Australia’s Oil-Based Energy Security
Posted by aeldric on June 23, 2008 - 8:00pm in TOD: Australia/New Zealand
Topic: Policy/Politics
Tags: australia, energy policy, oil depletion protocol, transportation [list all tags]
This is the first in a series of posts co-authored with Phoenix and Matt Mushalik. In my previous post I took a high-level look at solutions for Australia. This post starts the process of iterating down from the high-level view. It assumes that we will not be able to instantly convert to sustainable solutions - we need to get there in steps. This article is co-authored with Phoenix, a qualified mechanical engineer who has been working in the infrastructure construction industry for over 28 years. He has held senior manangement positions with a number of organisations delivering projects to key energy providers. These projects have included oil refineries, power stations, LNG plants and gas processing facilities. He currently works as the National Manager – Power Generation for a major Australian construction group.
Action Plan
1.0 INTRODUCTION: THE IMPORTANCE OF TRANSPORT
Transport is critical to the functioning of our society. If Australia’s transportation stopped tomorrow, then most of us would be starving in the dark a few weeks later.
Yet this is exactly the scenario that is emerging. The vast majority of transport in Australia is fuelled by oil. Without oil, transport stops. And we are being warned from every direction that our oil supplies are no longer secure.
This scenario will be the most serious threat experienced by our society since the Second World War. This is the first in a series of discussions that look at ways to secure Australia’s oil based energy security into the future. Over the next few weeks we will look at short and long term goals for personal and industrial transport.
2.0 TARGETS
The papers have been full of warnings from ABARE that Australia’s oil reserves will rise slightly this year, and then follow a depleting pattern through to 2013. Within 5 years we will be dependant on foreign oil for more than 50% of our needs.
However the ability of our traditional trading partners to deliver the oil we need is rapidly disappearing. Within 3-5 years, most of them will be exporting much less oil (http://www.theoildrum.com/node/3657 ). The oil we need for our transport will not be available.
Quantifying the degree of the problem is difficult, as it depends on two factors:
1. How much can we pay for oil without crippling our GDP and disrupting our macro-economic system?
2. To what degree can we compete with other nations, when these nations attempt to lock-in supply by exerting economic, political and military pressure?
This problem is not unique to Australia; our situation is simply a little more acute and immediate than the situation in the US or Asia. The CIBC has observed that oil exports are expected to fall world-wide (http://research.cibcwm.com/economic_public/download/occrept62.pdf ) and the IEA is scheduled to release a report in November that, according to early news releases, (http://www.washingtonpost.com/wp-dyn/content/article/2007/07/09/AR200707... ) supports this assertion. According to their press releases, the IEA is predicting a “Supply Crunch” by 2010-2012.
In 2012 we will be competing for new trading partners to replace the shortfall from our traditional suppliers. We will be competing against larger countries that can exert economic, political or military pressure, so we might need to accept that we will pay extremely high costs for a constrained supply that will only meet a portion of our requirements.
Although difficult to quantify, one thing can be stated with certainty: The only oil that we can count on is the oil we produce ourselves. In 5 years, this oil is likely to represent less than 50% of our projected needs.
This post will therefore focus on solutions that enable the country to establish complete oil independence within a 5 year period. Subsequent posts in the upcoming weeks will examine other issues, including the subsequent transition to more sustainable modes of transport.
3.0 PUBLIC AWARENESS
We have had warnings about an imminent energy crisis from:
- The peak international energy organisation, the International Energy Agency (IEA).
- Commercial analysts such as the CIBC.
- Governmental groups, such as the Energy Watch Group (EWG) in Germany
- The major oil exporters. The two biggest, Russia and Saudi Arabia have both warned that expectations of major increases in production will not be met. Malaysia (one of Australia’s largest suppliers) has warned that it might not be able to meet even internal needs for oil in 2011! (http://www.bernama.com.my/bernama/v3/news.php?id=339506 )
- The US Dept of Energy. Starting in 2005, with the Hirsch Reports, the US DOE has turned out a string of studies on this subject.
Despite this, the magnitude and timescale of the crisis is difficult to accept. It is likely that, in order to avoid catastrophic economic impacts, we will need to find a path to energy self-reliance within only 5 years!
The impending crisis will involve serious consequences for the current lifestyle experienced by most Australians. This will be a difficult for many average citizens to accept and even more difficult for them to act on.
Many of problems posed do not lend themselves to mandated solutions. Governments cannot tell people where to live or what job to take (at least not in the Australia we currently enjoy). The solutions must instead come from the general public, making decisions based on their individual circumstances. However, the public cannot make these decisions without a clear understanding of the problem and the Government’s proposed solutions.
Action: The federal government must make the public fully aware of oil depletion and it’s implication for future fuel prices.
