Energy Security

Sascha Muller-Kraenner

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9781844075829
• eBook ISBN: 9781317740896
• Edition: 1
• Topic: Biological Sciences
• Subtopic: Ecology
• Index: Biological Sciences

'Essential reading.'
Bernice Lee, Chatham House

'Lays out the energy security landscape with a commendable clarity that I have not seen elsewhere. It could help save the world.'
Science, People & Politics

Accessible and exciting... [this] is the first truly objective examination of the relationship between resource scarcity, security and ecological destruction.
Neues Deutschland

Cuts through the confusion and complexity, clarifying the options for a sustainable energy future.
Dan Esty, Yale University

Humanity stands at a threshold: will its shared energy future be peaceful, or will it be threatened by resource wars? How can rapidly depleting resources be managed to the advantage of all, and therefore conflicts averted? How can we avoid irreparable damage to the last areas of untouched natural beauty, all in the name of accessing valuable resources? And how do we arrive at an international energy policy which not only provides safe, economical energy without conflict, but also addresses the all-important issue of climate change: What is the best way to achieve greater energy security?

Energy Security addresses all of these questions, arguing for an urgent overhaul of international law and institutions to control relations with countries such as Russia, which own the worlds remaining fuel supplies. The book presents alternatives to fossil fuels as two diametrically opposing strategies: the increased use of atomic energy; and a comprehensive climate protection policy with a focus on energy efficiency and renewable energy. In times of international terrorism, there are heightened concerns about nuclear proliferation, and Energy Security argues that the future must belong to renewable energy.

Published with the Heinrich B ll Foundation

Chapter 1

Facing a New Energy Crisis

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The world is facing a new energy crisis. Unlike the oil crises of the 1970s and 1980s, this is not one of the known cyclical price increases, but rather a long-term trend towards scarcity of resources, caused by the entry of important emerging economies such as India and China onto the global energy market. Reserves of oil and gas are diminishing while demand is increasing. Only coal reserves still appear to be sufficient for a while. However, the combustion of all coal reserves would place an enormous burden on the environment, as worldwide emissions of the greenhouse gas carbon dioxide would increase even further. Apart from the energy crisis, politicians and the public are increasingly aware of the imminent climate crisis. After all, the first effects of global climate change can be observed today in the Arctic and other sensitive ecological systems.

Furthermore, the looming energy crisis threatens to shift the political balance of the world. The remaining oil and gas reserves are concentrated in the Persian Gulf, in central Asia and Russia. Europe therefore faces the risk of becoming dependent on politically unstable countries with undemocratic constitutions, the new great energy powers of the future. However, if Europe and other countries succeed in using renewable energies, the power balance in the geographic dynamics could once again shift in their favour.

Business as usual

The International Energy Agency (IEA) in Paris was founded after the first oil crisis in 1973. It monitors the development of worldwide energy markets. Its annual World Energy Outlook publishes regularly collected data on trends in energy consumption, its exploitation and price development in all major industrial and emerging countries. It is worth having a look at the latest figures published by the IEA to understand what dramatic developments are looming on the global energy markets and the political challenges associated with these.

In World Energy Outlook 2005, the IEA has drafted a scenario for the period from 2005 to 2030. The basic assumption is that the energy policy of the major industrial and emerging countries will not significantly change during this period. Americans would call this ‘business as usual’. If today’s trends continue, based on the expected development of the global economy, the experts at IEA have worked out that worldwide energy consumption will increase by 50 per cent by 2030.

In accordance with this trend, energy supply in 2030 will mostly still rely on fossil fuel resources as well. Global consumption of oil, gas and coal will accordingly increase further. The bulk of the increase will be experienced in the major emerging markets of India and China. As a consequence, emissions of the greenhouse gas CO₂ will increase by 1.6 per cent per year. The goal of the UN climate convention passed at the Rio Summit in 1992 was to reverse this trend by the year 2000 and to reduce CO₂ emissions to below the level of 1990. Achieving this goal is no longer possible today. If current trends continue, the nuclear energy percentage will decrease as fewer new reactors are planned than are shut down. The percentage of renewable energies, such as sun, wind, water and biomass will increase faster than that of all other energy forms. However, as the growth of renewable energy technologies starts from a low level, they would only cover 2 per cent of the entire primary energy demand, even in 2030, despite the expected high annual increase of 6.2 per cent.

