The Scotsman reports the following, rather extraordinary claim:
The oil crises of 1973-4 and 1979 saw a massive reaction against oil use and a rapid reduction in western consumption. What we are seeing now are government policies to promote renewable energy and energy efficiency which are creating another decline in oil demand. [1]
The remark is attributed to Dr Peter Cameron, Director of the Centre for Energy, Petroleum and Mineral Law at Dundee University in Scotland. His most recent book, “International Energy Investment Law: The Pursuit of Stability”, suggests his area of competence.
Basic economic theory (which his Institution teaches) contradicts Dr Cameron. As long as energy consumption demand is limited by discretionary income (which it still is), the effect of energy efficiency increases is to increase demand, not reduce it (the so-called “Jevons Paradox”). Energy demand is “inelastic” i.e. it is very resistant to price incentive because we like the things we can do with it so much in comparison to almost anything else we could spend the money on.
This is why, for example, car fuel efficiency improvements lead to increased milages, and total fuel consumption remains the same. It is why the substitution of power generation fuel leads to a reduction of fuel use in that application, but overall fuel use continues to rise. Absolute oil demand has fallen in the past, but that is following price and supply shocks. I have not been able to find any academic references that support the statement that government policies have created a decline in oil demand.
On the contrary, UK government policy explicitly promotes a substantial increase in oil consumption.
For example, it endorses airport expansions and runway additions. Collectively, these will double passenger movements over the next 10 years.[2] To put its renewable energy policies in context: the largest windfarm in the UK (Whitelees) produces roughly as much power (net) as a single 747 commercial aircraft consumes in flight.[3] Covering 10% of britain with Whitelees could power about 8,500 747s.
Yet with government approval, aircraft movements (not passengers) at Heathrow will increase by 125,000 to 605,000 per year after completion of the third runway expansion. Most UK airports are actively expanding their operations. The policy is being challenged, but the fact that it is government policy is not.
Even for a layman (which Dr Cameron can hardly claim to be) this information is not difficult to either acquire or understand.
In the face of such overwhelming counterfactual evidence, what are we to make of this extraordinary statement from the Director of an institution that boasts “academic excellence, professional relevance” in energy policy making?
Understanding this requires some lateral thought.
In studies of societal collapse, one of the many puzzling issues that emerge is the question of why societies continue with “business as usual” long after the means to understand the gravity of their situation becomes apparent. What was going through the mind of the Easter Island inhabitant who chopped down the last tree for firewood for his evening meal, knowing that was his only means of constructing a boat to fish for tomorrow’s?
Tainter’s theory of collapse argues convincingly that complex society’s resist simplification because they can’t. But that leaves us looking for the precise processes.
One which goes a long way to explaining this behaviour is “lock-in”.[4] According to this, one particular form of technology gains prominence over rival options. Adjustments and adaptations amongst other technologies, public and private institutions and society take place which reinforce the technology and suppress alternatives.
Hydrocarbon energy forms provides a classic example. Its (former) abundance, density, transportability and flexibility has given rise to symbiotically adapted technologies (for example, the internal combustion engine and all of its supporting industries, and industrial agriculture) and a population density and form of society dependent on them which cannot now adapt to other forms of energy.
So consequently, banks are simultaneously dependent on a model of exponential growth only afforded by hydrocarbon, and only understand investments in those technologies. Governments has conditioned citizens to expect perpetual growth, and have no capacity to think about the political changes implicit in the failure of that assumption.
Of interest in this case is the role and motive of academic institutions. Theoretically, they provide a vital service under conditions of lock-in, and one of the few avenues of escape. Under the core academic assumptions (and, as recipients of so much government money, responsibilities) of intellectual honesty and the process of thesis/antithesis/synthesis, this is where we should look to for intellectual leadership and resources to break out of “lock-in” and begin the paradigm shift to an alternative conception of our relationship to energy.
Except—institutions are as much a victim of lock-in as any other. Academics secure tenure by publishing, and have to be very good to publish energy peak paradigm-shift research. Institutions secure funding from commercial sponsorship, and the people with money for Energy Centres like Dr Cameron’s are oil companies. They will not tolerate their sponsorship money being spent on having their business model undermined. Students buy an education which gets them into the high income world of oil company finance, negotiation and leadership. Centres can’t charge paradigm-changers £18,000 a year fees.
So the next time an academic tells you renewable energy policy is leading to a reduction in oil demand—think “lock-in”, follow the money and just do a simple common sense check.
(Fairness prompts me to point out that, within its sphere of competence, the CEPMLP and its staff have a reputation for excellent research and consultancy work. That sphere includes oil and gas policy and law, electricity policy and regulation and, increasingly, nuclear and water policy.)
References
[1] Dalton, Demand for oil will peak by 2030 – BP chief, The Scotsman, 03 February 2010
[2] For a comprehensive list of all UK airport expansion plans and projections of traffic increases under Government policy see AirportWatch
[3] From MacKay Whitelees powers Glasgow again, Whitelees produces about 184MW on average. From Wikipedia a 747 consumes about 140MW in flight
[4] Unruh, G.C., 2000, Understanding carbon lock-in, Energy Policy, 28, pp. 817-30 provides a good overview from the originator of the concept