Energy and Climate Change

Energy and Climate Change: A Sustainable Future?

A presentation given by Dr. Thomas Homer-Dixon to the Canadian International Council 2008 National Foreign Policy Conference in Toronto. Watch the video

The images shown in this transcription are just placeholders. Dr. Homer-Dixon will insert better images once the transcription is complete. There is still a lot of proofreading to go. About 41 minutes of 1.5 hours have been transcribed so far.

0:23

Welcome

Thank you very much. It is marvelous to be with you. I feel very flattered and privileged to be able to close your conference, and I realise that at the end of a meeting like this, especially on a Friday afternoon, we really are down to the most determined, hard-core people who want to see this thing through. I feel very fortunate that you are still here to listen to me, and I hope that I am able to communicate some useful information over the next three-quarters of a hour. 0:52

Are Radical Measures Necessary?

When I started to think about this presentation I looked through the material I had for the conference program. This was the title of the session originally Energy and Climate Change: Are Radical Measures Necessary?, but when I went onto the web and looked at the most recent program, I found that the subtitle had been changed to A Sustainable Future? Well, I actually decided that I liked the earlier title better, because I think it is actually a much more important question. I think the word sustainability is almost unserviceable now. I don’t think it has a lot of content. It also perhaps, to the extent it has any content, is somewhat misleading because it implies that we can find some kind of nice sort of glide path where we can tweak things carefully and maintain human, or increase human well-being more or less indefinitely into the future. It implies somehow that the systems that we live within — the resource, environmental and economic and social and technological systems are easily managed, or if not easily managed, we can manage them, that we understand them well enough that we can find that glide path, or that flight path and maintain it indefinitely. I am increasingly convinced that it is a complete folly that we can do that kind of thing, that inevitably human affairs involve constant adjustment constant recreation of one’s perspective on the world and response to crisis. I am absolutely convinced that the challenges of the twenty-first century will be among the most severe that human kind has ever faced and we are going to have to be very nimble and very creative and very responsive in that approach during that time. I think the real question becomes how much, how serviceable are our conventional ways of looking at the world, our conventional scholarly and academic apparatuses and theories in allowing us to understand the challenges we face and what we should do about them. 3:03

So I think in the end, I think this is a much more interesting question and my answer is provisionally is, are radical measures necessary? You bet, and every day we wait, the more radical they are going to have to be. I want to explain why I think that’s the case, over the next few minutes. 3:21

General Purpose Technology Transition

This is a time in the future of enormous risks and enormous opportunities. We are going to be going through in the next decades a deep reorganisation of our economies and societies. Because we are going to have to make some very profound changes to the way we live, technologically, institutionally and very basic patterns of our lives relating most fundamentally to our energy use patterns. This is going to be something equivalent to what economists most commonly call a General Purpose Technology Transition or a (GPT) transition. We have seen a number of these in the past, with for instance the rollout of railroads across North America, the development of the internal combustion engine, the electrification of our economies, more recently the development and diffusion of the personal computer. In each one of these cases you saw a surge of investment, an enormous process of creative destruction as some industries simply disappeared and other ones were created. There was a terrific opportunity for entrepreneurship and innovation but there was also terrific hardship and disruption and economic crisis in certain sectors.4:40

I think that the real question for us in the future, the real question for Canada, is whether we are going to be one of the leaders of this transition, which could be of a magnitude much greater than any of those previous GPT transitions, or whether we are going to once again as so often has been the case in the past, be a follower. I would like to see us be a leader. We have everything it takes for us to be a leader, but we are very rapidly choosing the path of being a follower and so I will go through a few ideas in the future especially some of the places where Canada could be specialising in technological innovation where I think Canada could really make a mark. 5:24

The Challenges

But first let me spend some time talking about the nature of the problem we face, the magnitude of the problem and challenge we face. [I have a laser pointer here which is about the size of a brick, the whole Russian technology.] I think we will look back, or historians will look back, at the end of the twenty-first century and say that the twenty-first century wasn’t the age of biotechnology or the age of nanotechnology or some other thing like that but will say that this was really the age of nature, that this was the century in which we were reminded powerfully, perhaps very hurtfully, that nature matters in every aspect of human well being, that we are fundamentally dependent upon the services and goods provided by the natural world, the resources and environmental products of the natural world. The economic challenges of the twenty-first century are going to be powerfully driven by these material forces — demographic change, resource scarcities, environmental stress and technological shifts. 6:39

