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ISIS Report 22/06/06
We Need A Change in Energy Policy As Well As in Government
Rt. Hon. Michael Meacher
MP speaks out on
peak oil, nuclear energy and beyond
Unhealthy
dependency on oil
I was asked to speak on what should the Government do in order to get
out of the energy crisis. The way the public debate is going at the present
time that might be seen as meaning, is it going to be nuclear? Or is it going
to be renewables? And that, of course, is not actually the most important
issue. There are two aspects of this because energy is needed to generate
electricity, but energy is also needed for transportation systems.
The scale of change required
in the world economy as we approach and soon gradually pass peak oil is really
nothing less than apocalyptic. Our whole civilization depends on oil. Our
industries are dependent on it, our mechanised industrialised agriculture
is dependent on it, our transportation system, planes and cars obviously,
and you cannot fight a military campaign, or engage in any serious long-term
military activity without oil.
Already four fifths of
the world’s oil supply comes from fields that were discovered before 1970.
Even if we were to find a field like Ghawar in Saudi Arabia,
which is far and away the world’s largest; again, that is exceedingly unlikely
given the advance of geological knowledge in the last thirty years, it would
only meet world demand for about another ten years. So what is to be done?
Oil
supply declining fast and will last just 40 years
Peak oil is the point at which the production of oil reaches its peak
and failing to meet demand, and there is some uncertainly about this. The
experts believe that it is somewhere within the next 5,10, or at most 15 years
and the ex-Saudi oil chief, Dr Sadat Al-Huzani certainly is one who believes
that it is within that time scale.
It has taken 145 years to consume half of what is believed
to be readily available oil supplies, something like just over 2 trillion
barrels of conventional oil supplies. But it is likely, and this is the key
point, that we haven’t got another 145 years, far from it, as a result of
the prodigious increase in demand for oil, especially from China
and India, which together account for two fifths of the entire world population.
The two countries have been engaged for the past decade in rates of economic
growth of something like 7-10 percent. That probably won’t continue indefinitely,
but for some time into the future. So, the other half of the world’s oil will
be used up in not much more than 40 years. That is a staggering.
And I need hardly say to
an audience like this, we do not wait for 40 years, we need to start taking
action now. Some 98 percent of global crude oil comes from 45 nations only,
of whom more than half have already peaked in oil, including seven of the
eleven OPEC nations. Major oil field discoveries have been in continuous decline
since the 1960s and fell to zero for the first time in 2003. And worse still,
the excess capacity held by the OPEC nations to meet sudden surges or spikes
in demand has dwindled over the last 40 years from an average of 30 percent,
which gave lots of headroom to deal with these sudden crisis, down to something
like 1 percent of the global demand now.
The political significance
of this is almost incalculable. World oil and gas production from existing
fields is currently declining at a rate of about 4-6 percent a year, whereas
demand is growing at about 2-3 percent a year. You don’t need rocket science
to know that when those lines cross we are in for big trouble. In the last
35 years, one and a half trillion dollars has been spent outside OPEC in order
to find new supply sources; but the three largest discoveries will produce
a peak of just one and a half million barrels per day.
One and a half million barrels
a day has to be set against current global use of oil, which is about 84 million
barrels a day. I quote the President of Exxon Mobil, John Thompson who said
2-3 years ago: “ To meet projected demand in 2015 the industry will have to
add about 100 million oil equivalent barrels a day of new production, and
that is simply not available.” It’s not just a question of cost with the
price going up, it simply isn’t there.
Oil wars of desperation
What are the implications? Well I think there are three answers to that.
The first is America’s answer, which is that we will grab ruthlessly and by
war the lion’s share of what’s available. That is, I submit the main reason
behind the gulf war in 1991 to deter Sadaam from gaining control of the Saudi
oil fields. Although this is extremely controversial in my mind, that was
the main, or certainly unquestionably a main trigger for the Iraq war.
A large part of Iraq, in
particular the Western Desert area, is still mainly unexplored. Something
like less than two and a half thousand oil wells have been drilled in Iraq
compared to about a million in Texas. We may well find a lot more oil in
Iraq. However, the cost in terms of trying to increase Iraqi oil supply and
gain control over Middle Eastern Oil, the escalating cost politically, militarily
and economically, are simply prohibitive. This is not a long-term policy
whatever else it is.
A second alternative is
to take advantage of high and long-term prices. Gas oil prices are not going
to come down; they are going to go up. In order to develop unconventional
oil sources, notably the Athabasca
Tar Sands in Canada, the Venezuela Orinoco heavy oils, and if
reserves estimates for non-conventional oil and gas, which are very high indeed.
Although Exxon believes that only something like 800 billion barrels are extractable,
that is well less than half of the conventional oil that remains. If you add
those in, it does double the amount of world oil left, which could extend
the peak for some decades. However, the down side in terms of cost in manpower,
in water shortages and above all CO2, are again absolutely prohibitive.
Just in terms of cost, the International Energy Agency reckons that investment
in oil and gas over the next 25 years to meet an expected 50 percent increase
in global demand, for the reasons I’ve set out, will be about $5 trillion.
