that there is substantial doubt that this will be the case.

  30. wizofaus
    May 9th, 2008 at 14:17 | #30

    It really doesn’t make a lot of sense to say “about the only use for which liquid fuel is essential is aviation”, because we simply do not have the capacity to replace existing liquid-fuel-powered vehicles with fully electric ones any time soon. So liquid fuel will be “essential” for road vehicles for at least another 20 years, probably 30.
    By then, it’s conceivable (if unlikely) that alternatives will have been found for air travel.
    But more realistically, if the total exported supply has shrunk to, say, 75% of what it is now, then most of that will be running genuinely essential services in China and India, and the rest of the (non-producing) world will have to manage with the rather little that’s left. That’s an optimistic scenario of course, as others have prediced that total exported supply will be down to almost nothing by 2040, with producers keeping their oil to themselves.

  31. May 9th, 2008 at 14:19 | #31

    Australia and the Export Land Model

    http://europe.theoildrum.com/node/2396

    Posted by aeldric on February 22, 2008 – 11:00am in TOD: Australia/New Zealand
    Topic: Demand/Consumption
    Tags: australia, Export Land Model, peak oil [list all tags]

    I normally try to be a “Good News� kind of guy, but today I bring bad tidings. Despite my previous claims that Australia is The Place To Be, we are in for some tough times here.

    TOD has featured the Export Land Model (ELM) on several occasions (http://www.theoildrum.com/node/3018 ). A summary can also be found in Wikipedia.

    The concept is deceptively simple:
    Oil producing countries service internal markets first, and then export their surplus. Observations of oil exporting countries show that their internal markets continue to grow rapidly even after the peak. So their exports are hit by 2 factors – declining production and increasing domestic consumption. As a result, their export capacity drops with unexpected rapidity.

  32. May 9th, 2008 at 14:31 | #32

    Carbonsink, please read the policy regarding snark.

    Clearly I was deliberately (and wildly)exaggerating. Is that not allowed? … and no I don’t think oil go up 4 orders of magnitude, one definitely (look at the price in 1999), two maybe.

    But at least this thread has taken off now and we’re not talking about Howard’s ‘core’ promises (yawn!). The world is in serious trouble and you guys want to score political points about ancient history?!

    This is just plain wrong. Gas can compare, is in fact superior in a wide range of uses, and is widely used for motor transport.

    What Mike Stasse said.

    Sure there’s a lot of gas in the world, but we have already seen a few countries pass “peak gas”, the North Sea and continental USA to name two. The UK is now heavily dependent on gas from the FSU and the U.S. is heavily dependent on Canadian gas (which BTW the Canadians are consuming at a rapid rate in the tar sands).

    If we transition to gas as a transportation fuel there are certainly benefits (lower CO2 emissions per km for one), but poor energy density and the awkwardness of handling CNG and LNG are significant downsides. The big problem though is the effect it would have on demand for gas. We’d be talking peak gas before you know it, and apparently gas fields decline very rapidly once they peak.

    No, the problem is not that we have too much fossil fuels, the problem is we have too much coal.

  33. May 9th, 2008 at 14:39 | #33

    About the only use for which liquid fuel is essential is aviation, and even here it is perfectly possible to use alternatives to oil (Branson’s biodiesel effort was a stunt, but it proves the point).

    Branson’s stunt proves nothing.

    You can prove that you can run a car on hydrogen produced by electrolysis, but that says nothing about the economic viability of such a vehicle, or producing fuel in that way. The same applies to Branson’s coconut stunt.

    During Virgin’s test flight from London to Amsterdam, the Boeing 747 consumed 22 tonnes of fuel, of which only 1.1 tonnes (or 5%) was neat biofuel. Producing even that much, says Imperium’s Director of International Business Development, Brian Young, required the equivalent of 150,000 coconuts. So had the hour-long flight run entirely on biofuel, it would have consumed 3 million coconuts – an astronomical number that highlights the scale of the problem

    .

