Download Overview - Austrian Association for Energy Economics

PEAK OIL AND CLIMATE CHANGE POLICY
Aviel Verbruggen, University of Antwerp, +32 3 220 4895, [email protected]
Mohamed Al Marchohi, University of Antwerp, +32 3 220 4587, [email protected]
Overview
We discuss the eventual impact of belief in nearby peak-oil forced by physical depletion, on the design of climate
policies. Peak-oil belief stimulates a passive attitude in climate policies when suggesting emissions reduction may
piggyback on the dwindling oil stocks. An extreme version is that carbon dioxide emissions from fossil fuel combustion
may disappear without additional mitigation measures.
A few concepts, data and mechanisms of resource exploitation are reminded, with an overview of the different
conventional and non-conventional oil resources and their associated carbon charges. A balanced outline of the two
Peak-Oil camps with their corresponding arguments is presented. Weighing arguments and statements by peak-oil
adepts and critics reveals that semantics contribute to their conflicting positions. Both camps confirm the standard
sequence of natural resource exploitation that runs from easier and cheaper reserves uphill to more difficult and
expensive grades. The latter are still available in immense quantities. The seemingly conflicting arguments concerning
increasing oil reserves and decreasing discoveries of new oil sources are normalised by showing the former handles
proved reserves while the latter handles a wider range of reserves. Over time, already discovered oil may be converted
to proved reserves because of increasing prices and/or advancing technologies.
Applying a sources-sinks perspective on the exploitation and use of oil resources, highlights the physical condition that
atmospheric sinks constitute the tight constraints on oil use, not the scarcity in resources. Carbon stocks in fossil fuel
resources are still immense enough to multiply present carbon dioxide concentrations in the atmosphere. Avoiding
further increase in concentration of carbon dioxide in the atmopshere as IPCC argues to be an absolute necessity,
implies very limited use of fossil fuels in the future. For ‘drastically and urgently’ reducing the use of fossil fuels, there
is a need for “setting higher end-use prices” (Stern, 2007). The point of discussion remains: how will the prices be set?
When oil companies can charge the higher prices they can afford bringing new oil to the market at least for decades,
maybe for centuries, extending the carbon lock-in by fossil fuel technologies. Higher end-use prices therefore should
result from charging end-users for the public good “atmosphere” and recycling the revenues for efficiency and
renewable energy options. The oil age will not end by lack of oil, but emission limits will trigger the reality of peak oil
production in the coming years. Hindsight in the distant future will find a peak-oil occurrence in our times, not because
of lacking oil resources but because of depleted deposal space in the atmosphere.
Methods
The analysis is based on the literature on oil production; many available publications of peak oil adepts and of critics is
processed and compared. The work is so to say comparative analysis. Some graphs used by prominent peak-oil adepts
and critics are updated, edited and nuanced. But ahead of the comparison of the two camps, we covered more standard
literature on resources, their availability and their exploration and exploitation. For the sources-sinks perspective, we
converted the fossil fuel resources data into carbon stocks and compared them with historical emissions related to fossil
fuel use. The latter linear relation is very approximative, because the precise relationship between quantities of emitted
carbon dioxides and the concentration of greenhouse gases in the atmosphere and the consequential effects on radiative
forcing, average temperature rise, etc. requires highly complex meteorogical models (IPCC).
Results
We have completed and updated a few graphs that are famous in the debate (e.g. Hubbert bubbles; Odell’s graph from
1992 showing additions to reserves versus production). We added the latest available data and this provided new
insights for further debate. The arguments are supported by graphs that will animate the presentation and discussion.
The carbon stocks, converted from fossil fuel reserves and resources data, have been put together with the historical
fossil fuel emissions to give a graphical overview of the carbon balances. The discrepancy between the carbon in the
atmosphere and the carbon in the geo and biosphere is clearly observed. The results are helpful in framing the
discussion within orders of magnitude.
Conclusions
1.
We conclude that peak-oil due to nearby exhaustion of physical resources is not an urgent issue, because the
physical resource base is sufficient for centuries, and there are no strong arguments why exploration and
exploitation technology should not evolve as it did in the past.
2.
The debate about what is peak-oil exactly and how important it is, is often foiled by unclear language: there is
no common set of definitions agreed upon and various parties apply concepts differently. When the debate is
normalized for semantics, the differences between several supporters of the peak-oil vision and the critics
become minor.
3.
The real problem in commercial energy use facing the world today is not at side of the sources but at the sinks.
IPCC (2007) shows that the atmosphere cannot absorb a lot more carbon dioxide. Due to limits on emissions,
peaking in oil (and other fossil fuels) production will be the observed fact within the coming years, but this is
not the “peak-oil” phenomenon of the Gaussian bubble based on geological limits.
4.
Pricing/taxing oil and other fossil fuels (predominantly on the basis of carbon content) is an important policy
issue of the coming years, that will shape the peak oil pattern during the coming years.
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