The collapse of the Soviet Union had an unpredictable result: Cuba survived a real world peak oil shock, providing a valuable example of how other communities around the world can respond to scarce and expensive petrol. In the early 1990s's Cuban oil imports were cut in half and food imports dropped by 80% when the Soviet Union cut aid and the US tightened its trade embargo.

A prize winning US film called "The Power of Community" documents how Cuba survived peak oil by growing veggies on the rooftops of Havana, by downsizing farms into smaller private lots, by importing 250,000 Chinese bicycles, and by mobilising the entire culture around a huge national challenge.

 

This story is full of hope for community resilience. Cuban Environmentalist Roberto Perez was in Brisbane last week and spoke to Green Cross Australia's CEO Mara Bun about the inspiring account of the survival of Cuban food and culture, through the Cuban food crisis. Watch the video on YouTube to learn more about this amazing story of adaption and survival.

After you've watched the video, read our interview with Green Cross Advisory Panel member and leading Peak Oil commentator Ian Dunlop. Ian drives the message home that to prepare for peak oil, an integrated policy response is urgently needed.

 

If you are inspired by what Ian has to say, then consider Brisbane Lord Mayor Campbell Newman's plea to Brisbane residents to grow their own vegetables. If you're still not convinced that peak oil is an issue for here and now, then look at what Andrew McNamara, Queensland Minister for Sustainability, Climate Change and Innovation, has to say about what sustainability means to him.

 

 

Green Cross CEO Mara Bun interviews Ian Dunlop*

 

 

MARA:  Why is it crucial for policy makers to form an integrated approach to peak oil, water, food and climate change policies?

IAN: This is best understood by looking back to the work done in the 60's  by The Club of Rome, published as 'The Limits to Growth' in 1972.  In essence it was a set of scenarios that looked at the possible implications of population growth and the escalating consumption of resources. 

 

The work was misinterpreted, and heavily criticized at the time for supposedly over-dramatizing the situation, but what we now see unfolding is pretty much in line with one of those scenarios.

 

Global population is expanding faster than ever before; the 6.5 billion people today will grow to 9 billion people by 2050, all with aspirations to higher standards of living. Even today we are hitting the limits of our biosphere's ability to support the current population, let alone to provide more and more resources to support 9 billion with higher standards of living. Put bluntly, our current economic system is not sustainable.

 

These four concerns, energy, water, food and climate are all interrelated and converging. So we must have an integrated policy to address them, rather than treating them as separate issues as we do at present, otherwise we will not adopt realistic solutions.  Looking at each in turn:

1.  Climate change - The latest science is suggesting that we must rapidly reduce the concentration of CO2 (and equivalent gases) in the atmosphere from current levels of 430 parts per million to under 350. We are in the climate danger zone already.

 

2.  Peak oil - We cannot maintain our current reliance on oil.   The oil demand of a growing population is increasing rapidly, particularly from China and India, whilst production from established oil fields worldwide is declining. Further, the discovery rate for new oilfields is far below current levels of consumption, and there are unexpected problems in increasing the oil flows from both conventional and unconventional sources.

 

3.  Water - There are major concerns about water shortages in Australia, and more than 2 billion people worldwide live in countries that are experiencing moderate to high water stress, resulting from increasing demands from growing population and human activity as well as climate change.

 

4.  Food - This is the most acute problem in the immediate sense, with interconnections evident in the conflict between the use of land for food or biofuel production, a shortage of water and fertilisers for agriculture, and the impact of high oil prices and oil shortages on food transport.
 

 

MARA: Recently the Saudi Oil Minister affirmed that low discovery rates are due to low historical prices for oil, and that investment should now pick up to kill the peak oil myth. Does he have a point?

IAN: Unfortunately I don't think so.  But many conventional economists do take the Saudi Minister's view. As a former head of ABARE (the Australian Bureau of Agricultural Economics) Brian Fisher once famously said, "If the price of eggs is high enough - even the roosters will start laying".

 

Perhaps so, but the efforts of the roosters have yet to produce concrete results even with oil prices at historically high levels for some time now!  What we face is not primarily an economic problem, rather it is a technical constraint, something which has never happened before. Oil companies are struggling to maintain supply and find new reserves. We are starting to reach the limits of oil exploration, although it is always possible we may find more oil in areas that are less well explored.

Peak oil does not mean that we run out of oil, rather it is the point at which supply cannot be expanded to meet increasing demand, irrespective of the oil price, due to these technical constraints.  Oilfield production typically follows a bell-shaped curve, rising at first with increasing drilling of oil wells, then levelling off at the peak as drilling reaches saturation, then declining, or depleting, as pressure in the oil reservoir drops.  Global production follows a similar profile.  The peak is the point at which we have used up roughly half of the available oil resource.  So beyond the peak, which is where we may well be at present, the question arises, who gets the available oil?

