Oil, coal and gas will continue to dominate global energy production and use in the 21st century, whether global warming activists like it or not. The only way realistically to reduce CO2 emissions would be through carbon capture and storage.

Realism over the critical issues of potential energy resources in the 21st century has become a very scarce commodity. This is the result of three widely held, but highly doubtful, beliefs.

        First, that there is an inherent scarcity in the world’s endowment of carbon energy resources.
        Second, that CO2 emissions from the use of carbon fuels are causing a rapid onset of global warming.
        Third, that a set of geopolitical constraints will inevitably inhibit the production of, and trade in, energy.

Individually, each of these beliefs implies that we should reduce our dependence on carbon fuels as soon as possible. Collectively, the three concerns reinforce each other, accelerating the perceived need for a switch to the use of alternative energy sources.

In this paper, I will argue that each of these beliefs is mistaken. Not only is there no urgent need to foreswear carbon fuels in the foreseeable future, it is also very unlikely that a comprehensive switch to alternative energy sources will take place.

Carbon fuels supply potentials.

The oft-heard notion that we are “about to run out of fossil fuels” is quite simply a myth. Nor is it true to say that hydrocarbon production is about to “peak” anytime soon. At least for the first half of the 21st century carbon energy demand limitations will bring no more than modest pressure to bear on the eminently plentiful and generally profitable-to-produce flows of coal, oil and natural gas that are available.

To begin with, the world’s presently known coal resources of some 6,300 Gigatons are equal to a nominal close-to-1000 years’ supply. As shown in Figure A1 coal production is set to rise slowly, but continuously throughout the 21st century, so that, as shown in Figure A2, its total use over the 100 years will be of the order of about 700 Gigatons (475 Gigatons oil equivalent), constituting about 11% of the commodity’s resource base.

The century’s production trends for oil, based on the currently estimated proven reserves of about 200 Gigatons of conventional recoverable oil, show that annual production slowly moves towards a peak of about 4.5 Gigatons in 2030 (Figure A3). Thereafter, a slowly declining output is sustained for another 50+ years.

The present conservative estimate of non-conventional oil is currently indicated at about 860 Gigatons. Its most likely production curve shows that from its still near-zero production in 2005, output increases relatively slowly until 2030 (Figure A3). Thereafter production volumes are enhanced in order to compensate for the reductions in conventional oil outlook. An annual high growth rate of non-conventional oil thereafter continues through to 2080 when a peak annual output of about 5 Gigatons is achieved and by which time 175 Gigatons of non-conventional oil have been produced. Thereafter, over the 20 years to 2100, another 95 Gigatons are produced, giving a total cumulative production over the century of about 265 Gigatons. This is approximately only 30% of the presently defined resources of non-conventional oil. The downturn post-2080 in the annual supply of non-conventional oil thus cannot be attributed to the exhaustion of the commodity’s reserves. On the contrary, it reflects the preferred late-21st century’s rapidly growing production of natural gas and of renewable energies (as can be seen in Figures A1 and A2).

Figure A1
Trends in the evolution of Energy Supplies in the 21st Century

Figure A2
Cumulative Supplies of Energy by source in the 21st Century

Figure A3
Production Curves for Conventional and Non-Conventional Oil, 1940-2140

Global gas production by 2005 was only two-thirds as important as that of oil (2.5 Gigatons of oil equivalent, compared with oil’s 3.9 Gigatons). That reflected a strong belief in the past that the natural gas resource base and the limited number of energy markets which gas could supply, would not make possible its emergence as a significant third energy source alongside coal and oil. Since 2005, however, gas production has already increased by over 8%, whilst oil supply has remained more or less stagnant.

