Energy: The Countdown: A Report to the Club of Rome: Thierry De Montbrial
By Robert Lattés and Carroll Wilson
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Energy - Robert Lattés
ENERGY THE COUNTDOWN
A Report to the Club of Rome
THIERRY DE MONTBRIAL
Recommendations by
R. Lattès and C. Wilson
Table of Contents
Cover image
Title page
Other Pergamon Titles of Interest
Copyright
Members of the Executive Committee, Club of Rome
Foreword
Acknowledgements
RECOMMENDATIONS
Energy: the oxygen of economic life
Anguishing prospects
Numerous, diverse constraints
The time trap
The vital need for long-term planning
The need for a global view beyond the analyses
Essential questions
The energy issue: the key to world development
Additional studies are indispensable
Coal
Nuclear
Matching the type of energy to its application
The main types of economic, financial, monetary and social equilibrium
For a new approach: inadequacy of the traditional economic assessment of energy policies
The financing of oil investments
Geopolitical considerations
Developing countries
Solar energy
After the year 2000
Sensitivity analyses
Economic theory
Which energy strategies and what type of society?
The time needed for evolution and change must not be underestimated
Energy: a global problem
The energy countdown
A crucial period and its implications for our future
Geopolitical constraints and realities
Preliminaries
Part One: THE PAST: The Politics of Energy : The Oil and Nuclear Power Crisis
Chapter I: The Great Oil Adventure
Publisher Summary
I The basic characteristics of the oil industry
II The birth and hegemony of the majors
III Sharing the oil rent
Chapter II: The Oil Crisis and International Relations since October 1973
Publisher Summary
I. Fall 1973
II Reactions to the October 1973 events
III 1974 and 1975: confusion then calm
IV The CIEC
V 1976–78: quiet on the oil front
VI What happened?
Chapter III: The Nuclear Energy Crisis
Publisher Summary
I Why the opposition to nuclear energy?
II The proliferation of nuclear weapons9
III Remarks on the nature of nonproliferation
IV A few conclusions
Chapter IV: Geopolitics and Energy Policy
Publisher Summary
I Upheaval in the world order
II The Third World and OPEC
III The Organization of the Petroleum Exporting Countries
IV The United States
V The other energy-importing industrial countries and the IEA
Part Two: THE FUTURE: The Energy Crisis: Outlook and Scenarios
Chapter I: The Nature of the Energy Problem
Publisher Summary
I Renewable and nonrenewable forms of energy
II Pollution and degradation of energy
III Energy and civilization
IV A necessary decision
V An impasse?
Chapter II: Global Energy Demand
Publisher Summary
I General observations on the relationship between energy demand and economic activity
II Predicted annual energy consumption to 2025
Chapter III: Toward an Imbalanced Oil Market
Publisher Summary
I A question of method
II The decline in the gross increase in reserves
III The adjustment of supply and demand
Chapter IV: Natural Gas, Coal, Nuclear and Other Energy Sources
Publisher Summary
I Natural gas
II Coal
III Nuclear energy
IV Other energy sources
Chapter V: Anticipating the Second Energy Crisis to Try to Avoid it
Publisher Summary
I A second crisis is likely
II Insurance against the future
Chapter VI: Future Evolution of the Price of Energy
Publisher Summary
I The
price of energy: a useful fiction
II The principle of marginal-cost pricing
III Setting the price of energy and distributing the income in industrial countries
IV The need for international cooperation
Chapter VII: The Economic Effects of a Massive Increase in the Price of Oil
Publisher Summary
I The effects of the increase at the end of 1973
II 1973 crisis, monetary disorder and threats of protectionism
III Future shock
Summary and Conclusions
APPENDICES
Oil Prices, Taxes and Rent Sharing
Units and Orders of Magnitude
Supplementary Illustrations and Tables
Bibliography
Index
Other Pergamon Titles of Interest
GABOR et al.:
Beyond the Age of Waste
PECCEI:
The Human Quality
RABINOWITCH:
Views of Science, Technology and Development
Related Journals Published by Pergamon Press
Annals of Nuclear Energy
Conservation and Recycling
Energy
Energy Conversion
Solar Energy
Sun World
World Development
Copyright
Copyright © 1979 Pergamon Press Ltd.
All rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means: electronic, electrostatic, magnetic tape, mechanical, photocopying, recording or otherwise, without permission in writing from the publisher.
First edition 1979
British Library Cataloguing in Publication Data
de Montbrial, Thierry
Energy, the countdown. — (Pergamon international library).
1. Power resources
I. Title II. Wilson, Carroll III. Club of Rome
333.7 HD9502.A2 78-41103
ISBN 0-08-024225-1 (Hardcover)
ISBN 0-08-024224-3 (Flexicover)
Printed in Great Britain at William Clowes & Sons Limited Beccles and London
Members of the Executive Committee, Club of Rome
MAURICE GUERNIER
ALEXANDER KING
SABURO OKITA
AURELIO PECCEI
EDUARD PESTEL
HUGO THIEMANN
VICTOR URQUIDI
Foreword
Recent years have seen the publication of a considerable number of studies of the world energy situation, some of which are particularly significant, while all the elements and options of this extremely complex issue have been repeatedly analyzed and warnings issued that the situation might become out of hand. The Club of Rome has always assigned primary importance to the problems of energy, given its vital nature in human activities and its importance for the future of mankind. It therefore decided, on review of this new study, to extend to it the sponsorship of the Club.
The first report to the Club of Rome, on the limits to growth, examined the possible disastrous consequences of the long-term exponential increase of human numbers and demands on our finite terrestrial habitat. In the second report, a new tool was demonstrated which permits one and all to compare the feasibility, and under what conditions, of alternative plausible futures, and to judge the effectiveness of a given policy. Some scenarios were analyzed and the method further developed in subsequent studies and applied in different countries.
Other reports to the Club of Rome were aimed at deepening and broadening reflections, and debate for better understanding and facing up to the unprecedented problematique confronting mankind—of which the energy component has become a central piece.
However, while the demand for energy goes on growing substantially and imperatively throughout the world, especially in the industrialized and high-income countries, the posture of nations is so short-sighted and so self-concerned, that a catastrophic energy crisis might well become inevitable and could explode even before any comprehensive emergency plans are concerted. We believe that this possibility would, by itself, justify this report, whose publication is intended to contribute to averting such disaster to materialize. The purpose of the whole exercise is in fact to raise with both public opinion and decision-makers the consciousness that there exists in this field a real threat to human society.
It is not possible to give equal status to all aspects of the energy question, which are considered and indeed are quite different when looked from the different regional perspectives of North America, the Soviet Union, Western Europe, OPEC and the rest of the developing countries or, within each of these groups, by nations possessing different endowments of actual or potential energy sources and technological capabilities. An enormous variety of situations no doubt exists in the real world, and they cannot be embraced in a rather synthetic report as this. Nevertheless, even if these pages reflect more the views, problems and attitudes of the western industrial countries, they offer a stimulating picture of the global energy predicament. Situations specific to the individual parts of the world not treated directly by the report, including the awesome plight in which the non-oil-developing countries are likely to find themselves, should be discussed thoroughly, we hope, during the debate this book is going to arouse.
Other aspects that some of us in the Club of Rome would have wished to see more vigorously dealt with concern the urgent, extreme need for basic conservation and efficiency policies, particularly by the largest and more wasteful energy-consuming nations. In a like mood, in view of the global emergency ahead, many people would have welcomed a strong appeal to the most powerful groups of East and West for them to join their efforts and lead to worldwide drive to meet the energy challenge squarely.
