Meeting the post-oil challenge

There are few people today who still deny that humanity is facing a growing number of threats – or challenges, if you are an optimist. Eminent official institutions are joining social critics in declaring that our development is no longer sustainable and in stressing the need for radical change if we are not to court disaster. But what changes? Do we want more or less international trade and regulation? Which technologies and social practices should we support, and which should we resist? A frank and open debate that is free of taboos is needed if we want to agree a shared vision for the future. To contribute, albeit modestly, to such a debate, we put some questions, crucial to our collective future, to three leading international figures drawn from very different backgrounds. Each answered independently of the other. We then brought together their replies to offerthe reader a mix of stimulating and very contrasting ideas.

Aménagement d’un pipe-line près de Sangachal, en Azerbaïdjan. © 1996-2008 BP p.l.c.
Laying a pipeline near Sangachal, in Azerbaijan. © 1996-2008 BP p.l.c.
Vandana Shiva, 56 ans, est docteur en physique et en philosophie des sciences. De nationalité indienne, écrivain, écologiste et féministe, c’est une chef de file du mouvement altermondialiste au plan international, dont l’engagement pour la nature et les opprimés a été récompensé par de nombreux prix. Elle dirige l’association Navdanya, qui milite pour une agriculture respectueuse de l’environnement et s’efforce de réactualiser les savoirs agronomiques traditionnels. © GNU Free Documentation License
Vandana Shiva, 56, is a doctor of physics and the philosophy of sciences. Of Indian nationality and a writer, ecologist and feminist, she is a leading figure in the international alterglobalisation movement whose commitment to nature and the oppressed has earned her many prizes. She heads the Navdanya association that is campaigning for an agriculture that respects the environment and is seeking to update traditional farming practices. © GNU Free Documentation License
Claude Mandil, 66 ans, est ingénieur, issu de la prestigieuse Ecole Polytechnique française. Il a dirigé le Bureau des Recherches Géologiques et Minières (BRGM), l’Institut Français du Pétrole (IFP) et a été directeur général délégué de Gaz de France. Il vient de quitter le poste de directeur de l’Agence Internationale de l’Énergie (AIE), qu’il avait occupé durant 4 ans. C’est en son nom personnel qu’il répond donc à nos questions. © OECD/IEA
Claude Mandil, 66, is an engineer and graduate of France’s prestigious Ecole Polytechnique. He has headed the Bureau des Recherches Géologiques et Minières (BRGM), the French Oil Institute (IFP) and was Managing Director of Gaz de France. He recently retired from the post of Director of the International Energy Agency (IEA) that he had held for four years. He answered our questions in a personal capacity. © OECD/IEA
Achim Steiner, 47 ans, a étudié la philosophie, l’économie et les sciences politiques à l’Université d’Oxford, puis à la Harvard Business School. Il a été secrétairegénéral de la Commission Mondiale des Barrages, et a dirigé pendant cinq ans l’UICN (Union Internationale de Conservation de la Nature), l’ONG qui fait référence en matière de biodiversité mondiale. Il est depuis juin 2006 directeur exécutif du Programme des Nations Unies pour l’Environnement (PNUE). © UNEP
Achim Steiner, 47, studied philosophy, economics and political science at Oxford University and at the Harvard Business School. He was Secretary-General of the World Dams Commission and for five years headed the IUCN (International Union for the Conservation of Nature), the NGO that is a reference in global biodiversity. Since June 2006 he has been Executive Director of the United Nations Environment Programme (UNEP). © UNEP
Réduction globale des émissions de C2 réalisable en 2030 par le remplacement des énergies fossiles et les économies d’énergie. Le scénario de référence de l’Agence internationale de l’énergie prévoit que les besoins mondiaux en énergie primaire augmenteront de 55% entre 2005 et 2030, à un taux annuel moyen de 1.8%. Dans le scénario de politiques alternatives, la demande mondiale d’énergie primaire s’accroît de 1,3% par an sur la période 2005-2030 – soit 0,5 point de pourcentage de moins que dans le scénario de référence. Dans un scénario de forte croissance fondé sur l’hypothèse d’un développement économique plus dynamique de la Chine et de l’Inde (1.5 point de pourcentage de plus en moyenne par an que dans le scénario de référence), la demande d’énergie en 2030 de l’ensemble de ces deux pays serait supérieure de 21%. Comme le montre le graphique, l’efficience des usages finaux de l'électricité et des carburants représente les deux tiers des réductions possibles en 2030. © OECD/ IEA 2006
Global reduction in CO2 emissions possible in 2030 by combination of replacing fossil fuels and energy savings. The International Energy Agency’s reference scenario predicts a 55 % increase in world primary energy needs between 2005 and 2030, representing an average annual increase of 1.8 %. The alternative policies scenario calculates a global demand for primary energy increasing at the rate of 1.3 % a year over the 2005–30 period, which is 0.5 % less than for the reference scenario. A high-growth scenario based on the hypothesis of more dynamic economic development in China and India (an average of 1.5 percentage points a year above the reference scenario) puts energy demand in 2030 for the two countries together at over 21 %. As the graph shows, the efficiency of final electricity and fuel use represents two-thirds of possible reductions in 2030. © OECD/ IEA 2006
Besoins en pétrole de la Chine et de l’Inde selon les scénarios. © OECD/ IEA 2007
Oil needs of China and India according to the scenarios Big Island Fuel Crops Project. © OECD/ IEA 2007
Projet Big Island Fuel Crops. Recherches sur les biocarburants à partir de jatropha, menées à Hawaïi par South Point Propagation, en collaboration avec le Hawaii Agricultural Research Center, l’université de Hawaïi Hilo et le Hawaïi Biodiesel Consortium. © South Point Propagation
Projet Big Island Fuel Crops. Biofuel research on jatropha, carried out in Hawaii by South Point Propagation, in cooperation with the Hawaii Agricultural Research Center, University of Hawaii Hilo and the Hawaii Biodiesel Consortium. © South Point Propagation