The annual energy report of the German Federal Ministry of the Environment confirms the IEA figures. According to the report and if current trends continue (that is if renewable energies moderately increase while nuclear energy is abandoned), the calculated total percentage of non-fossil fuel, that is nuclear energy and renewable energies, will decrease rather than increase. The percentage of oil and natural gas in the energy mix would increase from 59 to 70 per cent in the same period. In addition, the German Federal Ministry for the Economy points out that European production from oil and gas fields in the North Sea will diminish further, meaning that dependence on imports from Russia and the Middle East will increase.

In this context, the ministry experts are worried by the political development in both regions. Political transformation processes in Russia are far from finalized. Nobody knows whether Russia will develop a stable democracy and market economy in the long run. From a security point of view, the Middle East is crisis region number one. Consequently, reliable energy supply from this region is not guaranteed. Besides, neither Russia nor the majority of the Gulf states are members of the World Trade Organization (WTO). This means that, should there be any trade conflict, the mediation instruments of the WTO do not even apply to them. The German Federal Ministry for the Economy therefore predicts that Germany’s energy security will probably decrease as it becomes increasingly dependent on the two export regions mentioned.

All in all, the IEA expects that existing fossil fuel resources will still suffice to supply the global economy in 2030. However, the forecast of the IEA contains some uncertainties. Its basic assumption foresees the discovery of new oilfields in the next few years and thus a further increase of refinery capacities, and consequently it expects only a moderate increase in the global oil price – and of the coupled gas price. In 2005, it predicted an average oil price of US$35 per barrel for 2010, increasing to $37 by 2020, and to $39 by 2030. However, in mid-2006 during the political crises in Iraq, Iran and Lebanon, the price per barrel reached almost $80, thus more than double the predicted price. In early 2008, the oil price crossed the symbolic threshold of $100 per barrel for the first time. And there is no end in sight.

The IEA experts rightly point out that natural catastrophes, political crises and wars may upset energy security for the consumer countries, even if quantities of global oil, gas and coal reserves are sufficient. However, the IEA is particularly worried about the growing asymmetry between few exporting and many consumer countries. If current trends continue, the world’s dependence on a few oil and gas-exporting countries, in particular, from the Near and Middle East, will grow dramatically. At the same time, the dependence of Western Europe on natural gas imports from Russia will increase. Unlike North America, the third pole of the industrialized world, Western Europe and East Asia have themselves only minor fossil fuel reserves. Apart from the loss of energy security, the IEA experts are first and foremost worried about increasing emissions of greenhouse gases if fossil fuel combustion is not reduced. The conclusions of World Energy Outlook 2005 therefore read: ‘It is widely recognized that the outcome of this reference scenario is undesirable and non-sustainable.’

Peak oil – the end of cheap petroleum

A ghost haunts the energy industry. Its name is ‘peak oil’ and it prophesizes the end of the oil era – or at least the end of the availability of a cheap, seemingly inexhaustible lubricant for the global economy. In a recent newspaper advertisement, American oil company Chevron said: ‘It took us 125 years to use the first trillion (1000 billion) barrels of oil. We’ll use the next trillion in 30.’ They refer to the production of the entire industry, not only that of the Chevron company. The question is whether the next trillion will also be the last trillion. A new branch of science deals with the time and the consequences of peak oil. Kjell Aleklett, professor in physics at the University of Uppsala, Sweden, has founded the Association for the Study of Peak Oil and Gas (ASPO) and scientifically researches this subject. Aleklett publishes news and newspaper articles that prove that oil and gas are taking a turn for the worse. In his blog (www.peakoil.net), a discussion forum on the Internet, geologists, energy traders and oil exploration experts discuss their common worry that the end of the oil era could be closer than we think.

Peak oil defines the time when worldwide total exploration of petroleum has reached its peak and from then on it will slowly decline. According to data from oil company BP, the estimated crude oil reserves will last for another 40–50 years. Since the beginning of the 1980s, more oil is being extracted than new oil is found, and the gap is widening further. Long-term investment in many old oilfields no longer pays. The old ramshackle production systems and the rusty tankers are therefore used until the well has run dry. After that, as the oil era is in any case coming to an end, they will be scrapped.

The time that the reserves of the major oil producing countries will last varies. While Saudi Arabia produces 1.5 per cent of its reserves annually, this figure amounts to 3 per cent for Africa and 5 for Russia. Roughly calculated, Russia’s oil reserves will thus be used up within 20 years. In addition, there are other resources that cannot at present be exploited at an economically and technically reasonable cost. However, this may change if the oil price goes up. After all, unconventional oil sources, such as oil slate and oil sand, also exist, and these would last considerably longer.

