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24 Mar 2010

Government ‘Peak Oil Summit’ Starts the Process of Government Acknowledging Peak Oil?

energyinstitutelogoOn Monday Peter Lipman and I represented Transition Network at an event which could potentially be the day people look back to as the day when UK government finally starting to ‘get’ peak oil.  Fascinating and frustrating in equal measure, the event, “Policy Response to potential future oil supply constraints”, was billed as “a half-day workshop hosted by the Energy Institute in partnership with the Department of Energy and Climate Change, under Chatham House Rules”.  For those who don’t know what Chatham House rules are, it means that the contents of what was said can be discussed, but none of it can be attributed to anyone.  Although the event was meant to be private, it was leaked and reported in the Guardian that morning.  Jeremy Leggett was quoted in the piece as describing the importance of the meeting thus: “Government has gone from the BP position – ’40 years of supply left, the price mechanism works, no need to worry’ – to ‘crikey'”.  So, here is an account compiled from my notes of what went on behind closed doors, bearing those Chatham House rules in mind, meaning that I can’t attribute some of the comments that follow.

There were about 20 people present.  It began with a startling statement about the lack of informed government capacity to formulate views on oil depletion/forecasting, along the lines of  “… has no firm views on oil depletion in the future, and does not have expertise in forecasting”.  A key question for the workshop to explore was “what is the appropriate government, business and local government practical response to, at least, the risk of peak oil?”

This was followed by 4 presentations.  The first offered an overview of last year’s UKERC report, and gave a good overview of the case for peak oil.  Among its findings were that;

  • global oil depletion is well understood and well advanced
  • that we have used at least a quarter and maybe more than a half of the global total recoverable resource of conventional oil
  • the global peak is inevitable.  The timing is uncertain, but the window is rapidly narrowing and the range of possibilities is narrowing
  • the quality of reserves data is appalling.  Much of the available field-by-field data is unreliable, especially for the large OPEC producers
  • knowledge is improving in key areas, but the news isn’t looking good.
  • methods for resource estimation and supply forecasting have major limitations
  • large resources many be available, but make little difference to the timing of global peak
  • the risks presented by oil depletion deserve serious attention

His conclusion was that many of the things that we need to do we are already doing in response to climate change, but not all.  In summary, he said, we will be seeing peak oil in the relatively near future.

The second was from an oil industry perspective, stating that it was in the world’s interest to slow down on approach to the peak, in order to lessen its severity.  He said that according to his company, 2004 was what he called the ‘inflection point’, the beginning of the global production plateau for conventional oil.  In 2005 oil stopped being cheap, and will never be again.  He stated that it is supply flow that is more important than reserves.  We know now, he said, that $150 a barrel ‘breaks the machine’, that the world can’t function above that price, it is the price that causes recessions.  If something is very expensive, it doesn’t really matter how much is left if we can’t afford it.  He gave, as an example, the fact that there are minute amounts of gold in sea water.  We know it’s there, but we can’t do much about it, in the same way that we know there is loads of oil spilt into garage forecourts across the country, but we are not going to dig them all up and steam the oil out of them!

In order to power the transition, he said, we would need to produce more oil and gas over the next 10 years.  The two things that would make this possible, he speculated, were what he called ‘unconventional gas’ (extracting gas from oil shale), and how quickly Iraqi oil is brought on stream.  Cheap energy prices are not good for energy transitions, we need high prices in order to incentivise the kinds of change we need.

The third was based on the recent  Peak Oil Task Force report.  This looked at the history of oil production since the 1970s, observing that it has always been cheap, until the spike of the 1970s, and the recent spike.  Is there any chance of the oil price now going back to $30 a barrel he asked?  Are we likely to be in a world of ever increasing supply.  It may be that, at a push, the world will reach 90million barrels a day, but it will struggle to sustain that, and will decline from that point forward.  The speaker also suggested that, given that India and China have developed their economies in times of volatile oil prices, whereas the West’s were developed in times of stable prices, the West will feel more pain from high prices.  In terms of what was to be done, he suggested that transport policies need to go some way to reducing our dependence on oil through improved technologies, and to encourage behaviour change.

Then Peter and myself had been asked to do a session on local communities and energy efficiency.  I started by talking about Elizabeth Kubler-Ross’s 5 stages of grief (denial, anger, bargaining, depression, acceptance), and how DECC was still largely in the denial stage, but that Transition groups gave an indication of what it looks like when people move have moved through depression and out the other side into acceptance and into practical responses to peak oil and climate change.

I showed the energy-mountain-turned-upside-down-as-fetid-lagoon slides to show how Transition reframed the issue, getting away from it as a disaster but presenting it as an opportunity.  The way forward, I argued, comes from overlapping peak oil and climate change, and from seeing the priorities as planning for a lower energy world, powering down and powering up.  I told the story of Transition groups, how many there are, and what Transition is, a self-organising, community-driven process of the exploration of what localisation looks like in practice.  Then, illustrated by slides showing Transition in action around the world, Peter took over.

Peter built on my explanation of what Transition groups were doing by exploring the wider potential for what Transition initiatives could achieve in a world in which authorities were collaborating with them, giving as examples work in Bristol (the Bristol Peak Oil Report and more recent peak oil and climate change resolution/budget) and work in Stroud around food security.  He also explored what “efficiency” actually means when taking resource scarcity into account as well as climate change, and how a more resilient approach to it would look at building in redundancies.  Finally, he looked at how Transition can influence the cultural stories which in turn enable politicians and policy-makers to face up to resource scarcity in a far more direct and appropriate manner.

