This week, Isle of Man Friends of the Earth campaigner Tony Brown looks at an impending energy crunch
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As we continue in our wasteful consumption of energy, under the illusion that it’ll keep on being in cheap and plentiful supply despite rising demand, recently published International Energy Agency (IEA) figures seem to indicate that this illusion could be painfully exposed in coming decades.
The IEA states that as old power stations in Europe close down over the next 20 years (some because of stringent EU emission rules), some 150 gigawatts – that’s a quarter of Europe’s electricity – of supply will be cut.
It warns that cheap energy is gone forever, as oil and gas companies deplete easy-to-access resources.
More than 80 per cent of oil companies’ investment currently goes to replace exhausted fields, with capital costs doubling over the last 10 years. In the Middle East, the petro-states have begun, increasingly, to siphon off much of their oil revenue to fund welfare spending and subsidies to help soften the rising social unrest.
This leaves little capital to invest in extra capacity, with a ‘fiscal break-even cost’ across the region set at about $100 a barrel; countries such as Russia, Venezuela, North Africa, and others need even higher figures to break even.
The IEA goes on to say that if we’re to head off a supply crunch by 2035, we (that’s the world) will need to invest a whopping $48 trillion – with 60 per cent of new investment earmarked for renewables.
To help with the necessary cut in consumption, the remainder of this money will be needed to cover efficiency measures for things like cars, fridges, insulation and so on.
This means annual investment of $550bn by 2035, up from $130bn now.
The IEA contends that this type of action will be cheaper than continuing with current consumption levels by trying to extract gas and oil from increasingly inaccessible places like the Arctic or deep mid-Atlantic, and so on.
The report warns that failure to wean the world off coal would make it impossible to meet CO2 targets and avoid planetary warming of 2 degrees centigrade.
To survive, the coal industry will have to master expensive carbon capture and storage (CCS) technology – an unlikely scenario at present rates of development – or find itself sitting on $300bn of ‘stranded assets’.
Meanwhile, the US White House’s Environment Agency is due to implement new rules, cutting CO2 levels from power stations by 30 per cent of 2005 levels by 2030 – rules which can be passed by President Obama without the say-so of the Republicans, due to their air pollution laws.
However, although this may signal that the USA has finally decided to take climate change seriously, the rapid replacement of coal by gas (which emits 50 per cent lower emissions) since 2005 means that it’s already well on its way to achieving that figure with little effort.
In Europe, in the short term, coal is still the dominant electric power source – especially as the US dumps cheap unwanted coal there!
The EU gas body, Cedigaz, has said that Europe risks losing a third of its power capacity as gas power operators mothball gas plants and become reluctant to invest, being unable to compete with cheap coal.
EU rules, however, will soon cause the closure of at least 70 gigawatts of coal-fired plants, leaving little capacity to cover the shortfall via wind and solar.
The IEA concludes that over time, scientific discoveries in energy storage will help with problems of intermittance, but that there’s little time to lose.
Finally, liquid natural gas (or LBNG, as it’s known) from Qatar and elsewhere (which European factories tend to rely on) costs 10 times as much to ship as does oil or coal, and retails at three times US gas prices.
Despite warnings of inevitable rises in energy prices, the EU energy commissioner Gunther Oettinger seems to be living under some misguided notion that prices could, indeed, fall.
For example, he has said that ‘unless we can bring down power prices, we are going to lose chemical and steel industries’, suggesting a possibility that this fall could happen, though it’s hard to see how.
Maybe when Isle of Man policy makers have little option but to wake up to the impending energy supply crunch, they’ll become more proactive in instigating measures similar to those needed to mitigate the most serious consequences of global warming.
But up until now, they’ve shown noticeable indifference, and time’s running out.