We know that the necessity of a radical change-over of the traditional energy patterns has stirred up emotions practically everywhere. In a period of great transitions, almost into an inimical unknown, this one seemed to reach the limit. Nuclear power was taken as a symbol—either as saviour of our dwindling civilization, or its ultimate perverter. Many of us, for instance, are reconciled to the inevitability of its expansion as petroleum becomes scarcer and more expensive but are not reconciled to the development of fast breeder reactors. Is it possible to prime a rational discussion of the entire issue without being led astray, one way or the other, by emotions? And is it possible to approach it in a truly holistic manner—the Club of Rome way—placing the need for, and availability of, energy in the overall context of a mankind which, having conquered the Earth, finds it impoverished and vulnerable, and yet must organize its own life on it for many centuries to come?
We know also that many other questions are just touched upon or left unanswered by this report. Such is the case of a drastic change in the basic policy of some of the main oil producers and how it will affect the planetary situation, or, on the other hand, the discovery of immense new fields, as is expected to occur in Mexico, and what period of grace this might mean for an oil-thirsty world. And where the frightfully huge capital resources required to develop old or new energy sources can be found? Also, if the worse is to come and an energy crisis is felt approaching, to what kind of pressure oil-rich but militarily weak nations will be submitted by big powers, and what chain reaction this may trigger? Again we should have welcomed a deeper analysis of the potentialities of solar and other non-traditional energy sources, in full consideration of the time required for their development and use on a significant scale.
As said, this book cannot delve into all these sub-sets of questions—and much less could pretend to give them an answer. We believe that it presents, however, a comprehensive outline of the gigantic drama of which mankind is half-consciously preparing the scene and which it will protagonize—though ignoring yet whether as the hero or the victim.
As members of the Club of Rome’s Executive Committee we therefore recommend this book. In our opinion, it may help many people to understand how easily we all can become the victims of the energy drama, while it would take just a bit of foresight and some minor sacrifices to play instead the role of the heroes—at least for the sake of our children and all those who will follow us.
August 1978
Maurice Guernier, Alexander King, Saburo Okita, Aurelio Peccei, Eduard Pestel, Hugo Thiemann and Victor Urquidi
Acknowledgements
It is a pleasure to thank all those whose help has made this report possible. First and foremost, I am indebted to Robert Lattès who, from the beginning to the end of this work, has provided his unstinting encouragement, advice and help. Above all, instilled in me his enthusiasm for a project considered of prime importance by the Club of Rome.
Several persons kindly agreed to read preliminary versions of the report and offer their criticism and suggestions. Understandably, I have been unable to incorporate all of these, and, as is the custom, I take full responsibility for what I have written. However, I wish to express my gratitude to everyone associated with this undertaking, above all Aurelio Peccei, Chairman of the Club of Rome, and Carroll Wilson.
My thanks also go to: my wife, Marie-Christine, whose careful reading of the manuscript and criticism have contributed to making it more comprehensible; my friend and predecessor at the Ecole Polytechnique, Jean Ullmo, who again shared his extraordinary intelligence and thinking with me; my colleagues at the Quai d’Orsay, Jean-Louis Gergorin, Marc de Brichambault, Olivier Gaussot, Jean-Jacques Subrenat and Albert Bressand; George-Marie Chenu, Counsellor, French Embassy, Washington, DC; Jacques-Alain de Sédouy, Director, Energy Division, Ministry of Foreign Affairs; my colleague at the Ecole Polytechnique, Claude Henry; Pierre Guillaumat, Honorary Chairman, Groupe Elf-Aquitaine (SNEA); Bernard Delapalme, Director of Technical and Scientific Research, SNEA; Vincent Labouret, Secretary General, Compagnie Francaise des Pétroles (CFP); Jean-Louis Carrié, Director of Economic Studies, CFP, from whom I learned a great deal; Pierre Desprairies, Chairman Institute Francais du Pétrole; and Hanns Maull, a political scientist with a profound understanding of energy problems.
The Division of Planning and Programming at the French Atomic Energy Commission provided precious help by allowing one of its staff to gather the information required for most of the tables and charts. Grateful appreciation goes to Guy Kracht for his important contribution.
Last but not least, this report owes much to the unfailing dedication and hard work of my remarkable assistants, Sabine Jouet-Pastré and Marie-Claude de Saint-Hilaire.