But that’s not the end of the story or even the beginning, because the challenge we face, I think, most fundamentally is one of multiple things happening simultaneously, a challenge of converging stresses. If we look at the instances of major social trauma and turmoil like the great revolutions of history, the French Revolution, the Russian Revolution, more recently the Iranian revolution, research shows that those societies ran into trouble and the states collapsed, in significant part, because they were hit by multiple shocks simultaneously, multiple stresses simultaneously that produced a situation of instititutional overload. The coping capacity of these societies wasn’t sufficient for the stresses that they faced. I am increasingly concerned that that’s the circumstances that we face right now in the world, that we are creating a situation of potential global societal overload. 7:38

Here are some of the things I think are converging on us. I sometimes say it is a bit like we are standing in the middle of a large parking lot and we look out as we see that there are ten Mac trucks approaching us simultaneously, barrelling down towards us. We look at one and we see across the front bumper “climate change” and we at look at another and we see across the front bumper “energy” and we step out of the way of one, and we look over here and there is another one coming at us. That is, I think, an enormously dangerous situation. 8:09

Synergy

place holder global warming slide

Here are some of the things I have highlighted in my most recent work. One of the points that I want to emphasise with this slide is captured by those little multiplication signs. These factors tend to tend to reinforce each other. The whole is more than the sum of the parts. You are getting synergies and interaction effects among these problems that make them collectively harder to solve. It would be really nice if we could just do these things consecutively. We’ll deal with the energy problem, then we’ll deal with the economic inequality problem, maybe pick up a bit of climate change on the side, but it turns out that we’ve got all this this stuff going on simultaneously. I’m going to focus on two of these challenges — energy scarcity and climate change, over the next few minutes. When it comes to climate, something significant has happened in the last three years. In fact in major part, since the release of the, excuse me, I have to get this right, since the guillotine came down on the science that was included in the latest round of IPCC (Intergovernmental Panel on Climate Change) reports. Now that deadline was the middle of 2005. It turns out in terms of climate change science to be a long time ago, and a lot of things have happened since then. We have about three years more of data, and even though the IPCC reports were released at the beginning of last year (2007) they were already insignificant part out of date by the time they were released. In that period of time, over that last three years, climate scientists have shifted their perspective significantly. They have moved from a perspective of, I think, generally regarding climate change as a matter of significant concern for human kind to now regarding it as a matter of grave urgency. A significant proportion, a large proportion of climate scientists now believe that we are close enough, potentially, to a tipping point at which the biosphere and the climate system could start its own to release very large amounts of carbon, that we may only have say 5, 10 at the outside 20 years to turn this ship around and start ramping down carbon emissions globally, very quickly. 10:23

The Two Crucial Climate Facts

There are points I want make about climate, in my comments here:

Positive feedbacks appear to be developing enormous force.
Ice-sheet melting appears to be occurring far faster than expected because of dynamic processes.

10:39 But first of all let’s talk about where we are right now.

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We’re looking at here a NASA map, Goddard Institute map, of warming in 2007. This is relative to a 1951 to 1980 baseline. So each region in the world’s temperature in 2007 was compared to the average temperatures between 1951 and 1980. We see across the bottom, a scale in Celsius from -3.5 to +4 degrees Celsius. 2007 was tied with 1998 as the second warmest year on record. 2005 was the warmest year on record. Take a look at what’s going on in the northern part of the planet. This is relevant for Canada as a northern country. It’s warming much faster, for reasons that I will explain in a few minutes. In terms of the magnitude, we see across the inhabited portions of Canada warming in the neighbourhood of 0.2, 0.5, 1 degrees and maybe in the prairie area 1 to 2 degrees Celsius. That might not seem like very much, but keep in mind, in terms of the magnitude of warming, that if we compare current temperatures to the temperatures that prevailed on the planet on average, the coldest period of the last ice age, 15,000 years ago, we are only about 5 degrees Celsius warmer than we were then. By the end of the twenty first century, the IPCC, according to its estimates which I think are probably conservative, the IPCC predicts that the average, the planet on average, will warm around 3 degrees Celsius. And that is probably going to be the fastest warming that the planet has experienced in at least the last 20,000 years. 12:26