The increase in the cost of conventional fuels is likely to have the greatest impact on discretionary motor vehicle travel. However it is important that the public is not shielded from taking full responsibility for cutting usage. It will be very easy for governments to resort to popularist policy decisions to reduce excise or in other ways encourage the continued high levels of personal use. The current tax and excise regime must be either maintained or enhanced to discourage the unnecessary discretionary use of personal vehicles.
The approach by government to the issue of excise and tax on oil based fuels will be the most powerful message they can send to the general public concerning the gravity and impact of oil depletion. The general public do not have the knowledge or skills necessary to interpret the likely price effect of the future oil demand/supply imbalance. They will need simple guidelines concerning future price in order to make sensible personal decisions.
Action: Federal government to set up an Oil Excise Commission whose specific task is to maintain a forecast of future oil prices for a period of 20 years out. The oil excise will be set at a level that produces a linear increase in prices up to the forecast. The commission will act independent of government and be charged to decrease excise in the event of spikes in the international oil price and increase it when the international price falls. The net tax take over time to be maintained at current levels.
4.0 SUPPLY
The achievement of self sufficiency can be tackled by addressing both sides of the supply – demand equation. The supply side can be influenced by a number of factors that affect not only the supply of indigenous crude oil but also alternative and substitute fuels such as Natural Gas, Coal to Oil, Biofuels and Electricity
4.1 Indigenous Crude Oil
The bulk of Australia’s crude oil production comes from Bass Strait fields and fields located off the west coast of Western Australia. The current government policy provides for oil field developers to sell oil extracted from these fields into the Australian market at world parity prices. There is no obvious need to change this policy as it should provide explorers and developers with the incentive they require to develop new fields and maintain production as high as is possible within the physical constraints. Governments should ensure however, that the requirement to give first preference to local supply be incorporated in all new permits issued.
Considering the timeframes that are required to find, test and develop new fields, it is unlikely that new finds will have any significant effect on our oil energy dependency within the 5-year period that we are currently examining.
4.2 Gas
Australia has an abundance of gas supplies both in the form of natural gas and CSM (Coal Seam Methane). As will be discussed later, it is likely that natural gas will provide the country with the most effective bridging fuel for the next 20 years.
Proved and probable reserves of natural gas are in the order of 140 tcf (trillion cubic feet) and the CSIRO has estimated CSM reserves to be in excess of 250 tcf. If the entire country’s oil demand were converted to gas we would consume around 1.6 tcf per year in addition to the current gas consumption of around 0.7 tcf per year. We therefore have over 100 years supply of this valuable fuel at current usage levels – enough to provide us with a transition fuel and still leave some stocks of this valuable resource for future Australian generations.
However Australia currently exports close to 1 tcf per year with plans to increase this number to more than 4 tcf per year.
This creates an insurmountable technical problem – it is not possible to increase local production to the level required to meet increased exports and ensure oil substitution within a five year time frame. All increased production must service domestic demand first, so the intended export targets will not be met. This makes economic sense – the income we receive from the LNG is only a fraction of the cost of the oil it will replace, so it makes more sense to keep it in Australia.
Action: Federal government to set in place a moratorium over the development of any new export contracts or facilities for the export of LNG.
For CNG to be an effective replacement for liquid fuels it needs to be provided with a widespread piping network to support refuelling points. This and the substantial increase in demand will mean that the natural gas pipe network that exists on the eastern seaboard of the country will need to be extended and reinforced. This network is privately owned. Government encouragement and facilitation will be required to ensure the private owners put in place the required enhancements.
4.3 Coal to Oil
Australia has vast reserves of coal and one possible solution for oil dependence is to convert some of this coal supply to liquid fuel. The technology for the conversion is well established using high temperature gasification of the coal and conversion of the resulting syngas to liquids in a Fischer Tropes reaction.
However:
- The process is wasteful of energy and produces a large amount of CO2.
- The infrastructure required for the conversion is large, complex and capital intensive.
- Developers of this infrastructure need to consider the impact of carbon tax on the price of the production.
For these reasons, it is unlikely that major developments will occur until there are clear price directions from both the carbon trade and the oil price. By the time these price signals are received there is no chance that any substantial production could be achieved within a 5-year timeframe.
4.4 Biofuels
Ultimately these may be the only energy efficient liquid fuels that will be available to us. The work on progressively transferring all of our liquid fuel demands to biofuels needs to progress at a rate that will have these fuels carry the entire liquid fuel demand within about 30 years.
Because of our very large growing areas, Australia is ideally placed for the generation of biofuels. We are however faced with a number of physical and moral difficulties. Climate change and resulting drought will impact on our capacity to grow sufficient feed stock for the production of biofuels in the quantities required. We also have to face the fact that feedstocks used for production of fuel directly impacts on the world capacity to feed an ever growing population.
The different biofuels can be effectively categorised into the feedstocks used to produce them as it is the feedstocks not the fuels themselves that are critical to the fuel’s financial viability.