Do you believe that the very high oil prices are due to circumstantial reasons or are they here to stay?

Vandana Shiva These prices are logical and not in any way circumstantial. All the independent experts say that we have already reached peak oil or, if not, are about to. As the main concern of oil companies is to maintain our dependency on hydrocarbons for as long as possible, they are notably unforthcoming on the exact status of their reserves. But we now know the truth.

Claude Mandil It is not impossible that, in the short term, if there is an economic crisis, we will see a very severe correction in oil prices. But I believe there is a very strong underlying trend towards expensive oil, not so much due to a lack of the physical resource as due to a lack of investment in extracting it. Most oil reserves are now in the hands of state-owned companies (in Mexico, Russia, Iran, the Middle East, etc.) whose priority is not to invest. We are witnessing a revival of oil nationalism within a broader context of energy nationalism that is even evident in some European countries. I would also add that the post-oil era is not for tomorrow. We are rather entering a period of scarcer oil with more difficult access and higher prices.

Achim Steiner The present high prices are the result of a combination of factors: the level of global reserves, global growth, and the policies of producer countries. But as an environmentalist and economist, I believe that the prices of fossil fuels should reflect the costs they inflict on the economy in the widest sense – and if this were to be the case, then I believe prices would no doubt be even higher. Because these fuels increase the quantity of greenhouse gases in the atmosphere, which will lead to an increased number of extreme events and rising sea levels, with a resultant loss of agricultural land and destruction of infrastructure. But their use also increases the level of pollutants that undermine public health in cities, and acidify the rain, thereby damaging productive ecosystems such as forests, lakes, estuaries and coastlines. We know that there are going to be fossil fuels for a long time yet, so let us cost them correctly so as to encourage the most efficient use possible and the development of alternative energies, from solar energy to hydrogen.