  34. smiths
    May 9th, 2008 at 14:42 | #34

    for my two cents worth i think the fact that the mainstream media is currently screaming to everyone that oil will soon be over $200 a barrel suggest that the oil price will ease off over the next twelve months, probably back below $100

    but it doesnt change the fact that however much easily recoverable oil there is, burning it is killing everything and so its use should be on really important things

  35. wizofaus
    May 9th, 2008 at 14:54 | #35

    I’d argue running a car on hydrogen via electrolysis would already be economically viable if there wasn’t a cheaper alternative available. It just wouldn’t be affordable by a substantial fraction of the population.
    I’d question whether it’s scaleable though.
    Can we generate enough electricity? Will the infrastructure to support it be built?

  36. jquiggin
    May 9th, 2008 at 15:20 | #36

    If you want to argue that a reduced supply of oil will make some things that are now convenient, less convenient, I have no problem. But the idea that moving to a slightly heavier fuel like LNG will bring about TEOTWAKI is just wrong. And even if we run short of gas, there are immense reserves of coal, and established technologies to derive gas and liquid fuel from coal.

    More seriously, as noted at #29 and elsewhere, this is all a distraction from what ought to be the main point. We need to use a lot less of all carbon-based fuels. Arguments about the precise mix of these fuels is like rearranging the deck chairs on the Titanic.

  37. May 9th, 2008 at 15:44 | #37

    and established technologies to derive gas and liquid fuel from coal.

    … and those technologies have horrendous consequences for climate change. The problems of peak oil and climate change are interwoven and interdependent. The good solutions to both are broadly similar (low carbon, renewable energy), the bad solutions to peak oil will seriously exacerbate climate change.

    You only have to look out to the ocean from Newcastle to see which option we’ve chosen.

  38. wizofaus
    May 9th, 2008 at 16:32 | #38

    Or listen to Rudd (lower petrol prices!) and Ferguson (CTL and GTL).

    If Australia’s emissions haven’t decreased in 3 years’ time, Labor deserves the electoral result it gets (unlikely to be enough to chuck ‘em out, but they might well find themselves very much more dependent on Greens preferences).

  39. jquiggin
    May 9th, 2008 at 16:54 | #39

    I’ll have one last go at stating my position. If it weren’t for climate change, Peak Oil wouldn’t be a serious problem. At sustained prices of $100/barrel there are plenty of substitutes for oil in all its important uses (maybe not perfect substitutes, but if the economy relied on perfection it would not last long). And the economic problems created by $100 oil are minor in comparison to, say, those created by bad subprime lending.

    The problem is that, as noted at #32, all of these alternatives are horrendous for climate change (some worse than burning oil, some not much better).

    So, if Peak Oil leads us to use less fossil fuels it will be a good thing. If it leads us to exploit fossil fuel substitutes for oil, its effects will be mixed (higher prices will reduce demand) but probably negative on balance.

    Overall, Peak Oil and talk of how oil is essential to the economy is a distraction from the main issue of climate change.

  40. John Mashey
    May 9th, 2008 at 17:03 | #40

    While it is nice to have qualitative arguments, even better is quantifying them.

    I strongly recommend Implications of “peak oil” for atmospheric CO2 and climate, by Pushker Kharecha and James Hansen.

    At the very least, read the abstract.

  41. John Mashey
    May 9th, 2008 at 17:06 | #41

    I’d recommend LLNL flow charts, but especially my favorite one-chart overview (of the US) US Energy Flow trends – 2002 and a (slightly old) one of California.

    (Can anyone point me at a one-page equivalent for oz? I looked.)

    The two charts illustrate several things:

    1) The issue is not that oil is *necessary* in the long run [it isn't], but the fact that so much of our current infrastructure and especially transport depends on it. It is clear from the charts that LLNL thinks most oil goes to “waste energy” from transport, which means that we can probably keep the fuel-requiring parts of transport going with biofuels (hopefully algae, if we’re lucky), while electrifying everything else.

    2) Even in CA, which is very aggressive on efficiency & CO2, and purposefully uses very little coal, and uses the same electricity/person as 30 years ago, a big chunk of energy comes from oil and gas, and won’t be replaced overnight.

