West’s ravenous oil appetite may lead to tough sacrifices

One of the backdrops to the Changing Fortunes Round Table in Calgary was a landmark report by the U.S. National Petroleum Council entitled Hard Truths About Global Energy. The study projects global energy demand will grow by at least 50 per cent by 2030. Essentially all that growth will come from the developing world. Given that energy use is currently balanced between developed and developing countries, this means a doubling of energy use by developing countries in 23 years. Delegates from Europe, Latin America and China expressed no disagreement with the conclusions of the report.
For me, the report leads to two key conclusions:

International competition for energy will intensify, providing energy exporters with geopolitical and financial advantage over energy importers.

Reconciling growth of hydrocarbon demand with the need to restrain emissions will require major energy cost additions such as clean-coal technology and carbon sequestration in both developed and developing countries.

The speakers from Exxon, Shell and Total, together with the other leaders of Canadian and international oil producers present, agreed that meeting these energy growth projections is a daunting challenge requiring growth in hydrocarbon, nuclear and renewable fuels. Yet, even in the best-case scenario, renewable fuels will be able to satisfy only a small part of demand.

Electricity generation is the world’s largest energy consumer. Wind and solar are unlikely to supply more than 10 per cent of electricity. Nuclear plants require lead times of more than a decade, assuming the angst about their safety can be overcome. That means more coal plants. China is the most formidable and damaging example. Its electricity is generated by toxic-emission-producing coal. A new plant comes on stream every few days, killing miners underground and the public who breathe the air above. Ironically, while China’s coal is some of the dirtiest, Alberta’s is among the cleanest. Yet it is in Alberta a new clean-coal demonstration plant is planned.

The longer-term supply situation for liquid transportation fuels is also challenging. While biofuels get a lot of attention, the realities were brought home at Spruce Meadows. Biofuel means ethanol added to gasoline or plant oils added to diesel fuel. The first reality is that the net energy contribution of corn- and grain-based ethanol – after deducting the hydrocarbons used for tillage, fertilizer and distillation – is very small. Then there are the social impacts. Delegates from Latin America gave emotional commentary on the terrible impact that skyrocketing corn and grain prices have on food for the poor. Another unintended consequence is widespread burning of the world’s tropical rain forests so as to plant oil palms in response to huge demand for biodiesel.

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