Lord Ron Oxburgh, former non-executive chairman, Shell UK; chairman, House of Lords select committee on science and technology; honorary professor, Cambridge University

The morning began with a Keynote address by Lord Oxburgh former non-executive chairman of Shell, who spoke on “Out of Oil, into Hot Water.” He began by noting the economic difficulties that are coming as demand continues to exceed supply. We are not, after all, making oil any more. (Ed comment – well let’s not forget biofuels – and it turned out he did not). Because these problems will arise around the time of peaking they will likely be precursors to it, and these economic consequences will come sooner than expected.

The problems, however, are not that we are running out of oil, rather it is that we are running out of cheap oil. When oil fields are abandoned there may be 60% of the original oil (OOIP) that is left in the rock. At present this is just too expensive to extract, but it leaves us with a problem since most transportation requires a liquid fuel. To work effectively the vehicle must have a small, relatively light engine, together with a storage reservoir full of fuel, that must in turn, be as light, yet energy dense, as possible. The Internal Combustion Engine (ICE) has filled that need for the past century or so. The fuels that power it are among the most energy dense of those commonly available. That alone, however, is not the problem.

A province known for lobster, potatoes, and low-key vacations, PEI may seem an unlikely venue for an energy revolution. It's a tiny place, an island the size of Delaware, with fewer people than Arlington, Va., or Eugene, Ore.

But PEI's small size is exactly what makes it appealing for the emerging renewable-energy industry to conduct pilot projects, says Mr. Ballem. "If you're developing a new technology, we're able to provide something nobody else can: a self-contained province where, with two days notice, I can get you a meeting with the premier or the head of the university," he says. "We're small enough to be affordable and big enough to be commercial."

Energy policy analyst Scott Sklar of the Stella Group in Washington agrees. "Clean energy industries are expanding at about 30 percent a year, and they're looking for places to put down investments.... In PEI, they've got an excellent renewable resource base, a small population, and a great willingness to move boldly. There's no doubt that that all plays in their favor."

The electricity-generating potential of the island's greatest energy resource - the wind - was recognized decades ago, and in 1980 Canada built its national wind test center on the island's northwestern tip. When the provincial government adopted its renewable energy strategy in 2004, expanding wind power was the first priority.

Two years later, three new wind farms are nearing completion - two built by a private firm, the other by the public utility, PEI Energy Corp. When completed in the coming months, wind will provide 15 percent of PEI's electricity, reducing the province's carbon dioxide emissions by 90,000 tons each year. The island's overall wind potential is about five times that, according to the government.

The government is working on a range of incentives for a range of potential wind farm owners including guaranteed purchase prices for excess electricity fed back to the electricity grid by small farms owned by cooperatives, farmers, and small businessmen.