Energy Is the Economy; Shrinkage in Energy Supply Leads to Conflict

It takes energy to accomplish any of the activities that we associate with GDP. It takes energy to grow food: human energy, solar energy, and–in today’s world–the many types of energy used to build and power tractors, transport food to markets, and provide cooling for food that needs to be refrigerated. It takes energy to cook food and to smelt metals. It takes energy to heat and air condition offices and to power the internet. Without adequate energy, the world economy would come to a halt.

We are hitting energy limits right now. Energy per capita is already shrinking, and it seems likely to shrink further in the future. Reaching a limit produces a conflict problem similar to the one in the game musical chairs. This game begins with an equal number of players and chairs. At the start of each round, a chair is removed. The players must then compete for the remaining chairs, and the player who ends the round without a chair is eliminated. There is conflict among players as they fight to obtain one of the available chairs. The conflict within the energy system is somewhat hidden, but the result is similar.

A current conflict is, “How much energy can we spare to fight COVID-19?” It is obvious that expenditures on masks and vaccines have an impact on the economy. It is less obvious that a cutback in airline flights or in restaurant meals to fight COVID-19 indirectly leads to less energy being produced and consumed, worldwide. In total, the world becomes a poorer place. How is the pain of this reduction in energy consumption per capita to be shared? Is it fair that travel and restaurant workers are disproportionately affected? Worldwide, we are seeing a K shaped recovery: The rich get richer, while the poor get poorer.

A major issue is that while we can print money, we cannot print the energy supplies needed to run the economy. As energy supplies deplete, we will increasingly need to “choose our battles.” In the past, humans have been able to win many battles against nature. However, as energy per capita declines in the future, we will be able to win fewer and fewer of these battles against nature, such as our current battle with COVID-19. At some point, we may simply need to let the chips fall where they may. The world economy seems unable to accommodate 7.8 billion people, and we will have no choice but to face this issue.

In this post, I will explain some of the issues involved. At the end of the post, I include a video of a panel discussion that I was part of on the topic of “Energy Is the Economy.” The moderator of the panel discussion was Chris Martenson; the other panelists were Richard Heinberg and Art Berman.

[1] Energy consumption per person varies greatly by country.

Let’s start with a little background. There is huge variability in the quantity of energy consumed per person around the world. There is more than a 100-fold difference between the highest and lowest countries shown on Figure 1.

Figure 1. Energy consumption per capita in 2019 for a few sample countries based on data from BP’s 2020 Statistical Review of World Energy. Energy consumption includes fossil fuel energy, nuclear energy and renewable energy of many types. It omits energy products not traded through markets, such as locally gathered wood and animal dung. This omission tends to somewhat understate the energy consumption for countries such as India and those in Middle Africa.

I have shown only a few example countries, but we can see that cold countries tend to use a lot of energy, relative to their populations. Iceland, with an abundant supply of inexpensive hydroelectric and geothermal electricity, uses it to heat buildings, grow food in greenhouses, mine “bitcoins” and smelt aluminum. Norway and Canada have both oil and gas supplies, besides being producers of hydroelectricity. With abundant fuel supplies and a cold climate, both countries use a great deal of energy relative to the size of their population.

Saudi Arabia also has high energy consumption. It uses its abundant oil and gas supplies to provide air conditioning for its people. It also uses its energy products to enable the operation of businesses that provide jobs for its large population. In addition, Saudi Arabia uses taxes on the oil it produces to subsidize the purchase of imported food, which the country cannot grow locally. As with all oil and gas producers, some portion of the oil and gas produced is used in its own oil and gas operations.

In warm countries, such as those in Middle Africa and India, energy consumption tends to be very low. Most people in these countries walk for transportation or use very crowded public transport. Roads tend not to be paved. Electricity outages are frequent.

One of the few changes that can easily be made to reduce energy consumption is to move manufacturing to lower wage countries. Doing this reduces energy consumption (in the form of electricity) quite significantly. In fact, the rich nations have mostly done this, already.

Figure 2. World electricity generation by part of the world, based on data from BP’s 2020 Statistical Review of World Energy.

Trying to squeeze down energy consumption for the many countries around the world will be a huge challenge because energy is involved in every part of economies.

[2] Two hundred years of history shows that very slow growth in energy consumption per capita leads to bad outcomes.

Some readers will remember that I have pieced together data from different sources to put together a reasonable approximation to world energy consumption since 1820. In Figure 3, I have added a rough estimate of the expected drop in future energy consumption that might occur if either (1) the beginning of peak fossil fuels is occurring about now because of continued low fossil fuel prices, or (2) world economies choose to leave fossil fuels and move to renewables between now and 2050 in order to try to help the environment. Thus, Figure 3 shows my estimate of the pattern of total world energy consumption over the period of 1820 to 2050, at 10-year intervals.

Figure 3. Estimate by Gail Tverberg of World Energy Consumption from 1820 to 2050. Amounts for earliest years based on estimates in Vaclav Smil’s book Energy Transitions: History, Requirements and Prospects and BP’s 2020 Statistical Review of World Energy for the years 1965 to 2019. Energy consumption for 2020 is estimated to be 5% below that for 2019. Energy for years after 2020 is assumed to fall by 6.6% per year, so that the amount reaches a level similar to renewables only by 2050. Amounts shown include more use of local energy products (wood and animal dung) than BP includes.

The shape of this curve is far different from the one most forecasters expect because they assume that prices will eventually rise high enough so all of the fossil fuels that can be technically extracted will actually be extracted. I expect that oil and other fossil fuel prices will remain too low for producers, for reasons I discuss in Section [4], below. In fact, I have written about this issue in a peer reviewed academic article, published in the journal Energy.

