How Existing Energy Technologies Can Offset Peak Oil
Resource Investor
By David J. DesLauriers
TORONTO (ResourceInvestor.com) -- With all of the recent discussion about Peak Oil, and some debate about where exactly the world lies on King Hubbert’s oil production curve, it is important to undertake an examination of just where the world would meet and fulfill its energy needs in the face of declining production.
Resource Investor did just that through a bird’s eye view of the situation by way of an interview with Dr. Gal Luft, director of the Institute for the Analysis of Global Security, a nonprofit organization (with a very informative website) which directs attention to the strong link between energy and security, and makes detailed forward-looking blueprints about how to address the need to strengthen the world's energy system.
Dr. Luft is eminently qualified and his work has appeared in, among others, the following publications: Foreign Affairs, Commentary Magazine, Middle East Quarterly, LA Times, The Washington Post and The Wall Street Journal.
Resource Investor tried to get to the crux of the situation with a line of questioning that strikes at the heart of the issue and focuses not on promising but expensive and untested technologies, but on solutions that can be put into effect now, on a wide scale, and at a reasonable cost, in order to mitigate the effect of higher oil prices.
DAVID J. DESLAURIERS: Is IAGS' generally a believer in Peak Oil and potential spikes to $100 per barrel?
DR. GAL LUFT: My position on Peak Oil is that you know you've been there only a number of years after the fact. We are quite concerned about the fact that oil companies cannot ramp up production, but a lot of this is the fact that they don’t have access to reserves, more than the fact that the oil isn’t there. One of the other reasons that oil could reach $100 per barrel is the lack of spare capacity.
Either way, the solutions take a long time to implement and we are already late in our response. It is not really important how far we are from Peak Oil, we need to start working now because there are other reasons like National security and the rise of China that are going to cause problems. If there is a geological problem, it will only add to those existing problems.
DAVID J. DESLAURIERS: What are the main sources of alternative energy that can be implemented on a wide enough scale to make a difference?
DR. GAL LUFT: The most immediate solutions are in the transportation sector where most of the oil is being consumed in the industrialized world – and two thirds of the oil used in the U.S.
Electricity as fuel is one important solution, from nuclear power, coal, natural gas, anything that makes sense economically. One way that we can reduce our oil dependence is to begin to displace it with electricity made from other forms of energy. There are advances in battery technology, which can allow us to do just that.
Biofuels, particularly alcohol fuels like ethanol, and methanol can also significantly reduce the dependence on oil. The entire family of alcohol fuels can run on flexible fuel engines, which are similar to the combustion engines of today and cost an extra $150 to produce.
A country like Brazil thirty years ago started a program to displace oil, and today they have an ethanol mandate of 26% of the blend in fuel in all cars. In fact, though that is the minimum, many other cars run on much higher blends of up to 100% ethanol, so they have been able to reduce oil consumption by more than half, and there is no reason why other countries cannot do the same if they show a long term commitment to do so. There is no technological barrier to accomplish this vision - all we need is political willingness.
DAVID J. DESLAURIERS: As a side note, when you talk about nuclear energy being part of a solution, how hard will it be because of lobby groups and green groups for new nuclear energy plants to be constructed in the U.S.?
DR. GAL LUFT: I don't think it will be difficult because it is a matter of investment and it certainly requires significant capital investment, but it is something that should be done.
DAVID J. DESLAURIERS: How competitive cost-wise could these alternative energy sources be?
DR. GAL LUFT: At $60 per barrel you find very few solutions that don’t make sense economically. Electricity today would cost you about 1/3 on a per mile basis of what you pay for gasoline. The market is still rigged in favour of oil and our entire automobile fleet relies on petroleum products, but that has to change.
DAVID J. DESLAURIERS: What is the current funding like for these initiatives both from governments and private sources?
DR. GAL LUFT: It is not enough. In fact the government has favoured ethanol for many years and even subsidized ethanol around 50c per gallon, but only ethanol made from corn. The government has not done enough to encourage electric cars.
Hydrogen has received a lot of funding and has a lot of potential, but it requires fuel cells and has a long way to go before becoming part of a viable solution.
DAVID J. DESLAURIERS: What is a reasonable timeline in which is it would be possible to diversify the types of energy we use by bringing on meaningful levels of alternative energy sources?
DR. GAL LUFT: If you look at numbers of the Set America Free coalition organized by IAGS, you can see that we can reduce demand for oil in the transportation sector by about 12 million barrels per day by 2025 should hybrid, and plug-in hybrid cars become much more widely used, and should cars manufactured going forward be equipped to run on alcohol fuels.
The IAGS Formula
IAGS, the Set America Free coalition, and Dr. Luft, see several ways to improve the situation (dependence on oil), and their plans are realistic. Some of the main ideas include:
Fuel diversification means that to the current list of fuels available, “other fuels that are domestically produced, where possible from waste products, and that are clean and affordable should promptly be added.”
Real world solutions means that “there is no time for commercialisation of immature technologies. The United States should implement technologies that exist today and are ready for widespread use.”
Using existing infrastructure means “focusing on utilizing competitive technologies that do not require prohibitive or, if possible, even significant investment in changing our transportation sector’s infrastructure. Instead, “fuel choice” should permit the maximum possible use of the existing refuelling and automotive infrastructure.”
Domestic resource utilization means tapping “energy sources from which transportation fuel can be safely, affordably and cleanly generated. Among them (in the U.S.): hundreds of years worth of coal reserves, 25% of the world's total (especially promising with Integrated Gasification and Combined Cycle technologies); billions of tons a year of biomass, and further billions of tons of agricultural and municipal waste. Vehicles that meet consumer needs (e.g., “plug-in” hybrids), can also tap America’s electrical grid to supply energy for transportation.”
A more fulsome overview can be found here.
Conclusion
This cannot happen overnight, but if conflicting political agendas are put aside, a transformation on a scale meaningful enough to dramatically cut oil use, especially in the transportation sector is clearly possible, and would probably have the concomitant effect of a positive environmental impact.
Despite all of the noise about Peak Oil, there is clearly substantial room at the margin for other forms of fuel and energy to be brought into the fold that would reduce substantially the effects and expense for consumers and economies of a declining oil production curve globally.
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