The usually cited ratio of reserves to statistical consumption, however, is misleading, as it incorrectly suggests that constant production could be maintained until all reserves are exhausted. Therefore, what is important is the time from which production will start to decline. ASPO believes that this point could be reached as early as 2010. The German Federal Institute for Geosciences predicts peak oil by the year 2025. Then, at the latest, oil will no longer be available as a cheap and seemingly inexhaustible natural resource, and the economy of scarcity – or the search for alternatives – will begin. The most important consequence of the lack of oil after peak oil is increasing prices, as supply can no longer satisfy demand. Not everyone will be able to pay these prices. They will experience a new form of poverty: energy poverty.

As mentioned above, the remaining reserves are concentrated in fewer and fewer regions. Approximately 70 per cent of conventional crude oil and 65 per cent of natural gas reserves can be found in a relatively confined region. This region, the so-called strategic ellipsis, spans from the Middle East via the Caspian region to north-western Siberia. As a result, this is the area that foreign policy strategists in Washington, Moscow and Beijing focus on. Here, the Great Game for the last resources of the fossil era will take place. Other regions, first and foremost Europe, with little of its own energy, become increasingly dependent on imports, unless they succeed in replacing fossil fuels by renewable energies and drastically increasing the efficiency of their energy utilization.

North Sea oil is an illustrative example of what the end of the oil era could look like. Following the first oil price shock in the beginning of the 1970s, the discovery of new oil reserves beneath the North Sea helped Western Europeans become less dependent on imports from the Arabian OPEC countries. Even if oil from the North Sea was considerably more expensive than the imports from the Persian Gulf, the monopoly of OPEC was broken. New oil reserves were also discovered in Alaska. Russia and the Central Asian states entered the international oil market in the 1990s.

Today, North Sea oil production is declining. Most oil wells will be depleted by 2020. Already today, the UK has once again become a net importer of petroleum products and natural gas. Norway, the second major oil power in the North Sea, is developing gas fields in its Arctic North and plans a pipeline along its coast as competition for the Baltic Sea pipeline and Russian trade with liquid gas. For the foreseeable future, Norway will be Western Europe’s only energy exporter.

Between 1995 and 2005, the average cost of producing one barrel of crude oil increased from US$5 to US$10. This is because the majority of the oil wells close to the surface and thus cheap to exploit are slowly running dry and the exploitation of less accessible regions is more expensive. The cost of production equipment, such as steel or oilrigs, is also increasing. Already, a serious lack of skilled labour is becoming noticeable for the increasingly complicated and technically more demanding oil production in the tropics, underneath the seabed (offshore) or in the Arctic. In countries with poor education systems, such as the oil-exporting states of Central and Southern Africa, this lack of skills is reaching dramatic dimensions. Western technicians and experts are reluctant to work in these countries because of the bad security situation. For instance, the staff of international oil companies are regularly attacked or abducted in Nigeria. The consequences of a lack of technicians are production losses and an increasing number of accidents.

Politicians have also discovered that the oil era is coming to an end. In his State of the Union Address at the beginning of 2006, US President Bush surprisingly demanded that America should be freed from its dependence on oil. Bush even admitted that the US was ‘addicted to oil’. The American Department of Defense has engaged the pope of alternative energies, Amory Lovins, to advise them on how to win the oil endgame. For the first time, the Swedish government has submitted a plan on how an advanced industrial country can manage without oil imports by the year 2020. In an advertisement series, energy company BP no longer calls itself ‘British Petroleum’, but ‘Beyond Petroleum’ – thus indicating that it sees a perspective for its business even beyond petroleum. Oil is still the main business of the BP group.

The ‘end of oil’ also has a climate policy dimension. Sweden’s neighbour Norway has announced the offsetting of the carbon emissions of its oil exports by protecting rainforests in developing countries such as Brazil and Indonesia.

Nevertheless, investment is still being made in the continuation of the oil and gas era. The IEA expects that until 2030, a total of US$13 trillion will be spent worldwide on the future of energy supply. However, a decision has to be taken in which technologies those investments should be made. One of the major oil companies in the world, British BP, plans annual investment amounting to US$15 billion, as well as another 2 billion through its Russian subsidiary TNK-BP This high investment requirement is also the multinational energy companies’ justification for their skimming of profits in times of high oil and gas prices.