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Looking back over what we’ve seen since the beginning essentially of the rapid industrialisation of the world economies and the temperature record that we have going back to 1880 up to 2007, this is the kind of chart you see. This again is a chart by NASA-Goddard. Each square dot represents the mean surface temperature of the planet as estimated for that particular year. The green vertical lines are error bars that gets smaller as we get closer to the present because the data get better. The red line is a five year moving average. You can see there is a lot of variation around the average. That’s because, on year by year basis, the world’s climate is chaotic. It is especially influenced by ocean dynamics and especially by what are called ENSO events, ( El- Niño Southern Oscillation events) as you probably know there is a kind of sloshing of warm water back and forth in the South Pacific. When you are in an El-Niño phase of the ENSO cycle, the planet tends to be warmer than average, When your are in an La-Niña phase, as we are right now, of the ENSO cycle, the planet tends to be cooler than average. 1998 which is right there, was, according to climate scientists was the most powerful El-Niño phase of the cycle in about 100 years. This is a substantial deviation from the average 1998. Currently we are in a La-Niña portion of the cycle, as I mentioned, which means that temperatures, probably, this coming year (2008) will probably not be a record high for the planet. 14:03

Has Global Warming Stopped?

I want to point out and respond to an argument that is out there right now that focuses on what’s happened in just the last few years. So we are looking from basically 1998 here, 2005, 2007. The argument that’s made frequently is that global warming has stopped, because if you start your little line at 1998 and draw it to 2007 you can say that there’s no trend. Well, when I talked to scientists about this. I did a little presentation at the Perimeter Insitutute, for instance, out of Waterloo, and there was laughter in the audience, because this is an elementary statistical mistake, and, in fact, it is probably an outright statistical manipulation. You could, if you want to go back, excuse me, to this, you can draw straight lines, many places in this graph, if you pick your starting and ending points effectively. What you really need to pay attention to, given the chaotic short term and medium term nature of the global climate is you need to pay attention to the moving average over at least a five year period. We can at expect therefore that when we get into the El Ninño phase of the global ENSO cycle, we will see much warmer temperatures. By the way, this leveling out of warming is usually attributed to changes in the changes in the solar cycle, in particular the absence of sun spots. There are some people who claim, we’re into a long term situation of no sun spots on the sun and therefore lower solar radiation therefore cooling of the planet, and as some people would say “yada yada”. 15:45

I think is important to know, though, why this argument is not valid and to understand though that we’re going to be hearing a lot of it over the next while, especially if this coming year turns out to be relatively cool, compared to other years. 16:01

Predictions

Looking out towards the future, the Intergovernmental Panel on Climate Change (IPCC) has produced a number of scenarios of potential future of warming and these are based on scenarios of carbon emissions going out to 2100 which in turn are based on estimates of future global population size, patterns of use of technology, certain kinds of assumptions about what kinds of energy source are used, estimates of fossil fuels and the like. 16:33

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Here we have three of these of these scenarios: B1, A1-B and A2. A1-B has been considered, in most of these discussions too be kind of modified business-as-usual, what the world will look like if continue along more or less the track we are on now, with some technological improvement, but no really aggressive attempts to deal with climate change. Across the bottom we have a scale from 0to +8 degrees Celsius. I am going to blow up these two images here. A1-B you can see 2020 to 2029 somewhere around the 15 to 20 years from now, across the inhabited parts of Canada we are looking at warming in the neighbourhood of 1.5 to 2 degrees Celsius. You get out toward the end of the lifespan of our grandchildren, at least my grandchildren, (whom I may never meet since I have two very young children at home), but their children are quite likely to be alive at the end of this century. You are looking at warming in the inhabited regions of Canada in the neighbourhood of 4 degrees and northern Canada in the neighbourhood of 5 degrees and the polar region 6, 7 to 8 degrees. 17:39

