A shorter version of this article was published in Di, Dagens Industri (the Financial Times of Sweden) on April 21 2009 (read the Swedish version in Di) . The original submitted article is translated to English by Michael Lardelli.
Last Monday (April 13) there were two articles in the Financial Times, either of which would be troubling by itself. However, if one analyses them together there is every reason to sound the alarm. On the first page there was an article on oil, ”Crisis hits N Sea oil search” and in the supplement that reports on investment funds there was an article on renewable energy, ”Inflows into clean energy drop by half”. In the article on future oil production in the North Sea it states that the oil industry has pulled on the emergency brake in terms of investing in the search for new oil fields. Investment has fallen by 78% compared to one year ago and in the article on renewable energy they state that investment has halved. The combined consequences can be devastating for our future.
One cannot expect to find large new gas and oil fields in the North Sea, but the smaller fields that one can still find are decisive for keeping production alive. Production from giant fields in the North Sea is now declining very rapidly. On average, the rate of decline is around 15% per year. To keep the large production platforms profitable they must be connected to new, smaller fields. Of course, these are also emptied very rapidly but together with the declining production from the giant fields they can still keep production profitable.
The fact that we are now not investing to try to find new fields means that an increasing number of platforms will close prematurely and permanently as their production volumes fall to levels where they are unprofitable. The Financial Times estimates that the lifetime for future oil and gas production will be halved. For the United Kingdom this can mean that in 2020 they will only produce 12% of the nation’s requirements compared to an earlier estimate of 45%. The fall in oil production is serious but even worse is that natural gas production is declining. If the scenarios that the Financial Times describes are realised there is a danger that the ”Sceptred Isle” may sink beneath the waves.
The article on the first page reveals current serious problems while the article on reduced investments in the renewable energy sector indicates an even more serious crisis for our future. The Financial Times is most concerned about the fact that the share value of companies that work with renewable energy has halved. Of course, this is a problem for owners of shares now, but the most serious problem is that the reduced investments mean that the renewable energy we need for our future will not be produced.
A new, small oil field is emptied in a few years while a wind farm is an investment with a longer future. The current volume of renewable energy is very low compared with what, in reality, would be required in the future. It is easy to have an enormous expansion from a low level but every time the volume is doubled it takes twice the effort to do so. The construction must begin forcefully now.
The global halving of investments in renewable energy is so serious that the world’s governments – and not least the governments within the EU – should gather immediately to decide on measures to combat it. In reality, there is no alternative to doing this. There is no price too high to pay to reinstate the previous investment levels. Future crisis packages should be completely focused on the energy sector.
The fact that production in the North Sea is on its way to fall by half and that, simultaneously, we are not investing in the substitutes that are needed means that it is time to sound the alarm in the EU.
The world’s governments should take president Obama’s pronouncement on energy on 26 January as their guiding star, ”No single issue is as fundamental to our future as energy”.
Kjell Aleklett
Professor of physics, Global energy systems, Uppsala University
Ed Pell
April 21, 2009
If the US is serious about a new energy system it will need to spend something of the order of 1 trillion dollars per year for the next twenty years. How is Obama doing relative to that metric?
Clifford J. Wirth, Ph.D.
April 23, 2009
Dear Professor Aleklett,
Most renewable energies yield electric energy, which is not practical in powering tractors, combines, long distance trucks, airplanes, ships, and most freight trains. The development of these renewables uses much liquid fuel and gives electric energy, which in not useful. And why develop more electric energy as factories, commercial centers and offices close and require less electric power?
Renewable energy is a myth, as it is manufactured, transported, and maintained on fossil energy, which will soon become prohibitively expensive.
Global oil production is declining. As oil and natural gas production decline, more oil and natural gas energy is expended in extraction and refining processes, and less net oil and natural gas are actually produced. Because the net production curve toward depletion is steeper than the production curves that we see on most all charts, this is an important question. For much deep water oil and gas extraction, the point at which the amount of oil/gas expended equals the amount of oil/gas produced is reached quickly, especially when all of the oil/gas used for manufacturing all of the ships, pipelines, platforms, refineries, parts, their manufacture in factories that use energy, and all of the employee/stock owner salaries/dividends/pensions for all of the companies (salaries/dividends/pensions are spent and use oil/gas), and transportation for all of the above parts and employees.
Other alternatives hold little or no promise. Coal liquefaction is possible, but global coal production is peaking, the capital for building plants is not available, and this oil production (made from coal)could not make up for declining oil production.
We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from “outside,” and without the power grid virtually nothing works, including home heating, irrigation, water supply and waste water treatment, pumping of gasoline and diesel, airports, communications, and automated systems.
Best regards,
Cliff Wirth
Svenne
April 23, 2009
Jag vill bara tipsa om ett program i P1 som heter klotet (23-04-09 kl.13.20 finns även på webbradion), det tar upp samhället efter oljan.
Joe
April 24, 2009
As far as I understand the slump in renewables investment is not only due to the economical crisis but also for a big part to the short-sighted Spanish photovoltaics support policy: The government had imposed an unnecessarily high feed-in tarif + an upper limit of total installations. This lead to an extreme boom of pv panel installations, but when the limit was reached last summer the entire market crashed down. So this is just one more example of unsustainable politics…