Thierry de Montbrial, Paris
1 October 1978
RECOMMENDATIONS
The World Energy Alert
ROBERT LATTÈS and CARROLL WILSON, Members, Club of Rome
We have seen many things called absurd in the past later become models adopted by the masses.
¹
Energy: the oxygen of economic life
Breathing is not an end in itself for the human being; however, without oxygen he is condemned to die.
The same applies to energy and the world. Augmenting the available energy resources is not an end in itself; however, a shortage or limitation of these resources can seriously endanger the world’s economic development. In a way, then, energy is the oxygen of economic life, an essential requirement for the development of modern society.
Anguishing prospects
Awesome needs
The world’s prospective medium- and long-term energy needs are likely to far outstrip supply in the very near future. In 1950 and 1975 (see Figure 5), the world consumed respectively 1.7 and 6 billion tons of oil equivalent.² During these 25 years of unprecedented expansion, cumulative energy consumption was slightly less than 100 billion tons. Analysis of some 30 recent prospective studies mentioned often in the report which follows shows demand of 14 billion tons by the year 2000 or 8 billion more than in 1975. Cumulative consumption during 1975–2000 will be 250 billion tons or over two and one-half times the consumption of the preceding 25 years. Even so, to avoid exceeding these already awesome figures we must make determined efforts at energy conservation and production. One other unsatisfactory alternative is relatively slow economic growth.
A heavy oil deficit in sight ?
Oil needs alone during the 1975–2000 period will total 125 billion tons, whereas recoverable proven reserves only add up to approximately 90 billion tons. This leaves a deficit exceeding 30 percent, assuming all these reserves are depleted before 2000. Since technical considerations place a limit (floor) on the ratio of reserves to annual oil production,³ even if we discovered a new North Sea every year we would still be faced with an oil shortage before 2000.
The reasons for such needs with cumulative effects
A failure to grasp the profound importance of these cumulative effects and the pressures they exert on us can only lead to misjudging the exigencies of this vital problem. Of course, each and every author of the studies mentioned could be wrong, but in this case we would still have to determine what kind of future scenarios are not subject to such a collective error. The enormous fuel needs are primarily attributable to the level of development attained by the most highly advanced countries. Another reason is the emergence and development of Third World countries whose growth is accelerating and becoming more necessary. A last factor, all things being equal, is the increase in the world’s population.
Recent and future changes in per capita requirements
Average per capita consumption in 1950 worldwide was 0.7 ton of oil equivalent. This figure more than doubled between 1950 and 1975, reaching 1.5 tons. At this rate of increase, average per capita demand will attain 2.26 tons in 2000 or a 50-percent increase over 1975. If we allow for disparities in per capita demand by country and in demographic change by country, by 2000 the annual share of the 8 billion tons of demand increase over 1975 due to population growth alone will be nearly 4 billion tons of oil equivalent. This is more than total annual world consumption in 1965!
Numerous, diverse constraints
Supply problems in the very near term
We would appear to be approaching a time when purely physical considerations will limit the supply of certain types of energy. As we have seen, this will be the case for oil in the very near term. Consequently, there is no way oil can long continue to play the same role in world energy consumption which, for the past 20 years, has permitted unprecedented expansion not restricted to the most highly developed countries.
Similarly, if we are not cautious nuclear programs based on reactors employing natural or enriched uranium could face a uranium shortage by the beginning of the next century. According to an intermediate scenario in the WAES report,⁴ by 2005 cumulative uranium consumption in the non-Communist world will total over 3.5 million tons of uranium. This figure would be far greater if we included the lifetime requirements of all reactors already built or committed. As it is, present estimates of total uranium reserves⁵ do not exceed 4 million tons. A possible deficit is thus looming on the near horizon. These total reserves are equal to the sum of proven reserves and the reserves geologists’ analyses give reason to expect provided uranium prices double. This would permit working deposits more costly to develop.