The Fat Tails Problem

Now, there are many people who consider that these estimates from the IPCC are potentially conservative in particular the ones that go further out into the future because they don’t take into consideration the full distribution of probabilities in the modeling. They tend to look at the mean, so for the A-2 scenario, which is not too dissimilar to the A1-B, we have this, the model runs, each curve represents a model run and you have a pretty close clustering of means here and a close distribution variance across the bottom. When you go out further into the future, you find the variance is much wider; the spread is much wider. For some of the models there is a suggestion of a significant probability that we could end up with warming not at the average of the models at 3 degrees, which, by the way, is what economists and many policy-makers are always pointing to, but warming 4, 5, 6 or even higher degrees. This is what is called the fat tails problem. Here are the fat tails — the higher tails of the probability distributions. I’ll come back to this discussion later in my presentation, but it’s important to recognise that there is, according to much of the modeling, non-trivial possibility that we could have temperatures at the end of this century much higher than 3 degrees Celsius. There is also of course a non-trivial possibility that we might end up in the lower fat tail too. 19:09

Positive Feedback

Let’s talk about positive feedbacks for a moment. Most of you probably know that a positive feedback is a causal cycle where a change in a system produces a sequence of changes that reinforces the original change. Positive feedbacks are fundamentally destabilising. They take the system in a new direction. often towards another equilibrium of some kind. You can contrast those negative feedbacks where a change in the system produces a series of changes that contradicts or counteracts the original change. These are equilibrating feedbacks. They are stabilising. Much of the debate over the last decade, but especially over the last few years in the climate science community has been over the relative prevalence of positive versus negative feedback. 19:54

There are many feedbacks in the climate system. Some of them we understand reasonably well. Some we don’t understand reasonably well. There are lots of negative and lots of negative feedbacks. The consensus that’s emerged in the last two years, and this is a very strong consensus now, is that the positive feedbacks on balance are more numerous, and in aggregate more powerful than the negative feedbacks, in fact far more powerful. They serve to accentuate the impact of relatively small differences in trace gases in the atmosphere. That is why what appear to be, to many people, tiny changes is concentrations of carbon dioxide can have such a large effect on the global climate. One of the most important positive feedbacks, but perhaps not the most dangerous to us, is a radiative positive feedback the ice albedo feedback that operates especially in the arctic reasons the arctic is warming so much faster than the rest the planet. You have probably heard about this as the arctic ice disappears it opens up ocean water. The open ocean water is dark to sunlight. It absorbs 80% more solar radiation than water covered by sea ice, highly reflective sea ice. As the open ocean water gets warmer, it impedes refreezing of sea ice in the subsequent arctic winter. The ice that does freeze is thinner and melts more easily, the following arctic summer. The result is a kind of vicious circle and more rapid loss of sea ice. There are a bunch of positive feedbacks operating in the arctic we now realise. This in one of the most important. It’s probably contributing significantly to the rapid loss of sea ice. 21:39

place holder global warming slide

What we have here are data from the National Snow and Ice Data Center, in Boulder Colorado. Across the bottom from 1978 to 2007. Up this axis from 4 million to 9 million square kilometers of arctic sea ice. As you know, I am sure, you have a cycle of the extent of arctic sea ice through the course of the year. During the summer it shrinks in extent and during the winter expands during the arctic winter. Each one of these little diamonds here represents the minimum sea ice extent for that year in the arctic, and that usually occurs around mid September. This past year (2007) it occurred on September 16. What the National Snow and Ice Data Centre people have done is they regressed a line between the data points from 1979 all the way down to 2006. In 1979 you had an area ? 7 and 8 million square kilometers. In 2006 we were down to about5.3, 5.5 million square kilometers. Then we saw last year (2007) a sharp divergence from trend. 22:53

I should tell you I was in conversation, both directly and by email, with a number of climate scientists around the world when these data were coming out last August and September (2007) when we saw that dramatic drop in sea ice. This was a jaw dropper, for them. They were astonished. According to the models, that loss of sea ice shouldn’t have occurred for at least another 30 years and the IPCC implies it should not have occurred for at least another 50 years. So we are way ahead of where we should be, but it reflects the fact, perhaps, that what we are dealing with here is fundamentally a non-linear system. It is system that has the ability, as I mentioned before, to flip from one equilibrium to another equilibrium. We may actually be in the process of seeing over last year, or the last couple of years a rapid and radical change in a major feature of the earth’s climate which is cryosphere, the system of ice at the north and the south of the planet. We may actually be in the process of seeing the disappearance, at least during the summer, of a majority, if not all of the ice in the north. 24:01