Sugar based ethanol
Australia has a substantial sugar growing industry and some of this capacity could easily be diverted into ethanol production. The planning and development of additional ethanol production facilities could occur within a 5 year timeframe. The only impediment is economics and certainty of a market.
Action: Federal government to mandate a progressive increase in ethanol content of all petrol in line with an aggressive build program for ethanol production.
Biodiesel based on animal or vegetable oils
Australia had a developed a large momentum behind this industry up till about 3 years ago. At that point the federal government decided to introduce the 50% ie. 19c/litre excise regime on all biofuels. This tax killed off many new proposals and forced some producers to close down facilities. Currently producers are only focused on plants where the feedstock is a waste product. This severely limits the capacity of the industry.
Ultimately the price of oil may make biofuels such as palm oil and algae based oil possible. Ethically responsible biofuel programs may grow out of these beginnings, but these industries will require years to develop and will be unlikely to be of any benefit within a 5 year timeframe. Nevertheless government needs to provide a lot more encouragement to this aspect of the solution.
Action: Federal government to repeal all excise on domestically produced biofuels.
4.5 Electricity
With the increase in oil price there will inevitably be a transfer of energy demand on to the electricity generation system. In the initial phase this will consist of increased load from public transport systems. Over a 3 year timeframe increases in load will result form electrification of rail and increased use of conveyor systems in lieu of haul trucks in mining. The major change however will be as a result of the take up by the public of plug in hybrid vehicles for commuter transport. Plugin vehicle should not present severe difficulty for the electricity system to manage if they are confined to drawing power in off-peak times. The large uptake of off peak power will necessitate a rapid roll out of timed metering.
Action: State governments to legislate that distributors are to provide access to timed metering to all consumers upon request.
Normal changes in the load profile for the electricity system are managed by the system control organisation. These changes however will be relatively rapid and will come at a time when the generation industry already faces massive upheaval due to the implications of carbon taxes and uncertainty over future fuel pricing. Power stations take 3-5 years to plan and build, cost up to a $Billion and have a life of more than 30 years. Developers need certainty over future operating conditions to free them to commit to such investments.
Action: Federal government to quickly resolve the carbon tax regime that is to be applied.
At present developers are intending a major switch to gas fired generation based on the lower carbon emissions of this fuel. The aggression with which this switch is pursued will depend on the treatment of existing coal fired generators under the new tax regime. This switch to gas however is being considered in isolation of the requirement of gas to provide an interim substitute for oil. In combination with proposed LNG export facilities the gas industry is in real danger of an over commitment, a resulting price hike and a failure to deliver.
Action: Federal government to immediately establish a national body for the management of the eastern seaboard gas network. The body to be responsible to forecast and manage future gas demand in a way similar to the way the NEM is managed.
5.0 DEMAND
Australia currently consumes around 880,000 barrels of oil a day. We currently produce around 570,000 barrels a day or 65%. As discussed previously the production of indigenous crude is likely to fall to around 50% by 2013. Add to this the small increases from production in alternative fuels and small amounts we will be able to extract from world markets, it is likely that we will have an overall oil availability in 5 years of around 60% of current consumption. We must therefore target a reduction in overall demand of 40% or 352,000 bpd. Following is a table of the approximate usage by sector of Australia’s total consumption. The targeted reductions will be discussed under each sectors analysis.
| Sector | 2007 Usage (bpd) | Proportion of Total | Target Reduction |
| Agriculture | 45,239 | 5.2% | 5% |
| Mining | 43,521 | 5.0% | 15% |
| Industry/Commerce | 80,171 | 9.1% | 25% |
| Road Transport (Personal) | 388,829 | 44.3% | 60% |
| Road Transport (Goods) | 133,427 | 15.2% | 25% |
| Public transport | 12,598 | 1.4% | 0% |
| Rail goods | 11,453 | 1.3% | 40% |
| Air transport | 98,496 | 11.2% | 50% |
| Water transport | 24,624 | 2.8% | 0% |
| Products | 36,650 | 4.2% | 0% |
| Heating | 2,291 | 0.3% | 50% |
| Total | 877,300 | 100% | 40% |
5.1 Personal Transport
Australia currently utilizes approximately 44 % or 390,000 barrels of oil a day on personal transport.
While personal transport directly contributes very little to wealth and gross domestic product it is the one area likely to have the greatest impact on our society and our economy. Our housing stock has been configured to be heavily reliant on personal transport to get people to and from their place of work. A disruption to fuel availability would trigger a major disruption to the workforce, that would make the difficulties that we currently face seem paltry.
So the challenge will be to cut our reliance on oil, in a dramatically short time frame, yet maintain as much as possible of our current lifestyle.
Personal transport involves a significant proportion of discretionary use so it is reasonable that the reductions here are more severe than the overall target.
Short-term Goal: In 5 years, reduce Australia’s oil consumption for personal transport to 40% of current consumption.