Do you, like the International Energy Agency (IEA), believe that a major increase in the use of coal is inevitable? Could CO2 capture and storage (CCS) offset the disastrous climatic consequences of such a development?

V.S. An increased use of coal is only inevitable if we persist in wasting energy and if the economy continues to promote industrial solutions even when we could do without them. In that case, then clearly we are going to resort to coal as we run out of oil and gas. As to CCS, there is not yet any proof that it works. What is more, introducing on an industrial scale gases or liquids where they do not belong – look at genes for example – never fails to have an impact on the environment. This will also have the effect of prolonging our dependency on fossil fuels when we should be promoting renewable energies – more time wasted for humanity.

C.M. The future growth of coal is evident. The Chinese, Indian and North American economies are massively reliant on coal that has all the desired qualities: cheap, abundant, well distributed. Its only drawback is that it emits a lot of CO2. That is why it is so important to be able to capture and store CO2. Admittedly that raises technical and economic problems that have not yet been totally resolved and no doubt also problems of social acceptability that governments should be concerning themselves with already. But we simply must succeed, for if we do not, the planet will have many difficult days ahead. But we must also not over-dramatise the risks: CO2 is not a toxic product. It is naturally present in abundance in the atmosphere and below-ground.

A.S. The IPCC devoted a special report to CCS, and estimates that between 15% and 55% of the effort needed to stabilise our emissions could come from such a strategy. The planet has a very large geological storage capacity, somewhere in the region of 2000 Gt (billion tonnes) of carbon dioxide! The consensus of opinion among scientists is that this gas could be stored in liquid form for tens of thousands of years before re-entering the atmosphere. But it is important to establish basic standards and secure procedures: energy producers risk not investing in this technology if they are legally liable in the event of gas escapes. The least expensive option would be to supply this technology to countries such as China where it can be incorporated in newly constructed plants rather than equipping existing plants.

Could the system of emission permits finance CCS? More generally, do you favour this system?

V.S. The system of emission permits is both ethically unacceptable and economically inappropriate. It is unacceptable because ultimately it is a system that rewards the polluter – whereas since the Rio summit the international community has adopted the principle that the polluter pays. That said, all kinds of convoluted arrangements are being introduced in connection with this polluter pays principle, in particular the so-called clean development mechanism (CDM). In the name of this system, we are generating a vast amount of polluting activities in China and India, congratulating ourselves on having cut their emissions by 10 % while ignoring the 100 % clean options! In India, the so-called sponge steel plants can be financed through CDMs despite being ecologically and socially disastrous. Emission permits are also an inappropriate system as it is founded on an industrial paradigm, making it incapable of taking into account the needs of traditional systems based on renewable energies – thereby ignoring totally the needs of the poor of this world.

C.M. What is needed to develop CCS is to allocate a cost to the carbon emitted into the atmosphere so that it becomes more economical to store it. This cost could be generated through a tax, a regulatory obligation, or an emission permit charge. The latter seems to me to be by far the best solution as it makes it possible to implement solutions at a lower cost. I am quite optimistic about its future: the European experience has been very interesting. It was criticised, but Europe had all the teething problems to deal with. There will be improvements and I note that more and more countries are expressing an interest. We can expect a major expansion of this system over the coming years, even if it will never be universal and perfect, and will have to make allowances for the particular cases of certain countries or industrial sectors.

A.S. There is no doubt that an intelligently designed emission permit market could stimulate carbon storage and, more generally, stimulate more efficient carbon usage. It will be for the politicians to decide whether such a system must be put into place and on possible special arrangements for poor countries. But we must not forget that, in many countries, the challenge is to bring electricity to rural populations despite the absence of a distribution grid – in which case solutions such as solar energy or wind power can prove both effective and cheap.

What should we think about biofuels, about which so much has been written?