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What are we looking at now? What do the latest data show? This a radar image of the arctic from the middle of March, this past March (2007). Here we have Alaska, northern Canada, the Canadian archipelago, Greenland there, Siberia, the Bering Strait. This dark area of course is open ocean water. The darker grey is seasonal sea ice, that’s ice that’s refrozen, just this past winter. The light grey and white, crammed up against the northern part of the Canadian archipelago and Greenland s the last remaining multi-year or perennial sea ice in the arctic. Normally that perennial sea ice would cover a much larger portion of the arctic. What we have seen in the last 6 months, has been an enormous flushing or evacuation of perennial sea ice from the arctic. I am just going to show you what that has looked like using the same kind of images, although with a slightly different orientation. Here we have… I hope you can see this. Here we have Greenland right here. That’s the east coast of Greenland and the west coast of Greenland. Northern Canada, Alaska here, Siberia. If you watch this date clock this October 1, 2007. 25:28

Here we have the remaining ice after the minimum sea ice was reached in the middle of last September. What I am going to show you is a video clip of individual images taken every day all the way up to March the 20th. I like you to keep your eye on this east coast and the west coast of Greenland and you’ll see the flushing process I was just talking about. November… December… January… February… March… What are we looking at now? This is the remaining perennial sea ice, this is seasonal sea ice in this region. If we have another summer approximating what we had last summer where the meteorological conditions were a bit unusual. There was a lot of cloud cover over arctic, but we have a warm summer with out much cloud cover, we can expect that this ice will disappear and we will open ocean water for the first time, at least in the scientific record up the past the north pole. I think this could well be a galvanic event for the world, when this happens. Most people are not aware of what’s been happening in the arctic over the last six months. It’s in significant part happening because as the arctic waters have become warmer, high, the Siberian high that usually sits right in this area has weakened and that has allowed winds to develop that have been blowing across the arctic in this direction. Since the ice has been weakened by warmer water that has been coming up through the Bering Strait and eroding it from underneath the ice has been easily blown by these new winds out and down, especially the east coast of Greenland. 27:12

Now, this actually isn’t actually about polar bears. I know that earlier some people talked about issues of Canadian sovereignty in the arctic and they’re important and worth considering but I think issue of biodiversity, polar bears, I’m afraid native communities, arctic sovereignty, whether we are going to get into a tussle with Russians over explorations for natural gas and oil, and whether we are going to be able to get tankers and freighters through the Northwest Passage, are all actually secondary or tertiary to the real concern that should be on the table which relate to global weather, because what we are going to do if we lose the arctic ice is we are changing an area above the arctic circle that represents 9% of the surface area of the planet above the equator from a highly reflective surface to a high absorptive surface. This is going to have a big effect potentially on the energy balance of the northern part of the planet, perhaps the whole northern half of the planet, and the weather patterns of the northern half of the planet as a result.

One of the concerns that scientists have is for these circulations that are called generically Hadley cells which are vertical circulation in the atmosphere that you can see operating here.

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There are three of them — the Hadley cell at the equator, the Farrell cell in mid latitudes, and the polar cell. The polar cell sinks here. The atmosphere sinks here in part because the pole is covered with ice and it is very cold. This circulation, along with the Farrell cell, determines the path of jet streams. Jet streams tend to move down the interface between the polar cell and the Farrell cell. And of course the jet stream paths determine storm tracks, precipitation patterns very much further abroad and potentially things like food production a long way away.