To achieve this goal we will need to:
1. Reduce the number of kilometers driven.
2. Increase the efficiency of vehicles.
3. Replace petrol and diesel with alternate fuels.
1. Reduce Kilometers Driven
The increase in the cost of conventional fuels is likely to have the greatest impact on discretionary motor vehicle travel. For this to be effective in reducing demand it is important that the public is not shielded from taking full responsibility for cutting usage. It will be very easy for governments to resort to popularist policy decisions to reduce excise or in other ways encourage the continued high levels of personal use. The current tax and excise regime must be either maintained or enhanced to discourage the discretionary use of personal vehicle.
Of course the public must be provided with alternatives to the use of personal vehicles for non-discretionary travel. This will mean a substantial effort by all local authorities throughout Australia. Bus and train services will need to expand dramatically. Where appropriate, road networks may need to be reconfigured to provide serious levels of accommodation for bicycle traffic.
People are abandoning their cars and moving to Public Transport. This process is an inevitable consequence of high oil prices. We cannot simply say “please wait until we install an electric light rail in your area”, people need a service now. We need to provide solutions that are immediately available. Small commuter busses bought straight off the assembly line and converted to CNG provide a “bridging service”. This bridging service can provide a pathway to light rail.
Action: Local governments to dramatically increase existing fleets of busses and commuter trains. For remoter suburbs consideration to be given to the introduction battery-powered or CNG powered mini-busses for shuttle services to transfer hubs on main roads and arterials.
While it is unrealistic to expect major new infrastructure such as light and heavy rail to be put in place over 5 years the relevant governments must take immediate action to commence the planning processes for this infrastructure. Waiting until the crisis unfolds may mean the difficulties in building these projects will be insurmountable.
2. Improve Vehicle Efficiency
While there is little that governments can do directly to effect the efficiency of motor vehicles there is significant measures that can be taken to influence the acceptance and take-up of high efficiency vehicles.
Action: Increase tariffs imposed on all imported vehicles using a sliding scale based purely on fuel consumption levels.
Action: Impose increased sales tax on all locally manufactured vehicles based purely on fuel consumption levels.
3. Alternative Fuels
On the demand side there are only two alternative motor vehicle fuel sources, electric and CNG (Compressed Natural Gas). Both of these sources have their place and need to be encouraged in parallel but CNG provides the most immediate solution to disengage the existing personal car fleet from oil dependence.
The conversion to Compressed Natural Gas (CNG) requires only a minor change to the existing fleet. The conversion costs about $3,000 per vehicle. The payback for this expense is around $1800 per year at current oil prices.
The conversion from petrol to CNG is not a long-term solution – this would just be changing one problem for another. Long-term we need to be aiming for 100% renewable energy. This conversion buys us time, allowing for a gradual transition rather than a traumatic shock.
Action: Government to introduce a 50% cash rebate on costs for conversion of private vehicles to CNG.
5.2 Other Demand
The other areas of demand reduction such as industry, goods transportation, air travel etc. will be discussed in a subsequent post.
6.0 CONCLUSION
6.1 Supply/demand balance
This will be the subject of a more detailed analysis to determine the time based results of the above measures and determine how effective each of the measures will be in achieving the targeted balance between domestic oil production and demand.
6.2 Government Budgets
There is no doubt the action items identified here will have significant budgetary effects. We have estimated the net government outlays to be in the order of $10 Billion in capital expenditure over a five year period. In addition there will be a impact on recurring revenues of around $ 7 Billion. This will come over a period during which there will be decreased economic activity and so lower tax revenue. The only way these expenditures can be responsibly accommodated is to slash government spending on the infrastructure associated with the oil-based economy.
Action: Federal and state governments to put a moratorium on all new projects involving public roads (excluding modifications for public transport) and airport facilities.
6.3 Economic Effects
The impending oil crisis will have wide ranging implications for both our domestic and the international economy. Australia along with most of the world will enter into an extended period of negative growth. This will manifest itself in the Australian context as a large increase in unemployment numbers. To a degree these effects can be countered by the high expenditure rates associated with the above measures. If prepared and managed properly by governments these actions can be used very effectively to stabilise the economy following the oil price induced crisis.
Related Posts:
* Australia: What to do, what to do about our energy situation?
* Election Time in the Land of Oz
* Coal To Liquids In Australia
* Australian Natural Gas - How Much Do We Have And How long Will It Last ?
Well, detailed but isn't this a bit too prescriptive?
I'll restrict my comments to the Demand section.
From your table... there are two stand out offenders; Road Transport (personal) and Road Transport (Goods) which you focus on. I agree (strongly) that these two areas need to see the most reductions, and that Government intervention may/will help speed this, and support your call for tariffs etc on this front... but to extend that (as implied in your table) to other industries that
1/ make up smaller percentage contributions and
2/ are going to respond anyway...
