Resource depletion will reduce emissions

For those who are concerned about the lack of an effective climate change agreement in Copenhagen, there is some consolation. Depletion of global fossil fuels is likely to force the world to move to alternative energy anyway. Higher energy prices will do what trading schemes won

At current levels of global production, there is enough oil in the world to last about 40 years, natural gas for 60 years, and coal for over 100 years. This has led many to assume that coal is so abundant that reduced supplies of coal will not limit coal-fired emissions any time soon. This is wrong because it ignores the geographical distribution of coal resources.

The problem is that as more countries run out of fuel, they will increasingly have to turn to countries that still have reserves. The enormous strains that this will put on supply chains via international trade will mean that some of these demands will be difficult and expensive to meet, if possible at all. This is indicated in a study recently undertaken at the National Institute of Economic and Industry Research, projecting resource depletion and international trade to the year 2050.

While new discoveries of oil and gas may roughly keep pace with annual production, this is not the case with coal, where reserve estimates have often been revised downward. Most future coal supplies are expected to have to come from deeper deposits, from underground rather than open cut mines, and from more remote locations, involving higher cost and lower quality coal. For this reason, Australia is emerging as the ultimate global supplier of coal.

However, long before coal and other fuel reserves become exhausted, production rates will begin to decline. When increasing demand is met by declining production, the inevitable outcome is higher prices. We have already seen oil reach $150 a barrel and coal reach $300 per tonne. When prices reach double or triple these levels, and stay there permanently, the world will take alternative energy seriously. When will this happen? It could well be within the next decade, certainly within the time frames contemplated by carbon emission policies.

Energy Bulletin