Energy giant BP has released its annual World Energy Report. Not surprisingly, it shows the global appetite for energy is increasing. What's alarming, however, is exactly what is being burned.
Unseasonable weather, natural catastrophes, political upheaval - 2011 was anything but boring and uneventful. And all of those disasters had an impact on global energy production and consumption, according to Christof Rühl, chief economist at the energy giant BP.
Political unrest and violence in parts of the Arab world, especially Libya, had led to large losses in oil and gas production, he notes. "If you add up all these losses, you would arrive at a total of 72 million tons of oil, that is slightly more than 11 percent of the total oil consumption in the European Union," said Ruhl.
And then there was the fallout from the Fukushima nuclear disaster in Japan. That led to a reduction in total global energy production of an amount equivalent to 115 million tons of oil. Nevertheless - and despite the price of oil reaching record levels - the world's energy consumption last year rose by 2.5 percent and economic growth seemed largely unaffected.
Flexible market reaction
Markets have largely absorbed the shortfall, says Rühl. Members of the oil producers' cartel OPEC - especially Saudi Arabia - increased their production. Japan used more liquid gas. In Europe, where gas consumption decreased by 10 percent, coal was imported from the United States, where it was no longer needed because more and more shale gas was being produced.
"The flexibility of markets is playing an increasingly important role. This is reflected in the ability to increase production to replace energy sources, but also quickly to redirect trade flows." All this has contributed significantly to relatively smooth adjustments, said Rühl.
But that's smooth only in the sense of guaranteed supply. There will be disastrous environmental consequences if gas and oil are replaced by relatively cheap coal from the United States and Colombia. In the past year, global CO2 emissions have increased by 3 percent, a figure which horrifies Regine Günter from the German arm of the World Wildlife Fund (WWF): "It ranges from alarming to catastrophic. We see this monstrous figure, 3 percent more energy-related CO2 emissions in one year, that's huge."
Does anyone remember the Kyoto Protocol?
Ottmar Edenhofer, chief economist at the Potsdam Institute for Climate Impact Research is not surprised by the rise in emissions. He believes it will continue. "We are at the beginning of the largest coal renaissance in human history," said Edenhofer. And we're just at the beginning of the process: "We have the largest increase in emissions, and if we examine the data, it looks like we never had a climate change conference."
At current average production levels, coal reserves will last more than 100 years, there's enough oil for 54 years and natural gas for 64 years. The world has so much fossil fuel and other sources of cheap energy in the ground, according to Edenhofer, that there's no point in talking about the scarcity of fossil fuels for the rest of the century.
So where's the renewable energy?
Price increases and regional shortages will not change the situation. On the contrary: the more oil costs, the more coal is used. That leads Edenhofer to ask some awkward questions: "Have we got the international strength politically to say that the room in the atmosphere for dumping waste is running out?" The atmosphere certainly doesn't have the capacity to cope with the energy sources which are still in the ground. And that leads to another point: "We need a worldwide price for carbon dioxide. Without that we won't be able to deal with the shift which is now occurring as a result of the gas revolution."
The gas revolution comes from shale: half the increase in global gas production in 2011 is the result of the exploitation of shale gas in North America. As supply exceeds demand, this environmentally controversial energy source is costing the Americans just one seventh of the world gas market price. Shale gas has also put a damper on the sale of carbon-neutral, renewable energy. The BP World Energy Report estimates the current proportion of wind power, solar energy and biofuel energy production to be 2 percent. Regine Günther from the WWF only has one comment: it's enough to make you cry.
Author: Sabine Kinkartz / jlw
Editor: Michael Lawton