That I would remind you is about four times the entire GDP of the UK, is that
likely to be forthcoming?
But the biggest constraint,
even if the cost could be met which I very much doubt, is environmental.
It takes almost as much energy to mine, to process, to refine and upgrade
the oil extracted from Tar Sands, as the energy contained in the light oil
produced [ref.8]. In
other words you’re hardly making a net gain at all. And worse still, the
processing releases 5-10 times more greenhouse gases than a barrel of conventional
oil. Well, I would simply say that this global warming turbo is the exact
opposite scenario to what the scientists are increasingly telling us and increasingly
making higher and higher demands about how little time we’ve got and how high
the global temperatures are rising and if we’re going to meeting that reduction
of 60 percent by 2050. I don’t consider that this is anything more than a
very short and limited option, certainly not a long term one.
A new energy world order
The third option in my view is clearly the way forward and that is a new
energy world order. I quote James Woolsey, the former Director of the CIA,
no less, who said recently, “Our growing dependence on increasingly scarce
middle Eastern oil is a fools game. There is no way for the rest of the world
to win. Our losses may come suddenly, through war, steadily through price
increases, agonisingly through developing nation poverty, relentlessly through
climate change or though all of these.” I don’t think one could put it better.
Instead the potential for powering the world economy via renewables is almost
infinite, and that is where Governments worldwide including the UK ought to
be doing far more.
Now the obvious answer to
this is, ah yes, renewables is a great idea, but it’s not really a serious
option. It’s just a bit exotic, it’s on the side, and it’s a limited thing.
Even the nuclear industry is saying of course we should go and have nuclear
as the main alternative, but of course we want to see some renewables increase,
and we want to see a bit of energy conservation. Well, the potential for
the global shift to renewables, I think is greatly underestimated. And I
simply quote what is already the case. The United States Department of Energy
(USDE) estimates that three States out of fifty in the USA; that is North
Dakota, South Dakota, and very interestingly Texas, have enough harnessable
wind energy to meet the entire US electricity requirement. Similarly it is
estimated by the European Union Commission that Europe’s offshore wind potential
in waters of 100ft depth or less could supply the entire continents power
requirement. Equally China has enough harnessable wind energy to actually
double its national electricity generation.
With regard to solar power
which is, I think, the long term answer, of course it is much more expensive
now, but where the price has already fallen ten fold since 1980. Recent studies
by accountants KPMG estimate that the construction of a 500-megawatt plant
at a cost of only less than three quarter of a million dollars would bring
the wholesale price down to that of conventional energy. While even the Ford
Motor Company believe that hydrogen fuel cells will become the major power
source for transport within 25 years.
Nuclear v. Renewables
I think it is absolutely clear where we should be going. I now turn quickly
to make a few comments on the other issue, which is the more pressing one
of nuclear energy and Peter Saunders already dealt with much of it.
Electricity generation in
this country is now 40 percent gas fired, 33 percent coal 19 percent nuclear,
4 percent renewables, and for what it’s worth 1 percent oil, and 3 percent
via the interconnecter across the channel. Now with regard to the gas part
of it, there is, I think, an agreement on all sides and it’s certainly a view
I take, that it would be unwise for us to increase our dependence on gas significantly
beyond that 40 percent of total because north sea oil and gas are already
declining quite fast, up to 6 percent per year.
We are already in this country,
for the first time in our history, dependent on foreign supplies for both
oil and gas, but we should not allow that to increase significantly when we
are dependent on countries in the Middle East, Libya, Algeria, Russia, etc.
With regard to coal, of
which we have enormous supplies in this country probably 300 years worth of
supplies. Of course, coal is virtually pure carbon and in terms of climate
change, it is again not a fuel that we should significantly increase and will
certainly decrease.
There are prospects of
course with clean coal technology. I simply have to say however, that there
isn’t a single prototype built either in this country or anywhere else in
the world and I’m very suspicious of Industries talking about new inventions
and how good they are until we’ve actually seen what it looks like, whether
it works, and at what cost. However, carbon capture and storage is a possibility.
But again, it does not actually exist, although it is a possibility.
That leaves, of course,
assuming that gas may go up a bit and coal may go down a bit, but it won’t
change very much. What do you do when nuclear goes down from 19 percent now
to something like 7 percent in 2020 or shortly after. And you do come down
to the question of nuclear v. renewables. Or indeed in some combination.
Now what Peter Saunders didn’t talk so much about with regard to nuclear is
cost. The Performance and Innovation Unit, which is the Governments, own
Strategic Research Agency estimated that by 2020, which is, when nuclear has
got down to about 7 percent and the first time that we could build a nuclear
power station is probably around that time.
The cost of nuclear will
be something like twice that of onshore or offshore wind capacity. More particularly
there is, of course, the problem of decommissioning. I’m amazed that in the
current debate there is so little attention given to this. The cost according
to the Nuclear Decommissioning Agency of the Government is now £70 billion,
and I have it on good authority that the figure will rise further. It’s about
6 percent of our GDP, and one has to ask do we actually want to go further
down a route that has such colossal decommissioning costs. Of course, some
of that is military, that is perfectly true and it does extend over the period
of the last fifty years. But we’re talking about the next fifty years, and
the decommissioning costs are going to be enormous.