V.S. Most of the world’s poor use biomass as an energy source – understood as such, the notion of biofuel does not pose a problem. The problem is the transformation of vegetal matter into ethanol and biodiesel using industrial processes. First, because more and more studies are showing that the production of these agrifuels consumes more energy than it saves. But also and most importantly, because by trying to meet the needs of an “all fossil” economy by diverting agricultural land from growing food, we are generating a major crisis among the poorest. In India, under a recent government plan, 11 million hectares are to be planted with jatropha to produce biofuels. These crops are often planted on common land from which the peasant farmers are evicted, often by force. In practice, the needs of the poorest are denied so that the rich can continue to drive their cars.

C.M. The IEA has long been saying that many fuels placed on the market are in fact more damaging than useful. The idea that, if we want to use biofuels, they must be produced in one’s own country is absurd: Europe’s cost conditions and climate make these fuels too expensive and cause them to emit too much CO2. I fear that the EU’s targets will prove difficult to meet in a sustainable manner. In fact, the best solution is no doubt to simply import ethanol from Brazil where it can be produced better and at a lower cost, while awaiting the second generation of fuels based on wood or whole plants.

A.S. It is vital for sustainability criteria to be developed and applied to biofuel production. It would not be right to fell tropical forests for ethanol or biodiesel production to comply with new European or North American standards. Or for agricultural land to be used. What is more, if it proves impossible to convince consumers that such production is ecologically compatible, it could all backfire. That said, biofuels could be a means of meeting part of the climate challenge while at the same supplying farmers in the developed and developing countries with new sources of revenue. Brazil says it can increase its ethanol production without any additional deforestation and indeed this country has reduced its deforestation by 50% over the past three or four years despite the growth in biofuels. So it is possible.

The energy system of the emerging countries is expanding very rapidly at present. Is there any chance it will take the route to sustainability?

V.S. The forces that are pulling the energy development of our countries (India, etc. – editor’s note) in non-sustainable directions are the same as the forces that drove developed countries towards total hydrocarbon dependency. These forces, notably agribusiness or the motor industry, are now looking at expanding their markets in countries such as India. A “people’s car” is to be launched here in India for example. It will cost US$2 500. But at that price it is not for the “people” at all, as just 5% of Indians can afford that! And the factory where it will be made as well as the steelworks that will supply it are based on land expropriated from farmers, often firing them in the process. And then the port from which the spare parts will arrive infringes on a mangrove that provides a natural protection against cyclones for the population. Let me give you another example: in India as in Europe and the United States, all subsidies go to industrial agriculture that consumes 10 times as much energy as biological agriculture. In fact, 95 % of Indians do not want this energy system, they simply want to live – and that is something that only sustainable systems can provide.

C.M. As to China, there is a very strong desire to take this problem into account and I sense that it is ready to make a major effort to develop renewable energies, CCS and nuclear energy – even if everything will be partly dependent on negotiations over the next two years. China is already taking measures to improve energy efficiency. It is, for example, the country with the highest penetration of low-energy light bulbs in the world. For the automobile industry too, standards are based on European standards, with a two-year time lag. In this area the Chinese are much more advanced than the Americans! It will no doubt be more difficult for the other emerging countries as their policy is more chaotic than China’s. But we must not lose hope because if we fail global warming threatens to exceed the IPCC forecasts and the costs of adapting to the changes will be truly exorbitant.

A.S. There are some positive signs. China is often criticised for building a new coal-powered plant every week, but in fact these are often to replace existing plants with new ones thal are more efficient. South Africa and Brazil now use sustainability indicators and, in terms of renewable energies, two of the world’s biggest companies are in China and India. But there is clearly an urgent need to accelerate the transfer of technologies to the developing countries. It is worth pointing out in passing that the Bali roadmap, which will serve as a basis for future climate talks, makes explicit reference to this. Then there is the need to speed up research: during the last oil crisis, in the late 1970s, a billion US dollars was invested in research on solar energy, resulting in a 50% increase in the efficiency of photovoltaic energy!

Do you believe nuclear energy can help us make the energy transition?