    As I’ve said elsewhere:

    It isn’t a question of “how much will it cost to preserve the climate”, it’s a question of:

    “can we move fast enough on efficiency and renewables, and *invest* the oil+gas that’s left (about 50%) so that there’s an above-subsistence economy left when fossil fuels are gone?”

    (and not be driven by desperation into massive (unsequestered) coal-burning, which is what worries Kharecha and Hansen.)

    And can we avoid building infrastructure and vehicle fleets that are instant “stranded assets”?

    But, all that needs clearer quantification from economics. As in my guest post, my concern is understanding the differences between neoclassical vs biophysical econ views of energy & growth.

  42. wizofaus
    May 9th, 2008 at 17:09 | #42

    That’s just as easily stated as “If it weren’t for peak oil, climate change wouldn’t be a serious problem”. We’d have loads of easy cheap energy, and we could use it to quickly build clean energy supplies.

    I don’t see how you can claim that talk of how essential oil is is a distraction from climate change. There’s no point proposing solutions to climate change without considering how feasible they are in a world with diminishing oil resources. And while $100 oil hasn’t caused major problems in rich nations, it’s made life very difficult for many poorer nations. There’s also a big difference between $100 oil and $1000 oil, which would assuredly cause major economic disruption. If net global oil exports decline rapidly enough and soon enough, it’s hard to see any other outcome but a major economic downturn. And once that occurs any talk of keeping emissions down will be distinctly low priority.

  43. May 9th, 2008 at 18:09 | #43

    I’ll have one last go at stating my position. If it weren’t for climate change, Peak Oil wouldn’t be a serious problem

    I would broadly agree with that, however…

    There are still issues ramping up production of so-called “unconventional” oil such as the Canadian oil sands. The most optimistic forecasts for oil sands are around 5 million barrels per day by 2020. The big energy agencies are forecasting demand north of 120 million barrels per day for that timeframe. Meanwhile production from the big conventional fields is falling 5-8% p.a.

    In other words we’re looking at a shortfall of 30-50 million barrels per day between forecast demand and conventional crude production, which will have to be made up by unconventional oil.

    Looking at the various sources of unconventional oil we’re already seeing plenty of (non climate change) problems. With biofuels its poor energy return and competition with food crops. With oil sands its lack of water and massive natural gas inputs (there has been some talk of using nukes instead). Rapid adoption of to GTL (or gas fuelled transport) will get us to “peak gas” much faster than we otherwise would have, which leaves coal, and CTL.

    Unfortunately the world has a lot of coal. CTL requires large energy inputs which would no doubt be supplied by more coal, but apart from the climate change impacts I know of no reason why CTL could not be scaled up to supply the world’s transport fuel needs for 30 or 40 years.

    Its a nightmare scenario, but that’s where we’re headed, especially if CTL is competitive at 25 to 35 USD per barrel

    One last point, climate change or not, none of these alternatives has the same stupendous energy return as conventional crude. Even today Saudi crude has an EROEI of 10:1 or better, and one thing is for sure, that is never going to be repeated.

    The once in 300 million year energy bonanza is over.

  44. MH
    May 9th, 2008 at 18:16 | #44

    To return to the core issue, if I understand it simply stated is – what is a sustainable level of activity knowing now that our fossil fuel energy dependence is not sustainable, not because it is not available in sufficient quantities to make all manner of substitution possible but because of what we now know what the unintended consequences of it’s use are – climate change.

    The critical limits then to growth are it seems biological adaptability and reduced environmental opportunity from climatic change. The rising cost of energy will take the gloss of the so called green revolution as the cost of fertiliser inputs soar, the drying of the planet means reduced available water in what were productive temperate regions not to mention the downstream affects to the Asian Region with decrease snow melt and the continued dropping of the underground water table throughout Asia and the Middle East. The killer in the climate change issue is the variability, so if you are a farmer, the variable rain supply means the temperatures are ok to plant but the rain is in the wrong season, like we seem to have here now. Personally we hit those limits on our miserable little rural plot about five years ago, our contribution to the nation’s primary production output over the last five years, effectively nil. Planned output this year again nil, why, climate variability means no useable rainfall.