Well, do we need that many Govt. interventions?
And where are you going to put the goods no longer moved by truck if you also want to reduce the rail fuel use by 40%?
Surely, the first step is to transition away from trucking (hooray) to rail, which may see a marginal increase in rail fuel use. A side benefit must be the decreased maintenance of road infrastructure, which could be put towards upgrading the rail network... thus possibly leading to lower consumption there.
Your biofuel advocacy, on the other hand has a hint of maintaining BAU to it.
Maybe, apart from climate change, a lot of that area is not suitable.
Please, I will repeat this again. Australia generally has poor soils. We grow a lot of what we do by applying PNK and H2O. Now sugar at least has the property that you are ultimately just exporting C, H and O (ie starch, and the ingredients are CO2 and H2O) but to expand your growing area you are going to have to displace other production... OR bring new areas under production... see the beginning of this paragraph. It is not by choice that our farmers use a lot of area, using a lot of oil to produce what they do. Our yields per area are a lot lower than elsewhere... even if our yield per worker is higher.
As Gav points out (frequently ;-) ) our large areas of high sunshine non arable land may have other uses.
True. Phoenix and I discussed the prescriptive nature of this post. We agreed that, if we want to prove that it is possible we need to provide specific numbers. These numbers are open to change - they simply form a concrete starting point for demonstrating what is possible.
If I was taking on this problem as a professional engagement, this would be my first step in developing a "Findings and Recommendations".
Electrified rail. I discuss it in previous posts, and we will discuss it in the next post. It wasn't specifically discussed in this post, because we are talking about road transport here, but our underlying assumption is electrification of significant sections of the rail system. Apologies if this assumption was not made explicit.
If exporting sugar becomes marginal, then we will have to find some other use for it. There are other factors that we have considered in this area, but they will be discussed in future posts.
A lot of what gets manufactured and transported is useless junk. My son does not need a plastic McDonalds Happy Meal toy - in fact he doesn't neeed ANY new toys, he only plays with 20% of what he has. Likewise, our house does not need any more toasters (we have 2), kettles (3), TVs (2), CD players (3), etc, etc, etc.
However I don't think we are suggesting that government intervention will be needed. Government planning yes. Government education yes. But this problem is likely to take care of itself if fuel continues at $130+ per barrel.
However, having said that, these goals are not set in stone - we are using them as a vehicle to demonstrate what might be done.
If these goals were achieved our reliance on foreign oil would be cut to 0 and we would be ahead of the depletion curve for long enough to make a transition to renewables.
aeldric.
PS
The problems we will experience and the subsequent solutions to those problems will sort themselves out. Market forces will eventually drive us to use of renewables etc. without government intervention. The problem with this approach, is the transition.
The infrastructure and societal changes necessary to effectively deal with an oil depleted society will take many, many years to put in place. In the meantime our economy and general population will go through hell. Government intervention is desirable to avoid this to the maximum extent possible.
Well I for one don't mind "prescriptive", if it gets Oz to oil independence in five years! ;-)
Bring on "The Prescription", Doctor!
(Do you think it's available for our Federal Politicians in suppository form?)
Agreed, its really refreshing seeing a potential transition addressed in a series of positive steps/actions like this.
To me, waiting for the market to fix things is a lazy "we'll cross that bridge when we come to it" way of thinking. The markets react, they don't anticipate. Waiting until the oil crunch forces us to look for alternatives is no good if the alternatives need years to put in place - the preparation work needs to be done now.
Quite a few relatives have dismissed the whole Peak Oil thing because its too depressing to contemplate, something which is exacerbated by the fact that so many websites delight in pointing out all the problems & end by concluding that TEOTW is coming - I'll be trying to get them to read this :)
It'd be really nice to see this article published more widely than on a site that only peakniks are likely to visit...
Agree also, this style of presentation is exactly what is needed, great work aeldric et al.
I'm no "free market" advocate... but you have to propose something that's going to bring the majority of people with you... and the current economic story with credence (deserved or not) is "the market" as told by our current crop of economists and commentators in the media (and think tanks). So a little pandering to it wont hurt.
Simply, I suggest focusing on the two transport issues identified.
The rest is "distraction" at this stage.
There is enough detail there to chew over for a 50% cut in fuel use... without regulating elsewhere.
The more grand the plan becomes, the more likely errors are and less likely you are to carry people with you.
In a nut shell - focus.
Phoenix I presume you are following the share market falls and the effect it is having on superannuation - this is a response to our oil situation - high prices with little to no growth in quantum. This trend will continue and will increase when shareholders realise that every endeavour has a key need for petroleum - therefore most enterprises have no long term value...
If we are to maintain some sort of material society then we need prescriptive solutions.
CNG may be OK for private transport but for the long hauls they can't carry enough.
