On 5th December 2007 Fatih Birol, Chief Economist and Head of the Economic Analysis Division of the International Energy Agency (IEA) gave a presentation in London at the Shell Centre, hosted by the British Institute of Energy Economics (BIEE). Mike Pepler attended the meeting and took the following notes (his personal comments are in italics):

Introduction

·         We are on the eve of a new world energy order.

·         On the supply side, we have oil production outside the core OPEC countries reaching a peak, which is not good news for the International Oil Companies (IOCs). The National Oil Companies (NOCs) will determine future oil supply.

·         On the demand side, China and India are transforming global energy markets through their sheer size and rate of economic growth.

·         Between now and 2030, China and India will account for 70% of new global oil demand, and 80% of new coal demand.

The key objective in the face of climate change is to reduce the atmospheric concentration of carbon dioxide from the combustion of fossil fuel. Certainly there are other aspects, it would be useful not to cut down forests for example and there are other greenhouse gasses but as this is The Oil Drum we’ll focus on fossil fuels and CO2.

The entire debate when it comes to fossil fuels and climate change is focused on demand, the consumption of fossil fuels and the resultant emissions. This is not the only approach. Here I propose an alternative approach that totally ignores emissions but instead focuses on the extraction of fossil fuels from the ground.

This is an update to an article of mine that was originally published in The Age back in March this year.

On the 15th March, the Esso/BHP Billiton Bass Strait joint venture asked the Minister for Planning whether a new gas conditioning plant at Longford requires an Environmental Effects Statement. The State Government's new guidelines for assessing projects with significant carbon dioxide (CO2) emissions were about to get their first big test.

The gas conditioning plant is required to treat new production from the Kipper gas field. The downside is that it would emit a million tonnes of CO2 every year. While not quite in the same league as a coal-fired power station, this is not the right approach to achieving urgent CO2 reductions.

Capturing carbon dioxide from coal (and gas) fired electricity plants. Subsequently transporting the carbon dioxide from the plant and storing it underground in (abandoned) oil/gas fields, in other geological formations or on the ocean floor. It seems like an excellent solution for continued fossil fuel use in the coming decades.

The European Union wants to have 12 large CO2 capture and storage demonstration projects in place by 2015, requiring an investment of 5 billion euro. The expectation is that this development will cause significant cost reductions, making the technology affordable by 2020. There are however two large drawbacks, it will keep costing large sums of money and the process is quite energy intensive. In this post the impact of the extra energy cost of the process on coal depletion is quantified, the economics will follow in a later article.