After the presentations there was some discussion around the table, and the concept was mooted that the solution to peak oil might be to just leave it, that price signals would bring about change far better than any government policy-making ever could .  This stimulated fascinating responses, mainly along the lines that if you leave it to the market, then what is the point of government?  Such an approach would result in volatile prices, which hits the disadvantaged first.  The purpose of government is, after all, to stop that happening.  He responded by challenging the idea that if government does stuff it will be a smooth transition.  It may not be, he argued, that government actually has such power.  One participant stated that surely one of the key roles of government is to make it possible for people to live with less energy, and that land use planning has a major role to play here.  Another person stated that as we enter the period of declining energy, the political context changes, from one of an expanding economy in which we distribute the surplus, to one where the cake we have to share out is shrinking.

Then we broke into two groups, one of which looked at national scale responses, and one that looked at local scale responses.  I ended up, logically I suppose, in the local group, and a range of approaches were discussed.  There was a tendency to focus on transport solutions, not just in the groups but all day, as though peak oil will mostly affect transportation.  I raised other areas, such as local PassivHauses, local food, community-owned energy companies and participatory budgeting.  Other issues included Oil Vulnerability Audits for local authorities which would then inform future planning, various ways of incentivising public transport.  The other group had looked at a national scale and had also ended up talking a great deal about transport.  Peter had also raised (I can say this under Chatham House rules because Peter has OK’d it) rationing (i.e. not by price) as part of the landscape that needed exploring, but this did not get an enthusiastic reception.

Then we all came back together again, and both groups reported back their findings.  There was then a break while we waited for an energy minister to join us, at which point, there was a summary given of the day’s discussions, rounding up what he saw as having been the main points;

  • The exact date of peak oil is an academic extraction, what matters is its inevitability
  • There is a high risk of its happening as soon as we come out of recession, in 3 or 4 years time (not sure that I share his optimism there)
  • Prices will inevitably be higher
  • In the near term we will be able to rely on more natural gas thanks to unconventional gas (not sure about that one at all, I suspect that is one of that speaker’s pet techno fantasies!!)
  • Government intervention will be inevitable
  • That behaviour change will be key, and government will need to message this carefully, stating that things will be different but no worse
  • We need improvements in public transport, including electrification
  • The land use planning system needs to bear this in mind, and we may, at some point, be forced to consider rationing.

Although Chatham House rules prevent me from stating what the Minister said, there is clearly a desire to continue this dialogue on peak oil.  There was a final opportunity for questions or points to the Minister.  I stated that across the UK were hundreds of communities responding with great creativity to peak oil and climate change, doing great work and starting projects with no government financial support.  In Scotland, the Climate Challenge Fund, £27 million, has enabled them to do all kinds of big projects, and find some core financial support, whereas here we have the Low Carbon Communities Challenge, which over 400 communities entered and only 20 got anything from the process.  I put in a plea for a scheme similar to the Scottish one to enable communities to be supported in being one of the key drivers for change in this area.

And that was that.  As I said at the beginning it was fascinating and frustrating in equal measure.  Fascinating that it represented the first time the UK government has created a space to explore the peak oil question, what the Guardian that morning called a “significant policy shift”, how it overlaps with climate change and what policies they might make in response.  Fascinating that Transition Network is seen as worthy of an invitation to such an event, that our work is recognised at that level.

Frustrating in that every time the question of economic growth and whether or not the idea had any mileage in a world of depleting energy reserves was raised it was largely glossed over.  Frustrating in that so often the question of what we might to do in response to peak oil focused almost purely in transportation and on the timely and complete creation of an electric car fleet, with a recharging network and sufficient electricity to keep the whole thing going, with no consideration as to how a nation which is the second most indebted in the world, which has become a net energy importer at a time of increasing price volatility and little remaining indigenous energy, is actually going to pay for such an infrastructure. Frustrating because the techno-fix mindset was prevalent, and the idea that part of a response might include the intentional refocusing of the scale of economic activity, the application of the Proximity Principle to economics didn’t really register with people.

Anyway, who knows, perhaps nothing will come of it, but it certainly felt like a pretty historic occasion to me, and although it was only attended by a small number of people, I hope that this garbled account offers some sense of what went on behind the closed doors of the Energy Institute.

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[…] SC: Well, absolutely. That is a critical thing. It’s very interesting at the moment that our UK Government is seemingly having a bit of a change of heart on its attitude towards fossil fuels. There’s that report you’ve just mentioned and there’s also, just yesterday, a report by a group called the Peak Oil Taskforce, which is an industry group made up of some of our biggest companies, including Virgin — whose chairman Richard Branson is very well known here, I don’t know how well his fame has spread across the Atlantic — and some of our big transportation groups, our rail companies, have launched a report basically stating that as an industry they are deeply, deeply worried that Governments aren’t taking peak oil seriously enough and that they really need some support on this from the government level. And the government put out a statement yesterday essentially saying that they’re a bit confused because on one hand they’ve got the likes of Shell telling them there’s nothing to worry about, on the other they’ve got some of their biggest industry representatives saying that they’re terribly worried about it. So they have now called together a ‘Colloquium’ I think they’ve called it, pulling together some of their biggest stakeholders on this issue to try to get to the bottom of why there is so much disagreement. And we’ve got a couple of representatives from the UK Transition movement going along to that meeting. […]

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