  45. May 9th, 2008 at 18:20 | #45

    If it [Peak Oil] leads us to exploit fossil fuel substitutes for oil, its effects will be mixed (higher prices will reduce demand) but probably negative on balance.

    Mixed?! Ok, maybe GTL won’t be that bad, but there are other downsides (discussed above). Oil sands, shale oil and CTL are all unambigiously bad, really, really bad.

    Overall, Peak Oil and talk of how oil is essential to the economy is a distraction from the main issue of climate change.

    The reason why peak oil will (IMO) get increasing attention is because the threat is more immediate. Climate change is (still) perceived as something way off in the future, but peak oil is happening now at a petrol bowser near you.

  46. wizofaus
    May 9th, 2008 at 19:02 | #46

    Carbonsink, uranium surely has a higher EROEI than oil, certainly once reprocessing and breeder reactors are in the picture.
    Nuclear-assisted fischer-troph seems a very real possibility.

  47. jquiggin
    May 9th, 2008 at 19:37 | #47

    Well, we seem to have reached a point of furious agreement. Let’s move on to the Burma appeal.

  48. May 9th, 2008 at 20:16 | #48

    Carbonsink, uranium surely has a higher EROEI than oil, certainly once reprocessing and breeder reactors are in the picture.

    Uranium has a EROEI that blows everything out of the water, but it doesn’t quite come in the convenient liquid form that oil does :)

    Certainly we could electrify ground transportation and power that with nukes, but that would take a tripling or quadrupling of current nuclear capacity in a country like the UK or US (David Strahan does the numbers in “The Last Oil Shock”) and in Australian we’d be starting from scratch.

    Nuclear-assisted fischer-troph seems a very real possibility.

    Unfortunately yes, its very real and very dumb. It would be much more efficient to use the nukes to generate electicity for electric vehicles … but we probably won’t do that. Nukes have already been given serious consideration in the oil sands. Crazy!

  49. wizofaus
    May 9th, 2008 at 21:21 | #49

    Actually I thought it was crazy too intially, until somebody did the maths – it does actually make economical and energetic sense. Of course that’s leaving out the cost of the environmental damage, but I suspect even once you priced that in it would make sense.

  50. wizofaus
    May 9th, 2008 at 21:49 | #50

    FWIW, anyone seriously doubting that we could build 32000 turbines a year, from what I can find, we must already be building close to 10000 a year, based on the increase in generation capacity (about 15000MW).

  51. Joe
    May 9th, 2008 at 21:57 | #51

    Kerosene is indispensable for aviation, there is no alternative, see Aviation and Oil Depletion. Can someone explain how fuel hedging works? The price of oil has been going up and up for the last three(?) years but someone is still selling oil to Qantas for $70 a barrel! How does this work?
    On the Club of Rome issue, I think that the opponents rejected it for the usual reasons (the market will take care of it, it’s a long way away..) and so took the findings out of context so they could declare the study wrong and the proponents took the extreme view because they believed that 50 to 70 years wasn’t very long to change human society so we should start now. Forty years on you’d have to say the proponents had a point.

  52. wbb
    May 10th, 2008 at 01:06 | #52

    Joe neatly ends the thread with the correct explanation for the original question.

    The Club of Rome pointed out that this planet is not so large that we can take it out of our economic equations. They were dead right.

    This planet is actually pretty damn titchy. (And that turns out to be some disappointment.)

    We don’t have enough oil, coal, gas ,uranium or food for the 7 billion here now. We never did have. And we don’t have enough atmosphere even for the 3 billion who do control/produce enough of the above.

    Peak oil can be legitimately considered as a separate issue to climate change as it has serious consequences for human welfare in terms of its serious geopolitical consequences.

    But yes, it is second order to Climate Change. And that’s very bad news.

