BIOMASS HUB

Climate change and peak oil, in many ways, go hand in hand, but from a policy perspective they must be treated differently.  Where climate change regimes are imposed through legislation and regulation to curb GHG emissions, the world economy has no choice but to eventually adapt to an oil constrained future.  Without alternatives, oil shortages will place tangible limits on industrialized society’s mobility, productivity, and viability.  Noted author and professor, Michael T. Klare, argues that U.S. dependence on increasingly expensive oil imports “will continue to drain the economy of wealth and vigor for years to come.”

While the biomass industry is inextricably linked to current climate change policy, the sector’s future growth will turn on the issue of peak oil.  Put another way, where climate change regulation will provide direct incentives for utilities, states, and national governments to make good on commitments to reduce GHG emissions; the supply of oil will have a direct influence on the future necessity of biomass resources, and in turn, their relative competitiveness.  Ultimately, dwindling oil reserves will affect when promising technologies must be commercialized  to avoid drawn-out financial shocks.  Peak oil brings the importance of biomass resources squarely into focus.

Peak Oil Beginnings

The peak oil debate is nothing new.  An excellent overview is provided by the Oil Drum here.  To summarize,  Kenneth Deffeyes in Beyond Oil explains, “The supply of oil in the ground is not infinite.  Someday, annual world crude oil production has to reach a peak and start to decline.”  In other words, the oil being discovered around the world will no longer replace the oil that has been produced.

Hubbert first floated the idea in 1956 that the amount of oil under the ground in the US was finite, and therefore, the rate of discovery would reach a maximum and decline.  He also predicted that worldwide production would peak around the year 2000; Deffeyes picked late 2005 or in the first few months of 2006.

Even if Hubbert and Deffeyes are ultimately proved wrong, oil will eventually run out, or at the very least, become prohibitively expensive to extract and refine.  In recent years, the shrinking margin between current supply and demand has made the price of oil increasingly susceptible to price shocks.  As developing countries industrialize, growing demand will place increasing pressure on dwindling reserves.

Peak Oil Predictions Take Heat, Then Add Fuel to the Fire

Recently, the peak oil debate has taken an interesting turn.  Updating my post last week summarizing the International Energy Agency’s (IEA) release of the World Energy Outlook 2009, the Guardian published an interview with a whistleblower inside the organization who claims the figures used in the report were deliberately distorted to downplay fears of a coming oil shortage in order to avoid triggering panic buying.

According to the insider:

Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further.  And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources.

Most recently, Cambridge Energy Research Associates (CERA), an international energy advisory firm led by Daniel Yergin, celebrated researcher and author of The Prize: The Epic Quest for Oil, Money, and Power, added further fuel to the peak oil debate with a report projecting that the remaining global oil resource base is actually three times as large as the 1.2 trillion barrels estimated by peak oil proponents.

The debate demonstrates how difficult it can be to measure and predict oil supply and production potential.  Although vast quantities of oil still remain underground, this unproven or “theoretical oil” exists underneath the Arctic ice, within unstable countries racked by civil war, and other difficult-to-reach regions.  As a result, it is riskier and more costly to produce.   In response to the Guardian interview, one of the world’s preeminent depletion analysts, Colin Campbell, wrote a letter to the Guardian explaining why.  His letter makes interesting reading, both for his survey of the oil depletion debate as well as his perspective on the historical significance of peak oil:

Given the central role of oil in the modern economy, the peak of production promises to be a turning point of historical magnitude…There may well now be a certain awakening, and the OECD governments may begin to seek an umbrella under which to introduce new national policies.  This may in turn allow the IEA to come forward with more realistic assessments of the true situation.

A Recipe for Biomass

Whatever predictions they stand by, peak oil optimists and pessimists are in agreement about one thing: aboveground factors such as geopolitics, war, economics, and technology will have a greater affect on the supply of oil than the actual size of reserves.  Add historical trends that have shown consumption doubling every thirty years and the supply of so-called “cheap oil” running out, and you have a potent argument in favor of alternative sources of energy.  Consider the following…

Writing in The End of Oil, Paul Roberts explains:

Aside from the question of how much oil is left, there is simply the matter of finding and producing enough oil, and moving it via pipeline and supertanker to the places it needs to go…when we say that by 2035 oil demand will be 140 million barrels a day, what we mean is that by then oil companies and oil states will need to discover, produce, refine, and bring to market 140 million new barrels of oil every twenty-four hours, day after day, year after year, without fail.

The bottom line: biomass and advanced biofuels must be ready to make up (at least some of) the difference.  As this DOE/USDA study concludes, the combined forest and agriculture land resources have the potential of sustainably supplying much more than one-third of the nation’s current petroleum consumption.

Image: Flickr/azrainman