Meanwhile, over the past decade, there has been a significant 21% increase in proved reserves of natural gas, so that the reserves to production ratio now stands at more than 60 years. Gas supply to date has been achieved through the exploitation of conventional resources and this is expected to ensure increases in production until the mid-21st century. Annual output will then have risen from its current 2.4 Gigatons level to 6 Gigatons oil equivalent (Gtoe), so exceeding the output of oil. Support for this expansion in conventional gas output (totalling about 130 Gtoe over the period to 2050) will require a modest expansion in the current level of proven reserves of some 180 Gtoe. Such an addition to reserves is well above the lower limit of potential additional reserves of conventional gas, namely 200-300 Gtoe.

Add to this the formidable potential of non-conventional gas. Around 2100, the production of non-conventional gas will be three times as large as that of conventional gas. Non-conventional gas resources are currently defined with a range of 780-950 Gtoe, with a formidable proportion lying in North America (210-230 Gtoe); the former Soviet Union (140-180 Gtoe) and the Asia/Pacific region (with 200-260 Gtoe). In fact, history and geography between them have set up a very long term prospect for natural gas production and use. In 2100, 30% of the total energy supplies will be natural gas, 28% renewables, 20% oil and 20% coal (Figures A1 and A2). In the event of coal and oil production being curtailed for environmental (climate change) reasons, then natural gas with its widespread distribution around main regions of the world seems to be most likely to fill the gap, given its potential availability, with, if need be, additional availability from the exploitation of gas hydrates for which a beginning is already in place in several countries of the world (notably Japan, Russia and the US).

Thus, over the 21st century as a whole some 1660 Gigatons oil equivalent of the various sorts of carbon energy will be produced – and used – compared with a cumulative total in the 20th century of just under 500 Gigatons. In other words, three times as many carbon fuels will be used in the 21st century than in the 20th century!

This three-fold increase reflects not only the bountiful nature of the world’s endowment of carbon fuels, but also the general willingness of the nations which are rich in coal, oil and/or natural gas to accept the depletion of their “natural resources”, in return for the economic growth it generates and the rising incomes which it secures for their populations.

Nor is it to be expected that nations will engage in “resource wars”, as some analysts are predicting. Resource wars are likely only in the context of a terminal scarcity of coal, oil and/or natural gas. Such scarcity is excludable for the 21st century, except temporarily from time to time, on a local or regional scale. The many parties involved in the development of carbon fuels (OPEC, IEA, OGEC, IOCs, NOCs, etc.) will no doubt have their frictions, but they have too many interests in common to allow conflicts to gain the upper hand. Supply continuity at the levels required by demand developments is much more likely than resource wars.

Renewables and global warming.

Neither is the carbon-energy production industry a serious, or even a relevant, phenomenon with respect to global warming and climate change, except under the close-to-unthinkable circumstances of very large scale and long-continuing releases of methane (natural gas) to the atmosphere from the production and transportation infrastructures of the industry. This could occur only if the generally expected markets for gas fail to materialise, so that the companies and other entities involved have neither the will nor any commercial motivation, to inhibit such a development.

Ironically, the only possible cause of such an occurrence would be a rapid and low-cost expansion of renewable energy sources, so that the ‘bottom’ traumatically drops out of the natural gas markets. In reality, renewable energy production plants (windmills, solar power installations, tidal or wave power driven generators, biomass fuelled electricity production, etcetera) expand too slowly and their cost-competitiveness improves too slowly for this to happen. It is these negative attributes of most renewable energy resources which make their expansion, at a rate whereby renewables could meet even the incremental demands for energy in the first half of the 21st century, well nigh impossible.

This limitation of renewable energy has already been effectively demonstrated in the world’s richest and most technologically orientated countries since 1990, the base year from which the Kyoto Protocol required their reduced use of carbon fuels, whereby the volumes of their CO2 emissions would be reduced. In reality, their collective use of 3.525 Gigatons of oil equivalent in 1990 (from a melange of oil, gas and coal) increased to 4.715 Gigatons by 2005. In marked contrast with this 1.2 Gigatons oil equivalent rise in carbon energy use, the use of renewables increased by less than 0.2 Gigatons oil equivalent. Of this, moreover, 83% was accounted for by nuclear power – a pseudo-renewable energy source. But the supply of nuclear electricity is now falling away, given that the small number of new stations under construction or currently planned will not even succeed in replacing the output of the stations which are scheduled for decommissioning in the short and medium terms.