.
What
about peak uranium?
The industry is saying that it can do without subsidies. Well I beg
leave very strongly to doubt it. When the industry says that they don’t need
subsidies, that’s why we should allow them to get on with the job, as long
as they can of course do a deal with the Government in some form or other.
We have enormous capital cost, constant overruns; we’re now seeing that in
Finland immediately. And I strongly suspect that there will be no investment
by the private sector unless there is some guarantee about price or some other
Government subvention, which is going to make it profitable. Because the
returns frankly are low.
Now, will the AP1000 series
be cheaper? Peter touched on this point. Only if you miss out the containment
unit and only if you lower transmissions cost by putting it close to the population.
But we do want to have an energy system, which is cheaper at the risk of undermining
safety? I very much doubt it.
Waste is a huge problem.
We have 10,000 tonnes of intermediate and high level waste in this country.
Governments have tried sincerely on both sides to find a way out of this problem.
We have not done so. I don’t think we are any further forwards about finding
a site today than we were 30 years ago. By the end of this century, according
to the Department of Trade and Industry (DTI) even with no new nuclear build,
there will be half a million tonnes of decommissioning costs and waste management
costs. That is absolutely gigantic. There is a terrorism risk people have
talked about, there is a cancer and leukaemia risk about which one could talk,
which is highly controversial, but I think is relevant. But then there is
this peak uranium, which has had rather less attention. The world now produces
just over half the uranium ore that nuclear power plants consume. This gap
is filled at the present time by using the plutonium from dismantled cold
war nuclear weapon stockpiles. However, this source is drying up and will
end by 2013. So, the private sector is of course trying to develop more uranium
mines. They basically exist in Canada, Australia and Kazakhstan. Of course
there are now indigenous sources in this country, but given the extra demand
for 440 nuclear reactors across the world, 28 currently under construction,
China is planning 30 new plants by 2020. The best estimates made is that around
one quarter of nuclear power plants will be forced to shut down within a decade
as a result of lack of fuel. Is that a fuel source on which we can rely?
Renewables
fill the energy gap
The real issue is can renewables fill the gap? I have already given some
evidence on this. So first let me say that this country has to meet its 10
percent commitment to renewables by 2010. The consultants, (Oxera etc) think
that we will get very close to it, probably slightly less than 9 percent.
However what is significant is the European Union Renewable Energy Directive
already stipulates 22 percent for the whole of Europe by 2010. So this country
is certainly going to be under pressure perhaps mandatory to move strongly
to 20 percent as soon as possible after 2010.
Is that realistic? Well
at the moment renewables in the UK are just 4 percent. Look at every other
major country in Europe, the big countries Germany, France, Italy, Denmark,
all in the area of 15-20 percent, Scandinavia actually over 30 percent, in
Finland and Sweden. The UK’s 4 percent is simply because we have not seriously
under any Government begun to develop the capacity we’ve got. We have more
wind power capacity because of our island position off the continent of Europe
compared to the rest of Europe put together. There is enormous potential,
but the vested interests in this country, particularly the nuclear industry
and the other big utilities have managed to squeeze out renewables. There
can be no doubt therefore that the 12 percent gap left by nuclear by 2020
can be met by renewables alone, there is not the slightest doubt about that,
without the higher cost, without the environmental health hazards and the
terrorist risks of nuclear. It is equally clear, contrary to what is so often
said, that we do not need nuclear in order to meet our Kyoto targets. As
Peter indicated their contribution whilst welcome is actually pretty small.
It’s very significant
that AEA Technology, the former research arm of the Atomic Energy Authority,
recently concluded after a study backed by Britain’s second biggest electricity
company, that a quarter of Britain electricity needs could be met by building
the worlds largest complex of windfarms on the North Sea off the East coast.
Perhaps even more significant, Germany has gone considerably further by decreeing
that half their energy will come from renewables by 2050. Now, I believe
passionately and I’m sure everyone else here does too, it’s not just about
what is the right energy mix, it’s about managing the demand, reducing the
demand and there is so much we can do about that.
Only 15 percent of the energy
used to drive a car actually reaches the wheels. Only 25 percent of the energy
used for cooking food in a standard oven actually reaches the food itself.
And it is estimated that a very small improvement in the efficiency of cars
in the United States, of cars and light vehicles would be sufficient to reduce,
if not completely eliminate the import of oil from the Gulf, which some of
us might think was a better answer to the energy problem than starting a war
in Iraq.
I think the evidence is
absolutely clear. Renewables are set to become the dominant energy source
of the 21st Century; plus determined energy conservation for economic
as well as climate change reasons, must be part of the answer. I think it
is staring us in the face. And I hope that there is going to be very strong
cross-party support a fundamental change in our energy policy.
Speech given at ISIS Energy Report Launch Conference,
25 May, Westminster, transcribed by Sam Burcher and edited by Mae-Wan Ho
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