More than ever its clear that an oil based economy is not sustainable from a variety of perspectives, both ecologically and economically. Perhaps counterintuitively, these domains are not obverse to each another, but are interlocked facets of the how the earth sustains lifecycles. They are also twin indicators of humanity’s role in the stewardship of them.
Last week we saw the somewhat mind boggling announcement by Saudi Arabia that it planned to partially wean its economy from oil sales by 2020 and do so completely by 2030. From Reuters on April 25:
The powerful young prince overseeing Saudi Arabia’s economy unveiled ambitious plans on Monday aimed at ending the kingdom’s “addiction” to oil and transforming it into a global investment power….His “Vision 2030” envisaged raising non-oil revenue to 600 billion riyals ($160 billion) by 2020 and 1 trillion riyals ($267 billion) by 2030 from 163.5 billion riyals ($43.6 billion) last year. But the plan gave few details on how this would be implemented, something that has bedeviled previous reforms….The 31-year-old prince gave assured answers to questions on the plan, and appeared to pitch his comments to appeal across the Saudi social spectrum, and in particular to young people, who face unemployment and an economic downturn despite their country’s oil wealth.
Many were of course skeptical. And while few details were given, the Saudi markets seemed to like the news as they rose by ~2.5% that day. Presumably this is because of publicly announced plans to sell public stakes in the Saudi state run Aramco. Do the Saudi’s think we are in Peak Oil?
Their neighbors in Dubai might think so as well. They are about to bring the world’s largest solar plant online which will provide electricity at 3 US cents per Kilowatt hour.
According to industry analyst Apricum:
All three lowest bids by themselves clearly set a new world record for the unsubsidized cost of solar electricity. A recent bid of 3.6 cents/kWh by Enel Green Power in Mexico did not include the value of additional green energy certificates. Solar tariffs in the USA now regularly dip below 3 cents/kWh, but these include a 30% tax incentive and other subsidies.
Twist number two was in an Oilprice.com post covering a scientific analysis of the the recent Global Energy Assessment by the International Institute of Applied Systems Analysis which finds that proven reserves are 50% lower than decades old conventional wisdom would have it:
According to Professor Michael Jefferson [of the ESCP Europe Business School] who spent nearly 20 years at Shell in various senior roles from head of planning in Europe to director of oil supply and trading, “the five major Middle East oil exporters altered the basis of their definition of ‘proved’ conventional oil reserves from a 90 percent probability down to a 50 percent probability from 1984. The result has been an apparent (but not real) increase in their ‘proved’ conventional oil reserves of some 435 billion barrels.”
Global reserves have been further inflated, he wrote in his study, by adding reserve figures from Venezuelan heavy oil and Canadian tar sands – despite the fact that they are “more difficult and costly to extract” and generally of “poorer quality” than conventional oil. This has brought up global reserve estimates by a further 440 billion barrels.
Predictions about the exact nature and timing and of the phase-out process for fossil fuels are premature. Yet, as the the developments above indicate, the pace of the transition away from fossil fuels to renewable energy sources continues to accelerate.