We need to have diesel / electric trucks that use overhead electricity directly between cities. There is a push to put all trucking on the New England route and so it would be the obvious choice to electrify. The costs are high but a 10 cents per kilometre charge should pay for it in spades.
You mean... trains?
Trains - No...Trucks but like Trolley buses... http://en.wikipedia.org/wiki/Trolleybus
You would use a rail quality delivery system as the load would be very great over the entire line - say 2000 units per day - B Triples would be the preferred size - greater energy efficiency...
We have a great road infrastructure and a culture of trucking and not a lot of rail lines that go places.
The cost of rennovating the Great Northern line is prohibitive as all new rails and sleepers are required, and you are still up for the electrification....
It would be sensible to link the rail system to this system by using the road rail trailers... http://en.wikipedia.org/wiki/Roadrailer
I am having a break from full time work starting next week and will endeavour to contract all the New England Shires to get support.. grass roots as it will be called.. experts out there who are willing to help leave a personal message Sololeum at Sydney Peak Oil...
The cost of rennovating the Great Northern line is prohibitive as all new rails and sleepers are required, and you are still up for the electrification....
The damage to the road bed is roughly proportional to the 4th power of the axle load.
Trolley buses require two wires, not one wire as with rail (the rail serves as the return).
Trolley buses use about 5x as much electricity/passenger as a small tram. The flexing sidewalls of those rubber tires and much greater co-efficient of friction.
The life time cost of maintaining roads for heavy trucks is substantially higher than rail (for rail replace every 50 years or so for moderately heavy use) and operating costs should be higher as well.
Alan
Strongly agree. That is why I discuss CNG for small mini-busses and "the existing personal car fleet" but do not discuss it for long-haul trucks. The majority of oil is burned in personal vehicles, so converting them to CNG would be enough.
aeldric, I think that CNG converson is thrown around here a little too flippantly as if it is already something you can just drop the car into the shop tomorrow and just get it done. My investigations for converting a standard Commodore to CNG has shown that it is not yet avaialable off the shelf and there is a rigourous certification regime required for each engine type that is put up for conversion. This is a costly exercise and just not economic for the individual to undertake. LPG is still the only real gas option for cars.
This is correct - it is still early days for CNG. So we better get off our butts and get a bunch of cars certified. The current driver for certification for a type of car is commercial fleet owners, who decide to get a fleet of cars converted.
Mangaing a fleet of commercial vehicles is not that straight forward. Most companies large or small will have a variety of vehicles at differnt ages and differnt qulity of vehicles for differen level of employee. There would be very few comapnies that say buy 20,000 Commodores or Falcons on 1 July 2008 and then turn all of them over in three years time.
It will take GMH and Ford to produce a factory fitted CNG car which fleet owners then have an option to take up. The government will have to roll out the filling infrastructure which will be very different to the current modes of fuel delivery. It could be done but it will ahve to be pushed by government. I just don't see anyone else that could clear the obstacls from the path and or lean on people who need to change their attitude. The government itself could simply act in the market by refusing to buy anything but CNG for ordinary passenger cars and that would soon get the attention of the car companies.
Thanks Aeldric for your presentation,
I think you are asking for a large number of actions, some will be very difficult to implement. I would agree that personal travel and road transport are areas where large savings are possible, and probably should be tackled as the highest priority.
Experience in US in late 1970's shows that vehicle miles traveled(VMT)is very difficult to change long term, especially as we have a growing population and an expanding suburbia. It's doubtful that in the next 5 years big movements of work commuting from cars to mass-transit will occur because;1)existing rail and bus are crowded at peak hours 2)many suburbs are not close to rail or work locations are not close to rail. Furthermore, 70% of travel is not work-related(for shopping, other activities) even less suitable for mass-transit. In time, a massively expanded rail system connecting major shopping, sports areas and going across cities would help but this will take 20-50 years. I suspect that moving commercial interstate road transport to rail could be done quickly but there is the problem of within-city road transport requiring new rail infrastructure.
Improvements in fuel efficiency and replacing petrol with CNG seems likely to have an immediate impact in reducing oil use or petrol imports.If all of the 1 million new passenger and light trucks sold in Australia each year(7% of total) were either PHEV, or duel CNG/petrol, could probably reduce commercial and private fuel use by 6-8%, translating into a 3-4% reduction in total oil use per year.
Legislative regulations could mandate 10% of vehicles having the poorest fuel economy to be duel CNG/petrol, and raise this until all new vehicles were either duel/petrol or PHEV. This would allow time for CNG infrastructure to be expanded. Existing LNG installation subsidies could be expanded to cover some of the costs and encourage retro-fitting of older vehicles. The advantages of having duel petrol/EV or petrol/CNG, is that vehicles will still have flexibility for inter-city travel and in locations not supplied by NG. Smaller CNG tanks( for say 60km range) would be less expensive to install and require less space. If petrol supplies really become critical, these vehicles would still be able to run even if re-fueling was tedious.