Not every form of energy is all-purpose
Operating constraints must also be added to these physical limitations. Not every form of energy is all-purpose. In the next 30 to 40 years, nuclear energy will primarily be available in the form of electricity, even if we develop heat-producing reactors, combination heat- and electricity-producing units or even high-temperature reactors permitting the production of hydrogen, a particularly flexible medium. At the same horizon of 30 to 40 years, coal could offer a much broader range of possibilities, naturally as a source of electricity of heat, as has been the case for a long time, but also as a source of synthetic liquid and gaseous fuel.
Extreme political risks
The preceding, purely physical constraints must not cause us to forget numerous other constraints⁶ of an economic, financial, monetary, social, ecological and, naturally, geopolitical nature.⁷ The growing role played by OPEC, Saudi Arabia in particular, in supplying the world with oil is subject to imbalances and instabilities of which we must be aware. In addition Saudi Arabia’s decisions will be all the more difficult to make, since it may only be left with a barren desert once its oil reserves have been exhausted.
The time trap
The race against time
Every possible means of avoiding an energy shortage, with the serious crises and confrontations it would entail, requires considerable time for planning and implementation, especially given the immense scale of fuel needs. It is the race against time which is perhaps the most decisive aspect of the energy challenge facing this planet.
Every solution requires very long lead times
Time is the most crucial factor lying in wait for us in the energy field. The cumulative effect of years of mounting energy needs acts like a trap. The time required for decisions to have significant effects may well close the trap on us, since new energy production will not have the time to reach the necessary levels. Every potential replacement source for oil already costs more to develop and exploit; what is worse, however, is the far greater time these replacements require. On the average, North Sea oil lead times are 10 years, while lead times for oil on the continental shelf are 12 years and for deepsea oil perhaps more. For oil sands and oil shale, lead times are 9 to 10 years. Nuclear plants require 8 to 12 years depending on the country. Far more is needed by the infrastructure required by a large expansion in international coal trade to handle some six to seven times present-day volume. Nonconventional oil and the synthetic fuels obtained from coal would cost at least twice the present price of oil in today’s terms but only be available in significant quantities toward the end of the century. Solar energy, finally, is also subject to time constraints if it is to make a major contribution.
The time gained through energy savings is insufficient
If by some miracle, without humanity suffering privation, world energy requirements in 2000 only totalled 10 billion tons of oil equivalent instead of the 14 billion mentioned above, the resulting savings for the 1975–2000 period would only represent 20 percent of the cumulated consumption of 250 billion tons of oil equivalent. Furthermore, these 50 billion tons would be consumed within 4 years!
Can we halt the economic growth/energy need spiral?
This cumulative effect of needs can be directly attributed to the so-called historical relationship between development and energy requirements. For some 50 years every added point of annual world economic growth has required an average increase of one point in energy consumption. Naturally, this relationship, called elasticity, is valid on the average, and its dispersion can vary greatly by country and over time. The historical one-to-one ratio of economic growth to growth in energy demand is falling due to conservation and response to higher prices. Such depressed ratios are unlikely to fall below 0.5 which will give us a little more time which we must use wisely. Nevertheless, we have less and less leeway to determine how to produce abundant quantities of energy to learn to to do without.
Time, a precious resource, is running out
The WAES report was only too right in emphasizing, Time is our most precious resource. It must be used as wisely as energy.
The lead times needed for large-scale changeover to replacement energy sources can only grow longer. This is true for both energy solutions proper aimed at producing energy and the extensive changes in infrastructure required by the new methods of energy production, distribution and utilization. We have just discussed the lead times for various forms of replacement energy. However, the same applies for construction of mains to distribute heat and the installations needed to replace electric heating with other sources of heat or the conversion of domestic heating installations from oil to nuclear electricity. Once again, the same situation holds valid for the penetration of solar heating and hot-water installations taking into account that the stock of housing is renewed every 100 years on the average.
Oil could permit very flexible adjustment, but this is the very energy that will be lacking
Time is getting short just when inertia is growing. During