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Does Oil Abundance Mean Climate Doom?

by Michael Levi
June 6, 2012


Over the past few months, I’ve found myself invited to a growing number of workshops, meetings, and conferences focused on the surprising growth in U.S. and world oil supplies. At every one of those, someone (often me) tries to inject climate change into the discussion. Invariably, that mostly fails.

Steve LeVine has apparently been having similar experiences. In an insightful post today at Foreign Policy, he drills down on the tension between the emerging “golden age of oil” narrative and the need to tackle emissions. Here’s his most striking observation:

“The absence of any detailed analysis of environmental [i.e. climate] risk from golden-age enthusiasts, as well as their frequently dismissive attitude toward the issue when it is raised, lends them a surreal political quality.”

Steve interviews several people in an attempt to fuel a more coherent discussion. Frank Verrastro of CSIS tells him that if “the new oil finds are developed full” (Steve’s words) then we will “blow through [our] emissions targets” (Frank’s). Peter Rutland, a Wesleyan University professor, adds that “in the absence of U.S. leadership, I tend to agree with NASA’s James Hansen that it is ‘game over for the planet’.”

I find it useful to separate the question of how oil abundance might affect climate outcomes into a physical/economic dimension and a political one.

Start with the physical and economic elements. Lots of oil intuitively means lots of emissions. How, though, does this shake out economically? The likely impact is smaller than you might think, in part because oil is only part of the emissions picture, and in part because oil consumption is driven by a lot more than how easy the fuel is to produce. Here are global emissions projections for three oil price scenarios from last year’s International Energy Outlook:

These reflect three different oil price trajectories:

All of these emissions paths are likely to be disastrous for climate change. The case with low oil prices represents a limit of how dangerous oil abundance could be for climate change. (Abundant oil encourages consumption and thus emissions by driving down prices.) The results are undoubtedly ugly. But the reference and high price cases, which are both variations on the oil scarcity theme, are almost as bad. The difference between oil scarcity and abundance isn’t as automatically consequential for climate change as one might suppose.

What I’ve left out, though, is the political dimension. Abundant oil can influence emissions by changing the political environment in which battles over what to do about our energy systems play out. This might ultimately be more consequential for emissions than the economic and physical influences are.

The influence of oil abundance on climate policy could run either way.

A sense of oil abundance could reduce any urgency surrounding efforts to curb traditional consumption of fossil fuels. The popular discourse often conflates the dangers posed by oil scarcity and climate change. If oil scarcity concerns weaken, then, it wouldn’t be surprising to see climate ones fade too. Since serious leverage over emissions will ultimately require concerted action from policymakers, the consequences of this dynamic don’t look good.

But a belief that oil is newly plentiful could also cut the other way. Oil scarcity could drive policymakers toward promoting synthetic fuels that actually have worse climate consequences than oil does. Let me highlight one possibility: efforts to convert coal to liquid fuels will be a lot more popular if countries fear that oil resources are scarce than if they believe that they’re abundant. Alas coal-to-liquids (absent carbon capture and sequestration) yields nearly twice the emissions of conventional oil. Oil abundance could actually blunt this dynamic. That would be good news for emissions.

My sense is that the political dynamics are more important than the economic and physical ones here.  So which way will things actually break? Only a fool would try to predict that outcome. Perhaps I’ll tackle it in a future post.

Post a Comment 8 Comments

  • Posted by Purgatus

    I also wonder how the economic impacts of cheap energy might play into efforts to address climate change. I believe the public, and consequently policy makers, tend to operate within a ‘heirarchy of needs’ mentality, and the economy is currently well above any other consideration.

    Abundant energy might contribute to economic prosperity (or at least prevent scarce energy from preventing prosperity, affordable energy being a necessary but not sufficient condition for growth I think).

    If the economy begins to boom, then perhaps people can begin to listen to talk about climate change without screaming “we can’t afford it!”

