Energy Debate

A lot of people are asking me how serious are the major oil companies like Shell tackling the issue of switching from "fossil energy" to "sustainable energy" (renewable).

Jeroen van der Meer (CEO of Shell) recently gave a talk, titled "The energy supply allows evolution but not revolution". I enclosed part of his lecturer here:

.....To answer this, I’d like to present some facts. Do you know how much energy the world is consuming at present?
All told, this comes to about 225 million barrels of oil equivalent per day. That’s the grand total of quite a wide range of energy sources.
In the first place we have oil, gas and coal. The fossil sources, in other words.
There’s also nuclear energy and hydroelectric – both with zero CO2.
Then there’s modern biomass, like biodiesel and ethanol.
Plus renewables, particularly wind and solar.
And in addition the world has 2.5 billion people for whom ‘energy’ only means firewood, harvest waste and dried manure.

I just said that fossil fuels account for 80 per cent of all energy, more than 180 million barrels of oil-equivalent per day.
Renewables and biofuels currently account for about 1 million barrels of oil-equivalent.
So that’s the ratio at present: over 180 times more fossil energy is being consumed than sustainable energy.

Why do fossil fuels have such a dominant position?
Because they’re still the most affordable and convenient source of energy on the planet.
Alternatives like wind, solar and second generation biofuels have the advantage of low CO2 emissions.
But they can’t compete in economic terms with fossil fuels – not yet.

Everywhere – at universities, scientific institutes and also at Shell – the hunt is on for technological breakthroughs to make alternatives cheaper.

If that succeeds – and it will succeed – these resources could meet about one third of world energy demand by about 2050. And they will continue to grow from then on.

Can’t it be earlier, can't it be more, I hear you think. Consider the two factors I’ve just mentioned:
- renewables plus biofuels are still a lot more expensive than fossil energy;
- and both still only account for a mini-share of world energy demand, which is still growing as well.

A simple sum will bear this out:
World energy demand is growing at an average rate of 1.6 per cent per year.
This year alone, that comes to an average additional consumption of 4 million barrels of oil equivalent every day.

Even if renewables and biofuels together were to grow at the rate of 25 per cent per year – which would be an enormous achievement, more than twice the average so far – they would then account for 250,000 barrels of extra energy per day.
But the additional demand comes to 4 million barrels.
So the remainder, 3.75 million barrels per day, will primarily have to come from fossil sources, because there’s little extra scope in nuclear and hydro.

If renewables and modern biofuels really are to get anywhere – and this must and will be achieved – then revolutionary technological breakthroughs will be needed.
This is being worked on – very hard, in fact. However the energy supply allows evolution but not revolution.
You can't simply upscale something that’s still very small, and also more expensive, into something very big.

Moreover, if we open up new oil and gas fields, set up refineries or LNG plants or build gas or coal fired power stations in 2007, these facilities will be there for a good 30 years.
That’s why the world can never switch over all at once to a new energy system; we’ll be growing towards it at an evolutionary rate.
The brand-new car you're buying now will only go to the breaker’s yard in about 15 years’ time. Only then will it be replaced by the newest technology......