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I’ve been playing around with several oil price scenarios like this recently. Feasta, the NGO through which I do a lot of my work, was awarded a contract by the EPA earlier this year to get Irish businesspeople and public sector policymakers thinking about the effects that very much higher energy prices might have on how people live and make their livelihoods. We have developed four oil-price scenarios to do this and the one I’ve just described is one of them. We called it Enforced Localisation because the shortage of money, the collapse of the world market and the high unemployment leave people with no alternative but to start their own currency systems on the lines of those used in Argentina during the peso crisis and to develop their own local resources for local use. A computer model we are using which tracks energy rather than money flows in the Irish economy shows that life under this scenario becomes very tough indeed.
A much better out-turn is provided by the Fair Shares scenario. Like Enforced Localisation, it assumes that oil supplies cannot keep up with demand but imagines that the world handles the situation very differently. In times of war, when something vital like food gets scarce, no decent government allows the market to continue to distribute the scarce commodity by selling it all to the highest bidder. Instead, a rationing system is set up, with everyone getting coupons entitling them to an equal share of whatever is available. In Fair Shares, therefore, fossil energy is rationed on a global scale. Or, more accurately, the right to emit the carbon dioxide created by burning fossil fuel is shared out in a way which eventually brings the world’s annual rate of greenhouse gas emissions down to one which no longer causes global warming. Everyone on earth is issued annually with permits which entitle them to their individual emissions share. People can sell their permits and in the scenario, we imagine what effect this system of rationing would have on the world. Here’s one of our imaginings, a commentary written by someone in 2015:
[Selling the permits gives]everyone an income which compensates them, in whole or in part, for the extra cost of everything they buy due to the higher energy prices. Everyone sells their permits as soon as they get them and uses the money for their ordinary living. The extra money going to very poor people has created huge markets around the world for lots of simple products.
In addition, the high energy prices have given a huge boost not only to the switch to renewable energy but also to ways of living which use little energy. We, in Ireland, are poorer than we were because a lot of our money goes overseas to buy emissions permits. We can no longer afford to buy anything which we throw away when it breaks or becomes unfashionable. We are always looking for things which are easily repaired and will last. I never buy stuff not made in the EU because I need to be sure that the spares will be available when I need them. Lots of local authorities are relieved that they did not invest in incinerators a decade ago because there’s so little that’s burnable that’s being thrown away.
The demand from the poorer countries has created plenty of jobs in both manufacturing and in the farm sector, so there’s plenty of work, even if the money doesn’t go very far. I don’t have a car these days but I do have an electric bicycle which I charge up every night. There's very little house building going on - the costs are high because of the embodied energy, in spite of the general use of timber-frame. In any case, lots more houses than were needed were built in the early years of the century so we spend what money we can adapting them for our needs and getting them up to a decent energy standard. Houses with garages sell well because people use the space for workshops.
The other two scenarios are both based on the International Energy Agency’s belief that there is enough oil for the next 25 years. One, Business As Usual, delivers lots of economic growth for a few years but crashes disastrously when the world’s oil output eventually starts to decline. The other, Enlightened Transition, assumes that the Irish Government starts doing all the right things to get ready for the decline. As you might expect, this turns out very well. The only problem with this scenario is that, as resources are used to develop renewable energy supplies and, more generally, to construct an economy which requires almost no fossil energy to meet our needs, it grows more slowly and delivers smaller profits than the Business as Usual one. This could make it politically hard to introduce.
Feasta invited senior businesspeople, civil servants and politicians to explore all four scenarios with us at a day-long seminar in a Dublin hotel on June 1. About 45 accepted and thirty turned up. They put in such a hard day thinking about the implications of the different futures for Ireland that several people said at the end that their minds were whirling. “That’s no bad thing” one added. You can see the ideas we put to them, and some of their reactions, on a website we have set up for the project – www.energyscenariosireland.com . It’s a wiki, which means that you can help develop the material that’s there.
Feasta will be holding other seminars on the same lines and if anyone would like to attend one please e-mail me on richard@douthwaite.net. We hope that some of those who attend will want to join us afterwards in looking in greater detail at the response their sectors will have to make if energy prices go substantially higher than they currently are. We’ll be holding a conference and publishing a report about the changes they expect later in the year. They will join the effort because they will recognise that thinking out a proper strategy will stand their companies in good stead when the inevitable oil price rises come about.
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