“…a small think tank with a knack of spotting new trends…” – Geoffrey Lean, Telegraph.co.uk.
Chapter 3. Climate Change and the Energy Transition: The Decline of Oil and Coal
Climate change poses a threat to our civilization that has no precedent. A business-as-usual energy policy is no longer an option. At issue is whether we can quickly transition from fossil fuels to renewables. If we wait until massive climate change forces us to make the shift, it may be too late.
For oil, geological constraints are leading to production declines in many oil-producing countries. Paralleling the oil field depletions are security concerns in oil-importing countries, since so much oil comes from the politically volatile Persian Gulf region. For the United States, which imports 60 percent of its oil and where 88 percent of the labor force travels to work by car, this is not a trivial matter. 72
Reducing oil use is not at all farfetched. For several reasons, including record high gasoline prices, consumption of oil in the United States—the world’s leading oil consumer—dropped 6 percent in 2008. This decline appears to be continuing in 2009 as motorists turn to public transit, bicycles, and more fuel-efficient cars. 73
With oil supply, the geological handwriting on the wall is clearly visible. Discoveries of conventional oil total roughly 2 trillion barrels, of which 1 trillion have been extracted so far. By themselves, however, these numbers miss a central point. As security analyst Michael Klare notes, the first trillion barrels was easy oil: “oil that’s found on shore or near to shore; oil close to the surface and concentrated in large reservoirs; oil produced in friendly, safe, and welcoming places.” The other half, Klare notes, is tough oil: “oil that’s buried far offshore or deep underground; oil scattered in small, hard-to-find reservoirs; oil that must be obtained from unfriendly, politically dangerous, or hazardous places.” 74
Another clue to the oil production prospect is the actions of the major oil companies themselves. To begin with, the collective production of the eight leading independents has peaked and is declining. This decline notwithstanding, there have not been any dramatic increases in exploration and development, suggesting that the companies agree with the petroleum geologists who say that 95 percent of all the oil in the earth has already been discovered. “The whole world has now been seismically searched and picked over,” says independent geologist Colin Campbell. “Geological knowledge has improved enormously in the past 30 years and it is almost inconceivable now that major fields remain to be found.” 75
Matt Simmons, a prominent oil investment banker, says in reference to new oil fields: “We’ve run out of good projects. This is not a money issue...if these oil companies had fantastic projects, they’d be out there [developing new fields].” Both Walter Youngquist, author of GeoDestinies, and the late A.M. Samsam Bakhtiari of the Iranian National Oil Company projected that oil production would peak in 2007. 76
Yet another way of gauging the oil prospect is simply to look at the age of the major oil fields. Of the 20 largest oil fields ever found, 18 were discovered between 1917 (Bolivar in Venezuela) and 1968 (Shaybah in Saudi Arabia). The two most recent large ones, Cantarell in Mexico and East Baghdad Field in Iraq, were discovered during the 1970s, but none have been found since then. Neither Kazakhstan’s discovery of the Kashagan oil field in the Caspian Sea in 2000 nor Brazil’s discovery of the Tupi oil field in 2006—both good-sized finds—make the all-time top 20. With so many of the largest oil fields aging and in decline, offsetting this with new discoveries or more-advanced extraction technologies is increasingly difficult. 77
The big news in 2008 was the announcement by Russia, the world’s leading oil producer in recent years, that its oil output had peaked in the late 2007 and would henceforth be declining. Data through mid-2009 confirm the decline, supporting those who think world oil production has already peaked. 78
Aside from conventional petroleum, which can easily be pumped to the surface, vast amounts of oil are stored in tar sands and in oil shale. The Athabasca tar sand deposits in Alberta, Canada, total an estimated 1.8 trillion barrels, but only about 300 billion barrels of this may be recoverable. Venezuela also has a large deposit of extra heavy oil, estimated at 1.2 trillion barrels. Perhaps a third of it could be recovered. 79
Oil shale concentrated in Colorado, Wyoming, and Utah in the United States holds large quantities of kerogen, an organic material that can be converted into oil and gas. In the late 1970s the United States launched a major effort to develop the oil shale on the western slope of the Rocky Mountains in Colorado. When oil prices dropped in 1982, the oil shale industry collapsed. Exxon quickly pulled out of its $5-billion Colorado project, and the remaining companies soon followed suit. 80