There are four reasons for the current supply tightness. First, despite continually improving technology, we are not discovering new oilfields fast enough, and certainly no giant fields. The majority of the giants were discovered in the 1950s and 60s, since when discovery rates, and the size of discoveries, have dropped substantially whilst production has risen, opening up a widening gap.

 

Second, data on existing oil reserves is suspect, particularly in the Middle East which holds the bulk of the world's remaining conventional oil, so we may not have as much oil as we think!.

 

Third, many established oil regions have already past their peak and are in decline. It is suspected that their depletion rates are often more rapid than officially admitted.

 

Fourth, the development of unconventional resources is proving to be more difficult than previously envisaged, technically, economically and environmentally.

This has generated an increasing note of caution around the world. Recent reports from the IEA (the International Energy Agency) and the US National Petroleum Council are the first, grudging, official admissions that peak oil may soon become a reality, if it is not here already.
 

 

MARA: But won't more innovative methods of exploration solve the problem?

 

IAN: As demand for oil increases and the oil price rises, much more effort is certainly being put into exploration for more resources.   But we have probably already found the cheap oil; the oil we now find will typically cost far more to produce; for example from deep offshore reservoirs requiring new technology and very large investments. Alternative unconventional resources such as tar sands and shale oil are more expensive again, and have significant environmental disadvantages.

 

Most importantly, the  so-called energy return on energy invested (EROEI), the ratio of the amount of energy put in to obtain energy out, for example in drilling and producing from an oilfield or tar sands, is dropping rapidly, to the point where there may be no net gain, so it will make no sense to continue.

 

MARA: Are we at the crisis point?

 

IAN: Yes, I believe we face a global sustainability emergency and the community, government and business need to face up to this reality.

It is best understood by looking at the linkage between fossil fuels and climate change. The bottom line is that, to avoid dangerous climate change, our maximum future emissions globally must be below 340 billion tonnes of carbon.  But the carbon which would be emitted by burning the current resources of any one of the three fossil fuels, coal, gas or oil, is already way above this level.  So how do we allocate that global carbon budget amongst those fuels, and why are we still investing in expanding these resources rather than putting far greater investment into renewable energy? 

This highlights the importance of also investing in technologies to capture and store carbon produced from fossil fuel combustion (CCS).  Unless we can find a viable way of doing this rapidly, the coal industry for example, will have to be wound back.  Indeed in my view, the climate science has progressed to the point that we should not be expanding the coal industry until we have greater confidence that CCS will work. 

 

MARA: Ordinary Aussies are confronting higher grocery bills - some say this is related to increasing biofuel production. What is the fundamental link between oil shortages and food production in Australia?

IAN: Increasing food prices and the emergence of the biofuel industry are closely linked. In a bid to reduce demand for imported oil, a few years ago the US government offered farmers subsidies to produce corn for ethanol production, so farmers rushed in to produce more corn, and also diverted corn production from food to biofuel use. Food prices rose dramatically due to shortages of corn for food, particularly in Mexico where corn is a staple diet. The shortage then reverberated around the world.

 

It also caused increased demand for phosphate fertilizer.  Phosphate rock is in short supply around the world, and again the price rose dramatically.   Higher fertilizer prices, coupled with the higher oil prices, then impact on Australian farmers, resulting in higher domestic grocery bills.

 

From a policy point of view, the unintended consequences of the US corn-for-ethanol subsidy rather painfully demonstrates the close linkage between climate, peak oil and food, and the dangers of not adopting an integrated response. 

 

MARA: Are you optimistic that the Australian community can respond to peak oil and related challenges?

IAN: Yes.  We know the solutions, but we have to honestly face up to these challenges, be realistic, move quickly, and start treating this as a genuine global emergency, not just another item on the political agenda.

 

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* Ian Dunlop has wide experience in energy resources, infrastructure, and international business, for many years on the international staff of Royal Dutch Shell. He has worked in oil, gas and coal exploration and production, in scenario and long-term energy planning, competition reform and privatization.

 

He chaired the Australian Coal Association in 1987-88, and the Australian Greenhouse Office Experts Group on Emissions Trading in 1998-2000. From 1997 to 2001 he was CEO of the Australian Institute of Company Directors.

Ian has a particular interest in the interaction of corporate governance, corporate responsibility and sustainability.

 

Originally an engineer, with an MA from the University of Cambridge, he is a Fellow of the Australian Institute of Company Directors, the Australasian Institute of Mining and Metallurgy and the Energy Institute (UK), and a Member of the Society of Petroleum Engineers of AIME (USA). He also chairs the Australian National Wildlife Collection Foundation (CSIRO) and is a deputy convenor of ASPO-Australia (the Association for the Study of Peak Oil).