V.S. One sometimes has the impression that since global warming was discovered any form of energy that doesn’t emit CO2 has become “sustainable”. Yet this is certainly not true of nuclear energy that is dangerous and generates huge quantities of toxic waste. Not even hydroelectricity is always sustainable. In India there is a powerful popular opposition movement to the building of large dams that – like the Three Gorges Dam in China – destroy rivers, generate landslides and pose an industrial risk. Dams have already displaced 50 million Indians! In countries like India, energiesthat consume capital are not really suited. What we must do is regenerate local renewable energy systems, animal energy, biomass, and the biogas that Gandhi already promoted on a large scale in his day.

C.M. Nuclear energy is absolutely essential. I do not see how one can seriously envisage sustainable development without nuclear energy contributing a share of the global energy supply. Unfortunately this share is in danger of falling during the next 20 years because many power plants will reach the end of their lives and they will not all be replaced. It seems to me there is a certain contradiction in seeking, like Germany, to cut CO2 emissions, not be too dependent on Russian gas, and abandon nuclear energy! On the other hand, I do not believe we should favour the development of nuclear energy in countries that do not have a competent and fully independent safety authority. By that I mean a body with the authority to shut down a dangerous plant despite objections from the head of state.

A.S. It remains to be seen. Nuclear brings the risk of proliferation, a terrorist risk and geopolitical tensions that are already visible. In economic terms, if the costs of building and dismantling the nuclear plants and storing the waste are taken into account, it is then by no means certain that nuclear energy does not prove more costly in the long term than major investment in renewable energies.

Is it possible to move towards sustainable development without reducing our level of consumption or even question the notion of growth, at least in the rich nations? Is our economic system capable of such a development?

V.S. I do not believe that the market economy will be able to assure our future without a set of political regulations and support for nonintensive energy production systems. If the transition to tomorrow’s world is made democratically, through debate in an informed context, then it can result in a fairer society, with increased well-being. On the other hand, if a powerful elite continues to impose unsustainable options so as to maintain a system that is ultimately doomed, while denying the poor their share of resources, then we will see an erosion and destruction of democracy, increased violence, and genuine social disintegration. A dominant, centralised model dictated by a handful of large companies, symbolised by monoculture and uniformity, must be replaced by a model based on decentralisation and diversity. But for that we also need an ethical transition. What does it mean to live a human life to the full? The market has no answer to that question; that is for society to answer.

C.M. We are certainly going to have to implement some profound changes. In our use of energy, fortunately we are a long wayfrom having exhausted all the potential for productivity gains. There are also some revolutions to be made in transport: perhaps the electric vehicle, perhaps alternative approaches to combining individual and public transport. In particular, we are going to have to rethink the link between problems of town planning and energy efficiency. As to growth, I would say that in future we must be content with very low growth in our countries, of between 1% and 3%. Clearly we are not going to see the kind of growth we had in the post-war years. But I do not see how we can explain to the emerging countries that they must limit their growth when their per capital wealth is a fifth or even a tenth of that of people in the West. No doubt we will have to change the way we calculate growth so as to better take account of its negative aspects, but I believe that the aspiration of having more goods, more wealth and better health and education is going to last for a long time yet. And it is possible to meet these aspirations while consuming much less energy.

A.S. The issue is not to reduce our economic activity but to make more intelligent use of our resources. From fishing to energy production, to date our development has wasted resources in a way that is clearly not sustainable. But there are some positive developments. A recent United Nations Environ - ment Programme (UNEP) report estimates that investment in renewable energies such as wind power or solar energy now stand at US$100 billion a year or 18 % of total energy investments. The financial services sector is also showing a growing interest in companies committed to sustainable development. More than 230 institutional investors representing several tens of thousands of billion US dollars now support the “Principles for a Responsible Investment” put into place by Kofi Annan in 2006. This sends a clear signal to the markets, a signal that social, environmental and governance conditions must become major concerns for the economy and investment. In other words, the way we do business is changing – partly because the markets and the consumers are demanding this transition.

Yves Sciama