Think tank urges acceleration of climate policies to avoid energy crunch

A think tank based in Paris, the Shift Project, has for the first time produced an independent risk assessment related to future oil supplies based on the raw data of the Norwegian company Rysted Energy, a standard reference for the industry. In its report published on 23rd June, the Shift alerts on the critical exposure of the European Union to oil depletion by 2030 and the strategic importance of more ambitious decarbonation policies in the energy sector.

Why it’s important: for good reasons, the switch to clean energy is generally justified by the imperative of avoiding the worst effects of global heating and air pollution. Here, the authors insist on the need to also anticipate more forcefully the decline of physical oil resources. The “peak” year for conventional oil was 2008, and, according to Rysted, the peak for global oil production, including non-conventional sources like shale, could be 2035 or earlier, depending on hypothetical discoveries and levels of investment. For the authors:

«The energy transition must be implemented willingly, in order to avoid an overheated world; otherwise it will happen by force: should humanity persist in its addiction to fossil fuels, it risks being quickly overcome by constraints on access to these very energy sources.»

If climate policies fail to be implemented at the right pace, the risk is that societies will be “swept” by the decreasing availability of crude oil.

«Moving away from oil is like changing the very blood system of industrial societies; if nothing happens, they may in the near future find themselves drained of blood. Anticipation is crucial».

Because there is today such a strong relationship between fossil fuel consumption and growth, the report warns of “potentially devastating consequences for the economies and general balance of societies”. And calls on countries to update fast their prudential analysis and plans to radically reduce their dependency on oil.

Why the EU in particular should act quickly: As the world’s largest net importer of oil, the EU relies on imports for 53% of its energy needs. But it will likely face a shrinkage of its oil supply by up to 8% before 2030, which is higher than the rate of decline of its oil consumption. Besides, the production in Russia and Africa, representing more than 50% of the EU’s oil supply, is declining. Price volatility is mechanically impacting investment into costly oil extraction while demand for energy in Asia and Africa is predicted to increase massively.

The risk of an energy crunch is real if alternative solutions are not scaled up rapidly.

Possible déclin de l'approvisionnement en pétrole de l'UE d'ici ...

The bottomline: It would of course be tempting to conclude that the physical limitation of oil resources will represent a natural way out of the climate emergency. Unfortunately, nothing would be more wrong. The continuing consumption of oil, whether or not it matches the level of demand of our societies, will deliver disastrous levels of global heating.

«Global warming and “peak oil” are in no way exclusive: here are two natural hazards that pile up on each other».

The good news is: the solution pathways to both hazards are well identified and essentially the same: the rapid scaling up of clean energy production facilities, the moderation of the demand and greater efficiency.

The Covid pandemic has taught many what the costs of unpreparedness can be. With climate and energy, the stakes are this time much higher. The Shift Project’s next step will be to propose a transformation plan taking into account both the requirements of the climate emergency and the Earth’s physical constraints on resources. To be followed.