Richard Douthwaite reveals that oil and gas peak are barely mentioned in the Government's recent energy Green Paper.

Most Construct Ireland readers have been aware for some time that when the peak in global oil production is reached, it will be an event of massive historical significance. They know that the peak will mark the end of the expansionary, growth-oriented world in which they make their living and the advent of an era of contraction, scarcity and decline where income sources might be hard to find.

Opinions differ about when the peak will occur. Estimates range from “anytime now” to “in about thirty years”. The oil industry banker Matthew Simmons once commented that the world will only know for sure when the peak has happened by looking “in the rear-view mirror” some time after it has taken place. But that mirror already shows that one peak has occurred. This is the peak in the world production of light, sweet oil, the type found in the North Sea and elsewhere which is the best oil for petrol production.

As sweet oil output is already in decline, the debate has now switched to when the peak in heavy sour oil might happen. Sour oil is the high sulphur type that is found in the Middle East and which needs special refining capacity to get the sulphur out. Illustration 1 shows how total world production of both types of oil has run recently. The graph makes it clear that, while output is not yet falling, it is certainly not increasing. Could the resulting plateau be the peak itself and the prelude to an imminent decline? Only the rear-view mirror will enable us to tell. However, the graph indicates that it will be very difficult for the oil industry to increase production enough for world oil consumption to expand at even 1% a year from its 2005 level, as indicated by the shallower hatched grey line. If oil consumption does not increase, world economic growth will be constrained.

Since this country is one of the most heavily dependent on oil in the EU and our export success is closely linked to the growth of the global economy, you would think that the Irish government would be keeping a close eye on when oil peak might occur and developing policies to deal with it. Well, the Department of Communications, Marine and Natural Resources, which is responsible for developing energy policy, might be doing so, but there was no evidence of that in the Green Paper “Towards a Sustainable Energy Future for Ireland” it issued in early October.

The Paper's only mention of oil peak is a single sentence on page 23, stating “These trends combined with other factors such as concerns over peak oil production will likely result in increasingly high and volatile prices, particularly for oil and natural gas” Would Minister Dempsey claim that this is an adequate treatment of the implications of a crucial turning point in global energy use and in the historical pattern of economic development?

Indeed, the question has to be asked “Does the Minister's Department ever look at studies produced by other arms of government?” Last April, Forfás produced a report “A Baseline Assessment of Ireland's Oil Dependence: Key Policy Considerations” calling for “a national strategy in preparation for the challenge of peak oil.” This report is not even referenced in the Green Paper although the Forfás document said that the Green Paper “provides an opportunity to incorporate such a strategy” - an opportunity which the Department clearly missed.

Strangely, though, when Forfás submitted its comments on the Green Paper to the Department in November, it made no reference to the need to develop a strategy to cope with the oil peak at all. Why? And why were none of the policy recommendations it made in April repeated in November? So, while Forfás was calling for such things as the electrification of heavily-used public transport routes and for greater consideration for distributed electricity generation in the Spring, by the Autumn it was limiting itself to a very a conventional, non-controversial shopping list on which price competitiveness, generation adequacy and the greater use of smart meters are the main items. Was Martin Cronin, the chief executive of Forfás and the man who wrote the Foreword to A Baseline Assessment censured for encroaching on the DCMNR's territory?