World is looking down an empty barrel of oil

West Australian
Friday 11/9/2009 Page: 20

Now the end of world petroleum reserves is approaching, Australia should do more to exploit its natural advantage in renewable energy, says Professor Ray Wills

Until 1859 oil production relied on natural seepage to the surface where it could be scooped into barrels: with limited production oil attracted modest investment. But on August 28, 1859, Edwin Drake convinced William "Uncle Billy" Smith to set up his salt drilling rig to get to the oil - a turning point that made oil available in commercial quantities. The rest is history. Now, 150 years on, the timing of peak oil - the point at which the rate of oil production terminally declines because of resource and technical constraints - is discussed widely.

The published numbers suggest, based on current consumption of the 1,317,000 million barrel reserve at 84 million barrels used per day (Oil & Gas Journal, World Oil), global oil reserves have just 43 years supply remaining. Even occasional new huge discoveries of oil usually only add much less than a year of supply. Oil was mainly created over a period of 30 or 40 million years starting about 100 million years ago when marine plants captured atmospheric carbon.

In the past 150 years, human activity has released carbon dioxide stored in oil that probably took about 20 million years to accumulate in fossil reserves, and that in something less than another 50 years (if we continue to burn oil the way we are today), another 20 million years worth of fossil carbon will be released back into the atmosphere.

But the world is also changing. Germany has established new industries around renewable energy and as a nation renowned for its car industry now has more people employed in the renewable energy sector than in the automotive sector. And the car industry itself is moving this way, with German lawmakers last month approving a plan to put a million electric cars on German roads by 2020, in a bid to become the world's top market for electric vehicles.

In June, a report from the United Nations Environment Program advised that last year investment in new power generation capacity from renewable energy technologies was more than investment in fossil fuelled technologies. The UN estimated that $US 155 billion ($180 billion) was invested in clean energy companies and projects worldwide - not including large hydro.

The growth in investment in clean energy was mainly due to record investments by China, Brazil and other emerging economies. Total transaction value in the sustainable energy sector last year was $US223 billion. China is now the world's biggest producer of renewable energy, and is planning far more renewable than nuclear.

The Chinese National Energy Administration reports goals for 2020 for nuclear energy installed capacity of 86 GWs, while installed capacity of renewable power will be 200GW. China has revised its original goal of 15% of electricity supply from renewable energy by 2020 to a new target of 20%, and is on track to reach this ahead of 2020.

Last month's issue of the Monthly Energy Review by the US Energy Information Administration reported renewable energy use exceeded nuclear energy production. Renewable energy sources accounted for 11. 1% of US domestic energy production as opposed to nuclear's 10.4%. With the long-awaited agreement in Parliament to Australia's renewable energy target, investors will now have a higher degree of certainty and new renewable energy projects built over the next decade will ensure the rapid growth of energy sources in Australia too.

This target will develop an inexhaustible energy source that will also create a new economy for Australia based on sustainable energy for the 21st century and potentially power the nation for millennia to come. Once renewable energy is the dominant source of energy, the cost of energy over coming decades will in the first instance be contained, and ultimately start to fall. By comparison, use of any non-renewable energy source, including fossil fuels and uranium, by any rational assessment, has a limited life, and resource constraints in supply guarantees energy from those sources will be more expensive.

Everyone wants to be world leader in renewable energy. A quick Google of the phrase in news headlines has every world leader from Britain to Tuvalu saying their nation will be number one in this space. Most developed and developing nations are moving aggressively to develop their lesser renewable energy resources while Australia - with arguably the world's best resources in almost every category of biomass, geothermal, solar, wave and wind - has been lagging behind in the scale of investment and in the strength of commitment This is in some ways understandable with the wealth of non-renewable I resources that Australia has, and with companies holding licences to those assets with the desire to profit from them.

While many in this position argue that Australia must do all it can to export our fossil fuel and nuclear energy to the world, the dilemma is that if the world energy markets turn rapidly to renewables, as most propose to do, our economy will in any rational assessment be exposed to declining energy export markets and potentially within a few short decades. As the nation with the world's best renewable energy resources, all Australian governments need to become even more ambitious in the support for renewable energy generation.

Professor Ray Wills is the chief executive of the WA Sustainable Energy Association, which he says is an enterprise-level industry body and the only industry body advocating substantive action on sustainable energy in WA. www.wasea.com.au