We may confidently predict, then, that renewables, will, by 2050, still contribute less than 20% of total global energy supply (compared with a little over 10% in 2005 – excluding non-commercial traditional biomass in the world’s poorer countries) (figure A1). Such a near doubling of renewable energy’s importance by the mid-21st century can be defined as an organic growth rate, rather than one forced through by policies which require fundamental societal changes. Post-2060, however, following the potential peak of global oil production and in the context of a possible reduction in the growth rate of the natural gas industry, there will be a market-orientated widening of interest in renewables, especially in the rising number of countries in which indigenous carbon fuels become relatively scarce and more expensive. As a result, renewables could, by 2080, account for about 25% of global energy use; and for over 40% by 2100. Nevertheless, even then, carbon fuels will collectively still be the more important component in energy supply. But, by then, the world will have become emphatically marked by significant regional and county-by-country variations, as a function of highly significant geographical variations both in the availability of carbon fuels and of renewables. Cumulatively over the century renewables will have supplied about 30% of the total energy used (figure A2).

Thus, even for the world’s already “well-energized” economies and societies – still more than 85% dependent on carbon fuels and with more than half of the remaining 15% derived from nuclear power, now in decline since 2006 – there are no realistic prospects that renewables are capable of replacing carbon energy. Indeed, renewables are not even capable of totally meeting demand growth (incremental demand) in these countries! Unless, that is, the governments of these countries force energy markets to become so transformed. But the supply disruptions and cost increases which would emerge and which would no doubt spark popular protests, put such a radical policy out of reach.

This means that, in spite of most of the rich countries’ so-called Kyoto Protocol “commitments” to reduce CO2 emissions, future progress towards these targets remains highly improbable. At best, progress in reducing emissions will be slow until 2020, with some hope thereafter of more rapid progress. This development will most likely be mainly associated with an increasingly large-scale sequestration of CO2 captured from the combustion of carbon fuels. Technological developments, effective management and the falling real costs of sequestration will make this a more acceptable and, moreover, a financially less costly way to achieve emission reduction targets than that which could be achieved from constraints on the use of carbon fuels, with its consequential adverse effects on economic growth and on public opinion. To offset the costs of sequestration, moreover, attempts to enhance energy efficiency and energy savings will be speeded up.

Developing countries and sustainability.

The OECD countries and the former centrally planned economies of the Soviet Union, account – with only one-fifth of the world’s present population – for over 60% of global energy use. But, a combination of their generally low rates of population growth and their ability to achieve higher efficiencies in energy use will continue to reduce their share of the world’s use of energy – and, in due course, could eventually lead to the stabilisation of their CO2 emissions (providing they turn to sequestration of their CO2 emissions on an increasing scale).

Under these circumstances the world’s developing countries – already with 80% of the world’s population and with the percentage still growing – will play a rising relative role in both global energy use and in CO2 emissions. Indeed, as with most other attributes related to the process of development, these countries will need to use increasing amounts of energy, given that, on an average per capita basis, they currently use only one-eighth of that used in the rich counties of the world. This “natural” phenomenon of rising per capita energy inputs to the world’s poor countries’ economic and social systems is, however, possible only by their increasing their production and use of low-cost carbon fuels. The alternative renewable sources of energy are – to an even greater extent than in the developed countries – simply too-high cost, except in niche markets largely unrelated to industrialisation, urbanisation and motorisation.