If post peak oil results in >3-4% per annum reductions in oil availability, especially petrol imports, I cannot see any other alternative than petrol rationing, by either price, allocation, or a combination of both. Only if this happens, will it be possible to really reduce VMT and start building and paying for the expansion of mass transit infrastructure.
One mass transit infrastructure that might quickly reduce VMT(even if limited), would be to re-introduce or expand the electric tram infrastructure along existing roads(or parking lanes), to interlink or extend within-city rail transport. Trams seemed to work for users in Sydney, it was the private motor vehicle users who drove them off the streets, or possibly traffic jams?
Aeldric, I agree with most of what you say BUT- You have 2 toasters (as do I) etc in the consumerist society in which we live. The only way to reduce fuel/energy/junk consumption IS by government intervention.
Think of rationing in WW2. People had ration books so everybody had their needs(not wants) met without the richest buying everything. Today the government needs to intervene to give Carbon Ration Books with coupons for fuel, power and consumer items.
If government intervention meant our toaster imports were regulated to ensure that they were well built rather than cheap Chinese cr*p then the expensive, well constructed toaster would be more desirable than the cr*p because BOTH would cost a rationed carbon coupon and you wouldn't think of buying that $10 toaster on special as a spare.
Neal
Your comments sound a bit like you are advocating communism. While nice in theory the ultimate result is the LADA motorcar.
We have tried to keep the actions to things that are practical and achievable within the current political landscape of the next 5 years. Even so, they will be a very difficult sell to a public that still expect that problems will be fixed without any loss of convenience. With luck, the current pain being felt by the public will promt an increased awareness which in turn will provide courage to the politicians. Many of them, do in fact understand the problem and the implications. Unfortunately, talk of such changes as are necessary is viewed as heresy to the growth doctrine. It all has to start with public awareness.
Hi Phoenix
Your opening comments appear to be deriding both Communism and the LADA motorcar. Taking the second innuendo first, I would like to point out that the Lada is essentially the Fiat 125, built using the same dies that Fiat onsold after changing their designs.
I am sure that you are aware that an Italian motorvehicle manufacturer such as Fiat could never produce a quality car (sarcanol off).
Regarding "Communism", I am not aware that it has ever been tried as a form of Government for a large number of people. The so-called communist states, such as USSR, China , North Vietnam, North Korea, Cuba, etc have all been command economies with a small elite and a vast peasantry. The only true Communist entities have been small, usually religious, groups that have existed within, and partially separate from, the over-riding state infrastructure.
I personally would like to see an economy where the 1600cc motor LADA (Fiat 125) car was the norm, and the principal of "To each according to his needs; from each according to his ability" was the basic principle of the economy. It sure as hell would beat the mashete moshpit on the near horizon.
CHeers
Merv
No, it wasn't commumism when Churchill did it and it wouldn't be communism now. As Joe Public won't cut back on his consumption patterns voluntarily then prices rise (like petrol is now) forcing out the poor while those in Mcmansions have the cash to outbid them for free market fuel, junk and carbon credits.
All rationing does is restrict the size of the usage pie and means those with the money can only get access to extra fuel or whatever by paying to buy the coupons and credits of those of use who are really willing to cut our usage back.
That means that you and I get a nice extra source of income when we ride our bikes when the V8 idiots buy our coupons.
Capitalistic carrot and stick that encourages conservation.
I've been driven into by a Lada. Nearly totaled my car, but the Lada only had paint scratches on the bumper. Ugly cars, but built well.
Neal, I disagree slightly from my esteemed co-author - I don't think you are a commie ;-) , in fact I hope you are right. But as Phoenix says, I don't think it will happen in 5 years - maybe in 10?
Hi Neal, I wholeheartedly agree that rationing is needed, whether the binding constraint is emissions (climate change) or energy availability (peak oil). However, I would argue it makes more sense to operate an electronic system than a paper coupon system these days.
The TEQs system is being seriously examined here in the UK, and interestingly the other country with serious advocacy for TEQs is Australia.
I'd be interested to know what you make of it.
I agree with your electronic system rather than paper coupons. Whatever system that is used will be better than the current "I can pay the market price so F**K my neighbour". That I see in so many people.
A fair rationing system will also promote the public mindedness and common purpose that the wartime public had.
The future need not be a moshpit or even painful. IIRC the war years with their belt tightening actually improved peoples lives (even suicides dropped).
A litle self sacrifice in a common purpose makes people feel virtuous.
neal,
Are your 2 toasters both on all the time?, or is toaster electricity consumption a function of how many slices of toast are eaten per week?
Same for TV sets or cars, you can only watch or drive one at a time!
Price is a great way of rationing worth when choices are available, for example different sources of energy( oil vs coal). High prices of oil allow "price rationing" of oil for valuable uses( transport), keeping coal for less valuable electricity generation( because alternatives are available). If we start to have no oil except at very high prices( we are not there yet), then rationing based on priority of use will have to be introduced.