I have asked a number of climate scientists about the implications of the loss of arctic sea ice for global weather patterns and they actually don’t know what it’s going to do, but almost without exception, they are extremely worried about the implications. 29:34

Dynamic Ice Sheets

The issue here really relates to sea level rise and the rapidity of the potential melting of Greenland and western Atlantic ice sheet. Just to give you some quick figures, what we are talking about. If Greenland were to melt entirely, and nobody is saying that is going to happen fast, we would see sea levels arise about 7 metres. If the west Antarctic ice sheet were to melt entirely, sea levels would go up about 5 metres. If the rest of Antarctica melted, it would go up another 55 metres, or so. The total in all three areas is around 70 metres. Concern is about what’s happening in particular Greenland and the west Antarctic ice sheet. Here is an image of Greenland:

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Because there has been a rethinking of the nature of ice sheet melting over the last few years, again one that is not reflected in the IPCC reports. The IPPC estimate of sea level rise which is 20 to 60 cm this century is largely based on what are called static ice sheet models. In that case they are basically assuming if you have warmer atmosphere over the ice sheet, the ice sheet melts. You have water accumulating on the surface of the ice sheet that runs off the surface and down into the ocean, but it turns out as the ice sheets melt and warm, they start to develop cracks. These cracks tend to become very large and are called moulins. That’s one in Greenland and very substantial quantities of water flow down those cracks to the base of the ice sheets. A number of things may happen at that point. One thing that people are concerned about is that water will help lubricate movement of glaciers and ice sheet much more rapidly into the ocean. There is a debate about whether that’s happening or not. Another thing that gets less attention though is that these millions, perhaps hundreds of millions of tons of water, are taking enormous amounts of heat to the bottom of these ice sheets which essentially means they are melting both from the bottom and the top. There are a bunch of other things we now realise about the dynamics of ice sheets that weren’t incorporated in the IPCC reports. So the consensus in the scientific community about sea level rise has changed substantially. Even when the Working Group One report was released at the beginning of last year, ice sheet specialists came out and said the 20 to 60 cm estimate is way off the mark. Now, you hear a consensus that we are looking at least a metre this century and possibly 2 metres. James Hansen of NASA-Goddard has recently written that if you look at the paleolo-climatological record that goes back many millions of years and look at episodes where we believe sea level rose very fast there is evidence that sea level has risen in a number of case at a metre every 20 years. That’s because when these ice sheets start to go, they start to go really fast. It can be a process that is fundamentally non-linear, again a kind of flipping process. Our assumption that we are going to move in a nice incremental process into the future for many centuries when it comes to ice sheet melting is probably unwarranted.

Now, even if its 2 metres, which I think will probably become the consensus estimate within the next ten years or so that is that is still an extraordinary change in sea levels. We are building new residential areas in places like Delta and Richmond and west coast and we are rebuilding port facilities in Victoria and Halifax. The whole Vancouver airport, by the way, is already essentially under sea level. These are areas with a two-metre sea level rise that will have to be probably abandoned. There are major cities in the world where the two-metre sea level rise where start to question their viability. London, large parts of Manhattan, Rotterdam, Amsterdam, not to say many cities in the developing world. These costs have not been incorporated into the estimates of the consequences of climate change for the most part because those estimates usually take at face value the IPCC estimates of 20 to 60 cm sea level rise. 33:56

Energy

Let me move on to the energy issue. The four points I want to make are summarised here:

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We are probably near peak global output of conventional oil.
The energy cost of conventional oil is rising fast.
This trend appears to be driving a shift to more carbon intensive fuels,
and that means as a result massive deployment of Carbon Capture and Storage or what it called CCS is essential to avoid catastrophic climate change.

I am going to focus on the first three of these points over the next minutes. The most important thing I want to say in that we are in a transition period right now. We are beginning a transition from what you might call a petroleum age to a post-petroleum age. We don’t really know what the post-petroleum age is going to look like, but we can be pretty sure it going to be pretty different from what we have experienced. We need to recognise just how anomalous the last 150 years have been in human history. And by the way, Canadians should be a little bit bit proud of this, perhaps not, but the commercial oil industry began in Oil Springs Ontario exactly 150 years ago. It did not happen in Titusville Pennsylvania in 1859. It happened in Oil Springs Ontario in 1858. The gushers there were so prolific that they produced oil that flooded the ground up to a yard thick and the oil flowed into lake Simcoe and down into the St. Lawrence river system and fouled boats as far away as Kingston.