The one large-scale project that is moving ahead is the tar sands project in Canada. Launched in the early 1980s, it was producing 1.3 million barrels of oil a day in 2008, an amount equivalent to nearly 7 percent of current U.S. oil consumption. This tar sand oil is not cheap, becoming economical only when oil is priced at $70 per barrel. Some think it may take $90 oil to spur new investments. 81
There is growing doubt as to whether oil in tar sands and shale should be tapped at all because of the many damaging effects, including climate disruption. Since getting oil out of tar sands requires “cooking” the sands to separate the oil, the carbon emissions from producing a barrel of tar sands oil are at least three times those from pumping a barrel of conventional oil. As oil analyst Richard Heinberg notes, “Currently, two tons of sand must be mined in order to yield one barrel of oil.” Beyond this, the quantity of water needed to extract oil from shale or tar sands can be prohibitive, particularly in the western United States, where virtually all water is spoken for. Considering carbon emissions, water requirements, local water pollution, and the overall environmental devastation from processing billions of tons of tar sands or oil shale, civilization would be better off if this oil were simply left in the ground. 82
With coal, worldwide supply depletion is not imminent, but any strategy to stabilize climate must have the phaseout of coal as its centerpiece. Coal is carbon-intensive, with CO2 emissions per unit of energy produced double those from natural gas and half again those from oil. 83
Coal is also the most damaging to human health. Black lung disease among coal miners is all too common. Beyond this, an estimated 3 million people die each year, more than 8,000 a day, from breathing polluted air—much of it from burning coal. Coal burning is also the leading source of mercury pollution, a potent neurotoxin, one that is particularly dangerous to children. 84
Mercury emitted from coal smokestacks literally blankets the earth’s land and water surfaces. In the United States, virtually every state warns against eating too much fish taken from fresh water, lakes, and streams because of dangerously high mercury content. 85
In China, where cancer is now the leading source of death, coal pollution is a growing concern. A Ministry of Health survey of 30 cities and 78 counties that was released in 2007 reveals a rising tide of cancer. Populations of some “cancer villages” are being decimated by the disease. 86
Coal is only part of the problem, but in a country that was building a new coal-fired power plant every week, it is a large part. The new reality is that each year China grows richer and sicker. The Chinese leadership is becoming increasingly concerned not only with the cancer epidemic but with the sharp rise in birth defects. Concern about the health effects of coal burning may help explain why China is making a massive push with wind and solar energy, planning to soon be the world leader in both. 87
A sign of the emerging changes in China came when the New York Times reported in July 2009 that the Ministry of Environmental Protection has temporarily prohibited three of the country’s five biggest power companies from building coal-fired power plants because they had not complied with environmental regulations on their existing plants. This is a major step for China, and one that would not have been made without approval at the highest level. 88
In addition to coal’s disproportionate contribution to climate disruption and damage to human health, it also is the most easily replaced of the three fossil fuels. Electricity is electricity, whether it comes from coal-fired power plants or wind farms, solar thermal power plants, and geothermal power plants. In contrast, replacing oil is more complicated because it is so pervasive in the economy.
The third fossil fuel, natural gas, accounts for only 19 percent of CO2 emissions from fossil fuels. Because it is so much less carbon-intensive than coal and cleaner-burning than oil, it is emerging as the transition fuel as the world shifts from fossil fuels to renewable sources of energy. Its use, too, will be reduced, although not nearly as fast as that of coal. 89
72. IEA, op. cit. note 6, pp. 221, 225; DOE, EIA, “How Dependent Are We on Foreign Oil?” at tonto.eia.doe.gov/energy_in_brief/foreign_oil_dependence.cfm, updated 23 April 2009; U.S. Bureau of the Census, “Most of Us Still Drive to Work Alone—Public Transportation Commuters Concentrated in a Handful of Large Cities,” press release (Washington, DC: 13 June 2007); Peter Whoriskey, “GM to Build Small Car in U.S.,” Washington Post, 29 May 2009.
73. Ayesha Rascoe, “U.S. Oil Demand in 2008 Hit a 10-year Low: Government,” Reuters, 27 February 2009; DOE, EIA, Short-Term Energy Outlook (Washington, DC: 7 July 2009), pp. 22; Ayesha Rascoe, “U.S. Public Transit 2008 Ridership Highest in 52 years,” Reuters, 9 March 2009.