  53. John Mashey
    May 10th, 2008 at 04:05 | #53

    1) Fuel hedging: buy a contract for future delivery of oil at a certain price, i.e., it’s a mechanism for pricing risk like many others. SouthWest Airlines is reputed to be especially good at it.

    I recommend Peter Bernstein’s “Against the Gods: The Remarkable Story of Risk” in paperpback these days.

    2) John clearly wants conversation to move, so one last comment. There are still clearly different worldviews: in CA, especially places like Stanford, there is a strong belief that environment and energy [hence, Peak Oil+Gas, Coal, etc] are inextricably intertangled, which is why they have things like GCEP – Global Climate and Energy Program which says:

    “Supplying the energy required by both well-established and developing societies while at the same time reducing greenhouse emissions will be one of the grand challenges that we humans must face in this century. “

  54. May 10th, 2008 at 09:48 | #54

    One final comment on the peak oil vs climate change debate:

    Climate change depresses me, peak oil terrifies me.

    We will absolutely, definitely be forced into doing something about peak oil, and soon. Any action on climate change will be entirely voluntary.

    (A preview button! Thank You! Thank You! Thank You!)

  55. May 10th, 2008 at 19:20 | #55

    Can I suggest, If John Q will allow me, that anyone wishing to continue discussing this very important issue of Limits to Growth join our Running on Empty Yahoo forum at:

    http://groups.yahoo.com/group/roeoz/

    You too can join JQ!

    Mike Stasse
    Owner/Moderator roeoz

  56. Chris lloyd
    May 10th, 2008 at 19:21 | #56

    JA in Comment 48: I use SWA share price and oil futures as an example of nagatively correlated financial assets in my MBS course – it was about the strongest negative correlation that I could find (from an admittedly brief search). So their hedging is not working too well…

  57. OzTones
    May 11th, 2008 at 01:32 | #57

    An aside – I’m in the UK at the moment, literally looking out over my monitor to an East Sussex shingle beach and the English Channel beyond. It’s a mild early summer day after a week of warm weather. Petrol here is about $2.28/l, but it hasn’t stopped the water-skiers, jet-skiers, and power boats zipping back and forth, or kept the tourists from flocking to the beach. One wonders how high the price has to go before these behaviours are confined to the domain of the truly wealthy, and the famous English middle class can only look on – in envy, or anger?

  58. May 11th, 2008 at 14:06 | #58

    Anyone wanting to find out more about how much coal is REALLY left, I suggest you read this…

    http://globalpublicmedia.com/richard_heinbergs_museletter_193_its_happening#whatcar

  59. May 13th, 2008 at 09:01 | #59

    Perhaps John Q should also read this interesting paper which concludes that Peak Oil could also mean Peak CO2….

    http://www.internationaltransportforum.org/jtrc/DiscussionPapers/DiscussionPaper18.pdf

  60. jquiggin
    May 13th, 2008 at 18:33 | #60

    Since Peak CO2 is what we’re aiming to achieve as soon as possible, if Peak Oil will bring it about, that would be great.

    In reality, as I’ve said, while Peak Oil will probably be helpful, it won’t be sufficient. Peak CO2 will only happen when the price of emitting the stuff gets high enough.

  61. John Mashey
    May 15th, 2008 at 15:01 | #61

    insufficient, for sure.
    In #40, I pointed out the Kharecha+Hansen paper on this which analyzes the problem.

    CO2, CH4, etc molecules are what they are, regardless of whether they come from:
    - Oil {Peak now or soon]
    - Gas [Peak +10/20 (?) years]
    - Coal [No peak any time soon, unfortunately]
    - anything else

    One might wish for peak Oil & Gas to happen quickly, as that’s less CO2, and might focus the world on efficiency/renewables faster, i.e., via usual price signals.

    But, thoughtful people also worry that if the slide downPeak happens without the right preparation, the temptation to do:
    - CTL for synfuel to replace oil
    - burning more coal to replace the gas
    - *before* sequestration works (if it ever does)
    will be overpowering, and that’s scary.

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