Can peak oil be delayed? Can the oil era be extended? If one studies the full-page advertisements that companies such as Chevron and Shell have published on the subject of peak oil, the answer is ‘Yes’. However, the question is: at what price?

Oil sands – Canada’s Saudi Arabia

The saga of the allegedly inexhaustible potential of the oil sands of Canada and Venezuela that has been preached for decades is illustrative. In the early 1970s during the first oil crisis, the German magazine, Stern, published an article on the Canadian oil sands with spectacular photographs. There, in the west Canadian province of Alberta, journalists found the future of our energy supply beyond OPEC and the oil embargo.

Oil or tar sands contain potentially gigantic reserves of still unexploited crude oil reserves. These are layers of earth, slate or sand saturated with oil that can be found in numerous countries. The largest deposits lie in the Canadian province of Alberta, in the Orinoco river basin in Venezuela and in the vastness of Russia. The Canadian reserves alone are estimated to be larger than the conventional oil reserves of Saudi Arabia. With the help of these great oil sands, Canada could thus, theoretically, become a competitor for Saudi Arabia on the global petroleum market and significantly change the geostrategic balance.

Obviously, this would have happened long ago if it were not for a few problems. Not only the cost, but also the expenditure of energy, water and natural resources are significantly higher compared to conventional energy production.

Oil sands are exploited with shovel excavators in open-cast mines. Those who have seen the German lignite surface mining regions of Garzweiler or the Lausitz know that an unromantic moon landscape is left behind afterwards. Any subsequent renaturalization measures, if implemented at all, cannot restore the lost natural features but rather create a replacement landscape with few species and little variation. Pristine land, as still existing in parts of Canada, for example, is impossible to recover. Besides, oil sand mining in Canada’s west is by some dimensions greater than surface coal mining as we know it in Germany. Entire forests are cleared for this today, rivers are diverted and people resettled. If accidents happen, rivers, lakes and drinking water could be contaminated with oil.

One quarter of the energy content of the produced crude oil must be spent on the expensive exploitation and preparation of the tar sands as well as subsequent renaturalization. The petroleum is extracted from the sand using water steam heated by natural gas combustion. Plans exist to build a new transcontinental gas pipeline from the Arctic through the Mackenzie valley to support the new oil sand development. The Canadian government is even considering building a special nuclear power station to provide the thermal energy necessary for water steam production. Apart from the high energy consumption, the required quantities of water also pose a problem. The water must be purified afterwards in an expensive process and must be returned to the denaturalized river system via specially built waterways.

Production of marketable oil from slate and sand in the remote exploitation areas of Siberia or the tropical Orinoco would certainly not be cheaper. The environmental impact of large-scale exploitation of oil sand in open-cast mining there can only be estimated. However, while the media and environmental groups in the democratic system of Canada ensure a modicum of transparency and control, oil production on the outer borders of the tropics or the Arctic takes place largely with the exclusion of the public.

The oil sands of Canada are only one – be it a very illustrative – example of the fact that the exploitation of new oil and gas reserves is becoming increasingly more expensive, more difficult and also increasingly more dangerous for man and the environment. The first oil wells in North America and in the Middle East were discovered by virtue of the oil emerging naturally on the surface. Many of these wells had been known since ancient times: In Mesopotamia, tar and oil were used to seal ships and as a miracle medical ointment. In what is today Azerbaijan, the fire cult of Zarathustra originated at a place where oil wells emerging on the surface of the earth self-ignited. Such easily accessible wells are no longer found today, and the majority of those known have been depleted. Drilling must go deeper, through harder stone, through ice or beneath the seabed. As the global petroleum industry is now entering the last wildernesses in the search for the last hideouts of Black Gold, the price nature must pay also increases.

Natural gas – an alternative?

At the same time, it has become evident that the long-touted alternative, natural gas, is not available either in limitless and cheap quantities. ‘Peak gas’, that is the peak of worldwide gas production, however, is further away than the peak of oil production. Many countries have only just begun converting power pl...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Acknowledgements
• List of Acronyms and Abbreviations
• Introduction What Is Energy Security?
• Chapter 1 Facing a New Energy Crisis
• Chapter 2 The Great Game for Measuring the World
• Chapter 3 Energy Superpower Russia
• Chapter 4 The Rise of Asia
• Chapter 5 A Common European Energy Policy
• Chapter 6 Defending the Last Paradise
• Chapter 7 Ways Out of Dependence: Solar or Nuclear?
• Chapter 8 The Strength of the Law and the Diplomacy of the Future
• References
• Index