Wednesday, October 29, 2008

The Oil Crunch

Attended the launch of The Oil Crunch, a report looking at what will happen if we fail to address the systemic problems we have with energy, and oil in particular, in the same way we ignored systemic problems in the finacial sector. For me this is the most comprehensive, clear and well written assessment of the energy situation yet produced including contributions from both Shell and Zero Carbon Britain as possible scenarios. The basic message is that the UK has a 3-5 year window to engineer a soft landing and their hope is that this report will put the arguments into context and stimulate a knowledgeable debate.

The four scenarios considered are:
Growth - becoming less plausible by the day
Plateau - Shell - growth in supply to 1015 and plateau into the 2020s
Descent - Zero Carbon Britain
Collapse - here be dragons
The taskforce favour Descent, although this is conservative compared the the current IEA forcasts leaked today in the FT which project a 6.4-9.1% pa!

A good question was asked about why businesses would not want to sell more, particularly utilities. Ian Merchant from Scottish and Southern Energy, jumped on this one saying it was not good business practice to sell people what they did not need. Much better to sell less and build up a larger loyal clientbase. Great answer! It seems as the mighty are falling, what was previously unsayable (if you valued your job or reputation) can now be said. Will Whitehorn from Virgin said that business growth for the sake of growth was not good either, although there would be opportunities for growth in a descent scenario.

Some other points that came out of the Q&A:
- the need for a policy around heat as well as energy
- the urgent need for a feed-in tariff (and this seems about to happen)
- a key question is how much energy do we, as individuals, need to fuel our lifestyle? This is about us using smart technology and making choices.
- there is an urgent need to look at the regulatory environment which is creating many roadblocks to progress such as planning restrictions
- Stagecoach have coverted some buses in Kilmarnock to run on waste oil such as chip fat. Custom has increased, and some travellers are bringing bottles of old chip oil to pay for their journey!

The Industry Taskforce on Peak Oil and Energy Security included senior representatives from Virgin, Solarcentury, Stagecoach, Scottish and Southern Energy, Yahoo, Arup, Foster and Partners and First.

Report at

A few ideas occurred to me during this presentation. I don't think there is much to be gained by trying to analyse exactly when Peak Oil will occur. The question is when will the symptoms associated with Peak Oil start to have an impact and the answer is that that is already happening. Symptoms include erratic prices as confidence evaporates and pricing oil becomes more difficult, oil producing countries starting to conserve supplies for themselves, significant investment moving to renewables and alternative energy supplies, increasing interest in the subject in all areas.

I would like to see a mega plan put together identify all the projects/changes that need to happen and what the timescales and dependacies are for each of these. From that we could draw a huge plan identifying the critical path and what changes need to happen to unblock sections of the plan (like implementing feed-in tarrifs, smart metering and DR).

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