    Traditionally, prosperity has led to environmental protections. While with ghgs the dynamic is a bit different, prosperity might still be an enabler to significant actions in the future.

    Thoughts Michael?

  • Posted by Peter Wilkinson

    Michael, your sense of the political dynamic is spot-on; looking at this from Australia, it’s almost all about politics! We will continue to grow coal exports if only to balance our budget. And if any political leader globally is wondering about the wisdom of confronting climate change, as a counter-balance, they need only to look at Australia – the battle to introduce a Carbon Tax is tearing the political parties apart. On one recent poll, 63% of Australians are against a tax, due to be introduced in July 1. On all polls the government will topple at the next election – it’s popularity linked in part of the Tax. No wonder Obama and others are soft on climate change.

  • Posted by Randy

    Climate Doom would be a good name for a rock band.

  • Posted by Sandra Cass

    A real concern – but you are starting with a shaky premise. There is no future of cheap abundant oil – you made it up. Look at the actual data. Global oil production has stalled. For the last 7 years. And the puny pick up in U.S. oil production has not changed that. And as i check today the price of Brent is essentially $100.

    None of these extravagant claims about tight oil will change this because all of the unconventional sources (tight oil, tar sands, etc.) are characterized by very slow extraction rates.

    After all the hoopla about the Bakken it is now delivering 0.6 million barrels per day. Meanwhile the lifeblood of industrial civilization – the conventional high flow rate fields – are declining in rate worldwide at 4 million barrels per day per year. Do the math.

  • Posted by Dan Watson

    The basis of your article assumes the acceptance of greenhouse gases as the prime mover for climate change. Maybe at least acknowledging that the debate on exactly why climate change is occurring is not over or decided would give a more balanced view.

    If CO2 is the culprit for climate change, then why is there no effort to purge CO2 from the atmosphere. Grade school kids learn that plants use CO2 as we use Oxygen. So if there is excess CO2 in the atmosphere the world should be planting tress on a mass scale to absorb CO2. Think of all the places that could be re-forested and how this would reclaim arid lands and re-establish watersheds. But, all we ever hear is how CO2 is being produced and how we have to gut the economies of the world to save the planet. If the agenda is to save the planet then we should fix the economies and use the extra money to restore the forest of the world and the CO2 would eventually be in short supply for all the new green growth.

    I am skeptical of one sided approaches, they seem to always have a hidden agenda that is not what is being postulated. There have been times of excessive CO2 in the history of the earth but the incredible flora of the earth would bring it into balance. Of all that man has done to adversely affect the climate, certainly De-forestation is the most significant.

    [ML: There’s been lots of effort to promote reforestation. It unfortunately has attracted less enthusiasm than, as you rightly note, it warrants.]

  • Posted by jim

    This is an interesting analysis, but probably irrelevant. The “game over for the planet” scenario is gradually being eclipsed by a more realistic view that: a) rapid climate change is unlikely; b) moderate climate change due to CO2 may occur but is by no means assurred; c) previous climate projections have been highly inacurate; suggesting d) the relationships between CO2, weather patterns and cycles, precipitation, storm activity, temperature and many other climate-related variables are so poorly understood that nothing usefull can yet be obtained from their analysis at time frames longer than a few months

  • Posted by jim

    The climate policy debate, incidentally, is obviously not about climate any more, if it ever was. What we have is a larger debate about cost/benefit of environmental policy, as well as a debate about the relevance of recent research results for policy. What we are finding is that 1) enviro policy is no longer independent from economic policy – the preferred enviro solution usually has direct and negative economic consequences; and 2) research results often take decades to properly vet, particularly when they deal w complex natural systems and cant be tested experimentally. Thus definitive answers are often not on the horizon and uncertainties are not knowable.

    Under these conditions its hardly surprising that politics takes the lead – as it should.

  • Posted by Flemming Hedén

    Here is a related issue as it can be described from an investor perspective:

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