74. Campbell, op. cit. note 5; Michael T. Klare, “Entering the Tough Oil Era,” TomDispatch.com, 16 August 2007.
75. Michael T. Klare, “The Energy Crunch to Come,” TomDispatch.com, 22 March 2005; Jad Mouawad, “Big Oil’s Burden of Too Much Cash,” New York Times, 12 February 2005; Mark Williams, “The End of Oil?” Technology Review, February 2005; John Vidal, “The End of Oil Is Closer Than You Think,” Guardian (London), 21 April 2005.
76. James Picerno, “If We Really Have the Oil,” Bloomberg Wealth Manager, September 2002, p. 45; Klare, op. cit. note 75; Richard C. Duncan and Walter Youngquist, “Encircling the Peak of World Oil Production,” Natural Resource Research, vol. 12, no. 4 (December 2003), p. 222; Walter Youngquist, GeoDestinies: The Inevitable Control of Earth Resources over Nations and Individuals (Portland: National Book Company, 1997); A. M. Samsam Bakhtiari, “World Oil Production Capacity Model Suggests Output Peak by 2006–07,” Oil and Gas Journal, 26 April 2004, pp. 18–20.
77. Fredrik Robelius, Giant Oil Fields—The Highway to Oil (Uppsala, Sweden: Uppsala University Press, 9 March 2007), pp. 81–84; Petrobras Brazil, “Production Goes on Stream in Tupi: Year I of a New Era,” at www2.petrobras.com.br/Petrobras/ingles/area_tupi.asp, viewed 17 June 2009.
78. Guy Chazan and Neil King Jr., “Russian Oil Slump Stirs Supply Jitters,” Wall Street Journal, 15 April 2008; data on declining Russian oil production in IEA, Oil Market Report (Paris: May 2009).
79. Vidal, op. cit. note 75.
80. Gargi Chakrabarty, “Shale’s New Hope,” Rocky Mountain News, 18 October 2004; Walter Youngquist, “Alternative Energy Sources,” in Lee C. Gerhard, Patrick Leahy, and Victor Yannacone, eds., Sustainability of Energy and Water through the 21st Century, Proceedings of the Arbor Day Farm Conference, 8–11 October 2000 (Lawrence, KS: Kansas Geological Survey, 2002), p. 65.
81. Robert Collier, “Canadian Oil Sands: Vast Reserves Second to Saudi Arabia Will Keep America Moving, But at a Steep Environmental Cost,” San Francisco Chronicle, 22 May 2005; Alberta Department of Energy, Alberta’s Oil Sands, 2008 (Edmonton, Alberta: June 2009); BP, BP Statistical Review of World Energy 2009 (London: June 2009), p. 11; Robin Pagnamenta, “Canadian Oil-Sand Mines Stuck as Crude Price Plummets,” The Times (London), 5 January 2009; Jad Mouawad, “Big Oil Projects Put in Jeopardy by Fall in Prices,” New York Times, 16 December 2008.
82. Sheila McNulty, “Tar Sands Refinery Projects Face a Sticky Future,” Financial Times, 5 January 2009; Collier, op. cit. note 81; Alfred J. Cavallo, “Oil: Caveat Empty,” Bulletin of the Atomic Scientists, vol. 61, no. 3 (May/June 2005), pp. 16–18; Richard Heinberg, “The End of the Oil Age,” Earth Island Journal, vol. 18, no. 3 (fall 2003).
83. IEA, op. cit. note 6, p. 507.
84. World Health Organization, “Air Pollution,” Fact Sheet 187 (Geneva: revised September 2000); Janet Larsen, “Coal Takes Heavy Human Toll: Some 25,100 U.S. Deaths from Coal Use Largely Preventable,” Eco-Economy Update (Washington DC: Earth Policy Institute, 24 August 2004).
85. U.S. Environmental Protection Agency, Office of Science and Technology, “National Listing of Fish Advisories: 2005–06 National Listing,” fact sheet (Washington, DC: July 2007).
86. Jonathan Watts, “Beijing Blames Pollutants for Rise in Killer Cancers,” Guardian (London), 22 May 2007.
87. Barbara Demick, “China Blames Pollution for Surge in Birth Defects,” Los Angeles Times, 2 February 2009; Steven Mufson, “Asian Nations Could Outpace U.S. in Developing Clean Energy,” Washington Post, 16 July 2009.
88. Keith Bradsher, “Green Power Takes Root in the Chinese Desert,” New York Times, 2 July 2009.
89. IEA, op. cit. note 6, p. 507.
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