How many people in US or Australia cannot afford to drive a low cost, small, fuel-efficient car for just essential trips( work, shopping once a week) and have no public transport options? While $1.70 a litre petrol is the issue of the day in Australia( $6.50 a gallon), whats really hurting financially are increases in rents and mortgage payments( last years issues). Most of us still have choices, its just that we still choose to drive, look at the week-end traffic jams.
Can't say I agree with this. Rationing by price just means the richest get whatever's in short supply. And bear in mind that oil is traded globally.
Unfortunately, markets do not distinguish between more and less essential uses of oil – if we in the UK are willing and able to pay more to run our cars than people elsewhere are able to pay to heat their homes or power their hospitals then the limited supply of oil will flow here. Demand destruction can be very cruel or even fatal for those whose demand is ‘destroyed’.
According to the UN:
And that was written in early 2007, when oil prices stood at $60.
The point is, guaranteed minimum entitlements to energy (not price-based distribution) are already desperately required in many places around the world, and peak oil means that actual shortages will be many and widespread. And a well thought-through rationing system takes time to set up. As ever, waiting for market signals to tell us its time to implement such a scheme means leaving it too late.
"The future is already here, it's just unevenly distributed" - William Gibson
Australia has coal methanol and sugar cane ethanol--that means flex fuel vehicles using either E85 or M85. Ordinary cars can be retrofited to these fuels, so the public does'nt have to buy new CNG cars with an infrastructure. Natural gas is better exported to people who really need it.
Australia uses 1 mbpd of oil. Australia harvests 30 million tons of sugar cane which is equivalent to
.25 mbp of oil equivalent.
Methanol by the Lurgi or Koppers method is less complex than gasoline by F+T methods. To make a ton of methanol you need a ton of coal and a ton of methanol is equivalent to 4 barrels of oil, so you could make .25 mbpd of oil equivalent would take
22.5 million tons of coal per year. And Australia exports ~300 million tons of coal per year.
So that's .25 from sugar cane + .25 from coal +.5 imports and domestic production of AU=1 mbpd.
Stop complaining.
Australia really IS the lucky country!
I like the idea of the Oil Excise Commission to smooth out price expectations to a known but increasing price over time. It would be a difficult political sell but has some merit as it would create an independent body similr to the way the Reserve Bank operates with interest rates. To implement it you will first need the politicians to recognise the need and I have no faith in the current crop having the courage to do that.
"6.3 Economic Effects
The impending oil crisis will have wide ranging implications for both our domestic and the international economy. Australia along with most of the world will enter into an extended period of negative growth. This will manifest itself in the Australian context as a large increase in unemployment numbers. To a degree these effects can be countered by the high expenditure rates associated with the above measures. If prepared and managed properly by governments these actions can be used very effectively to stabilise the economy following the oil price induced crisis".
I just don't understand.
Do you really think the economy can be stabilised by government spending? Your thinking actually sent shivers up my spine and I simply shook my head.
"Large increase in unemployment numbers".......is this a few words thrown together or do you have an estimate? By how much will government tax revenue be reduced by unemployment and business failures? Which departments do you expect will be cut back to finance mitigation expenditure?
You suggest increasing excise on oil. How do you think THAT will affect inflation, business and employment? Don't you think the rising price of oil will do enough damage. The government's tax on fuel will increase as a percentage naturally with rising prices and inflation.
The death of consumerism will mean the death of the GST all heralded by the rising cost of fuel. It will ensure a contraction and localisation of food production and distribution. Coastal shipping will suffice for transport, the road is already built.
I guess you want to spend billions on rail electrification, so a few questions.
Initial funding from where and when, build time.
From where to where?
How much traffic?
How much revenue return to pay for maintenance, wages and power?
My expectation is governments worldwide will be busy putting out fires from now on, there will be no massive expenditure on huge mitigation projects.
The time for action is way past. Thirty years ago at a minimum was the time to start. Being proactive now will just make us feel good, it will expend the remaining cheap energy and leave the future generation with nothing to do but wither on the vine and bear the hardship we refuse to share.
The sad thing is we can't accomplish that what is necessary under a democracy and a capitalist system. An elected government will do what is necessary to appease the majority in an attempt at self preservation. It's only human nature.
I agree that initiatives to expand the substitution of natural gas for oil is the best chance for Australia right now, its use for fertiliser production should be regulated immediately . Though I don't agree we should be attempting ANYTHING which pretends BAU is viable.
Imagine if the government decreed ten percent of all imported and extracted oil from now on was to be secured in a reserve for thirty years and future generations. Imagine if the whole world had been doing it for the last fifty years. That is not conducive to our narcissistic human nature though.
Everything which should be done like radical conservation and regulated power down will not be done. We will continue to plunder, burn and squander any useful inheritance for future generations.