Thus, the future global energy needs of the developing world will inevitably be low-cost coal, oil and natural gas – albeit increasingly used at the higher efficiencies already achieved in the rich world. This will occur in preference to the generally higher capital-cost renewables such as are now under development in the OECD countries with subsidies from both international organizations and national governments. Given that in these countries higher per capita incomes, enhanced standards of social welfare and significant spatial mobility were, in large part, the result of access to carbon energy sources at low prices, similar opportunities that are now opening-up to the world’s other countries and to their rapidly growing populations cannot be denied to them. The only conceivable way this could be done is through massive subsidies from the ‘north’ to the ‘south’, whereby the higher costs – both financial and temporal, which the production and use of renewable energies involve – are fully offset. This seems to be highly unlikely.

The provision of access to electricity for all the world’s householders is a more appropriate and positive form of sustainability than that which most policymakers in the world’s richest countries present as their top priority, namely through the reduction of CO2 emissions, so that their hypothesised fears for global warming can be eliminated. Quite apart from continuing doubts over these hypothesised links and the possible development in the near future of technologies which can eliminate the growth in atmospheric CO2 at a cost well below that of switching from carbon fuels to renewables, there can be neither economic nor ethical justification for actions which obstruct the poor world’s supply of affordable energy.

Conclusions.

The picture that emerges from this is, in essence, a continuation of the organisation of the energy sector throughout the world in a way which has already become the norm in the world’s richer countries. With the indicated close-to-four-fold increase in total annual energy use over the century, but with an increase of only about 50% in the world’s population, average per capita use of energy will increase by almost 2.7 times. This is of course a generalised statistic which conceals a wide range of changing per capita energy use variations across the world. In almost all cases, however, the efficiency of energy use in terms of the GDP generated by a unit of energy input will certainly have increased.

This inevitability of continuing increases in the production and use of carbon energy sources seem likely to cause consternation in the ranks of the believers in a causal link between CO2 emissions and global warming. For those pessimists who visualise only adverse results from such developments, I have only two comforts to offer. First, only a two-and-a-half-fold increase in carbon energy use is indicated, compared with a more than five-fold increase predicated by the IPCC’s basic scenario. Second, that the forecast strong increase for natural gas in the mix of carbon energy sources will serve to reduce CO2 emissions by about 10% from what they would have been if the division of the carbon energy market in 2000 had remained the same throughout the 21st century.

CO2 emissions in 2100 may thus be expected to be 2.6 times their 2000 level. This is of course an “unsustainable” proposition for the global warming lobbyists. The only way out of this impasse lies in sequestration of the CO2 produced by combustion. The costs of this procedure will, given the difficulties ranging from the technological to the political which remain to be resolved, necessarily but modestly increase the costs – and hence the prices – of carbon energy, but this price-impact will stimulate energy efficiency and thus, in due course, reduce the rate of growth in the demand for energy.

Under these circumstances both the volumes of carbon energy required over the century could turn out to be significantly lower than this study suggests, while its share of the total energy market would be below the 70% calculated (figure A2). Nevertheless, the 21st century’s energy economy will remain dominated by carbon fuels, with much of their supply and use orientated to environmentally more friendly modes of production and transformation, such as in the potential of natural gas to be used in the production of hydrogen.

As to the most likely oil price development in the coming decades, in view of the fact that conventional oil will be able to sustain market demand to beyond 2030, and that this oil can be produced at a cost of some $10 to $40 a barrel, supply prices are likely to remain modest at about $50 per barrel. It may well be, however, that, with new gas supplies beginning to out-run those of oil, a worldwide gas-based or gas-orientated – rather than oil-based – pricing system will emerge. As producers and consumers involved in pipelined gas tend to aim for long-term contract, such a pricing system may be much less vulnerable to speculation than the oil pricing system has been in recent years. Thus natural gas producers and users should – and could – be cost-plus orientated in their transactions. Were such a globally-orientated system to emerge and achieve success, then the environmental advantage of gas over the other carbon fuels could be further sustained by the realities and reasonableness of both gas supply and gas use over the very large parts of the world in which natural gas will be of prime importance in the energy sector of the global economy.