During the last century between 1900 and 2000 the human population quadrupled in size. We increased agricultural output four-fold. I should say yields-per hectare, agricultural output per unit land four-fold during that time. We increased energy input per hectare 80-fold. For mechanisation, fertilising, irrigation transport and the like. A very large proportion of the human population would not be here if it were not for petroleum. Every time you fill you car gas tank, you are putting the equivalent of two years of manual labour into your gasoline tank. Three tablespoons of crude oil can contain as much usable energy as consumed by a manual labourer in two days. This is remarkably good energy. It is in some ways the most versatile probably and the most dense, in terms of its energy density, energy that humans are ever going to have available to them, and we have just ripped through it in a blink of an eye. Now, we are going into new period, and we know we are going into a new period because data like these:

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Oil

What we are looking at here are two curves, two plots, in time, 1900 to 1905, here from 0 to 60 billion barrels of oil equivalent. The lighter line represents global oil discovery which peaked as you can see around 1964 with around 60 billion barrels of oil has declined more or less steadily since then with a reversal in the 1970s when the North Sea fields and the North Slope fields in Alaska were discovered, and the North Sea fields in Europe. This dark line represents production or consumption, and its is rising at around 1.5 to 2% pretty steadily largely as a result of the very energy intensive industrialisation in India and China, as we heard earlier this afternoon, but the thing to notice of course is this gap over here, this yawning gap between production and consumption and discovery. On an annual basis, human kind around the globe is consuming around 30 billion barrels of oil, but we are discovering, on an annual basis, when we talk about conventional oil, we are discovering somewhere between 3 and 5 billion barrels. So on an annual basis we are consuming somewhere between 5 and 10 times as much oil as we are discovering. Now we can do that for a while because we are able to consume oil that we discovered a long time ago, but eventually this dark line is going to peak and start to decline. It is hard to say when that is going to happen. There is some evidence it has started to happen now. That is maybe one reason despite the fact that the United States economy static or declining that, energy prices/oil prices have stayed high. That’s a very unusual phenomenon by the way. In every other case, when the United States has entered a recession oil prices have started to decline. There is a lot of evidence that significant supply constraints in global conventional oil supplies. Now conventional oil provides 40% of the world’s commericial energy and and 98% of the world’s transportation energy. It is the stuff the global economy literally runs on. But aren’t there a lot of other oil fields out there? Well CitiGroup, an energy analysis group at Citi, recently basically analysed all the potential fields that were coming online, 175 of them, between 2005 and 2013 and tallied up the potential production from those fields and extrapolated it out through time. The total is this line here, what you are looking at, so this is from 2005 to 2013, and here the zero point represents 85 million barrels of production per day. Which by the way where the world’s oil production system has been stuck for the last 2½ years. We haven’t seen any increase about 85/86 million barrels of oil for 2½ years, another very unusual situation.

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If we bring all these 175 fields online and assume that they are going to be three months late, that’s the red line, and assume they are only going to produce 90% what they are predicted to produce, that’s the green line, then this is the amount we are going to be able to add, this green line to that 85 million barrels a day. So another 4 million barrels, 5 million barrels in 2008. Actually, excuse me, that 6 million barrels 6000 times 1000, 6 million barrels plus the 85 million barrels a day.

Oil Fields Decline As They Mature

However, here is something that most people don’t understand. All those material oil fields around the world that have been producing oil for us because they have been developed don’t just continue to produce the same amount of oil year in year out. Once they are mature, at some point they start to decline. So you have have to fill the gap that is caused by that decline. How much do they decline? Well it is not clear, somewhere between 4 and 6%, maybe even higher a year. There is a lot of debate about this. This is the line of decline, that line there, increasing over time as we go out. We have to replace in this case 5 million barrels now out to 7 million barrels a day of the production because of the decline of existing mature fields. You subtract this line every year from the green line you get this, which means in 2008, according to that estimate, we have peaked in global oil production.

Now, who knows? We are in the middle of a grand global experiment, and we will find out pretty soon, whether global conventional oil production starts to decline. But a lot depends at that point on the rate of decline. If you look at mature oil fields around the world and the rates vary from between 3% and 15%. The average according to Slumberjay, an oil field service company, is around 8%.

If we decline globally, once we pass peak production at 3% a year, we might be able to compensate by ramping up tar sands, nuclear renewables, etc. conserving more, but if global oil production starts to decline at 8% a year or higher the kinds of price increases that we have seen for petroleum so far are going to seem like a cake walk compared to what we are going to see in the future. 41:53

Much more of the transcript to come. For now watch the video:

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