Figure 4 shows this same information as Figure 3, divided by population. In making this chart, I assume that population drops only half as quickly as energy consumption falls after 2020. Total world population drops to 2.8 billion by 2050.

Figure 4. Amounts shown in Figure 3, divided by population estimates by Angus Maddison for earliest years and by 2019 United Nations population estimates for years to 2020. Future population estimated to be falling half as quickly as energy supply is falling.

In Figure 4, some parts of the curve are relatively flat, or even slightly falling, while others are rising rapidly. It turns out that rapidly rising times are much better for the economy than flat and falling times. Figure 5 shows the average annual percentage change in energy consumption per capita, for ten-year periods ending the date shown.

Figure 5. Average annual increase in energy consumption per capita for 10-year periods ended the dates shown, using the information in Figure 4.

If we look back at what happened in Figure 5, we find that when the 10-year growth in energy consumption is very low, or turns negative, conflict and bad outcomes are typical. For example:

  • Dip 1: 1861-1865 US Civil War
  • Dip 2: Several events
    • 1914-1918 World War I
    • 1918-1920 Spanish Flu Pandemic
    • 1929-1933 Great Depression
    • 1939-1945 World War II
  • Dip 3: 1991 Collapse of the Central Government of the Soviet Union
  • Dip 4: 2020 COVID-19 Pandemic and Recession

Per capita energy consumption was already growing very slowly before 2020 arrived. Energy consumption took a big step downward in 2020 (estimated at 5%) because of the shutdowns and the big cutback in air travel. One of the important things that energy consumption does is provide jobs. With severe cutbacks intended to contain COVID-19, many people in distant countries lost their jobs. Cutbacks of this magnitude quickly cause problems around the world.

For example, if people in rich countries rarely dress up to attend meetings of various kinds, there is much less of a market for dressy clothing. Many people in poor countries make their living manufacturing this type of clothing. With the loss of these sales, workers suddenly found themselves with much reduced income. Poor countries generally do not have good safety nets to provide food for those who are out of work. As a result, the diets of people subject to loss of income became inadequate, leading to greater vulnerability to disease. If the situation continues, some may even die of starvation.

[3] The pattern of world energy consumption between 2020 and 2050 (modeled in Figures 3, 4 and 5) suggests that a very concerning collapse may be ahead.

My model suggests that world energy consumption may fall to about 28 gigajoules per capita per year by 2050 (for a reduced population of 2.8 billion). This is about the level of world energy consumption per capita for the world in 1900.

Alternatively, 28 gigajoules per capita is a little lower than the per capita energy consumption for India in 2019. Of course, some parts of the world might do better than this. For example, Mexico and Brazil both had energy consumption per capita of about 60 gigajoules per capita in 2019. Some countries might be able to do this well in 2050.

Using less energy after 2020 will lead to many changes. Governments will become smaller and provide fewer services such as paved roads. Often, these governments will cover smaller areas than those of countries today. Businesses will become smaller, more local, and more involved with goods rather than services. Individual citizens will be walking more, growing their own food, and doing much less home heating and cooling.

With less energy available, it will be necessary to cut back on fighting unfortunate natural occurrences, such as forest fires, downed electricity transmission lines after hurricanes, antibiotic resistant bacteria, and constantly mutating viruses. Thus, life expectancy is likely to decline.

[4] It is “demand,” and how high energy prices can be raised, that determines how large an energy supply will be available in the future.

I keep making this point in my posts because I sense that it is poorly understood. The big problem that we should be anticipating is energy producers going out of business because energy prices are chronically too low. I see five ways in which energy prices might theoretically be raised:

  1. A truly booming world economy. This is what raised prices in the 1970s and in the run up to 2008. If there are truly more people who can afford homes and new vehicles, and governments that can afford new roads and other infrastructure, companies extracting oil and coal will build new facilities in higher-cost locations, and thereby expand world supply. The higher prices will help energy companies to be profitable, despite their higher costs. Such a scenario seems very unlikely, given where we are now.
  2. Government mandates and subsidies. Government mandates are what is maintaining demand for renewables and electric vehicles. Conversely, government mandates are part of what is keeping down tourist travel. Indirectly, this lack of demand relating to travel leads to low oil prices. A government mandate for people to engage in more travel seems unlikely.
  3. Much reduced wage disparity. If everyone, rich or poor, can afford nice homes, automobiles, and cell phones, commodity prices will tend to be high because buying and operating goods such as these requires the use of commodities. Governments can attempt to fix wage disparity through more printed money, but I am doubtful that this approach will really work because other countries are likely to be unwilling to accept this printed money.
  4. More debt, sometimes leading to collapsing debt bubbles. Spending can be enhanced if it becomes easier for citizens to buy goods such as homes and vehicles on credit. Likewise, businesses can borrow money to build new factories or, alternatively, to continue to pay wages to workers, even if there isn’t much demand for the goods and services sold. But, if the economy really is not recovering rapidly, these approaches can be expected to lead to crashes.
  5. Getting rid of COVID-19 inefficiencies and fearfulness. Economies around the world are being depressed to varying degrees by continued inefficiencies caused by social distancing requirements and by fearfulness. If these issues could be eliminated, it might boost economies back up to the already somewhat depressed levels of early 2020.

In summary, the issue we are facing is that oil demand (and thus prices) were far too low for oil producers because of wage disparity before the COVID-19 crisis arrived in March. Trying to get demand back up through more debt seems likely to lead to debt bubbles, which will be in danger of collapsing. There may be temporary price spikes, but a permanent fix is virtually impossible. This is why I am forecasting the severe drop in energy consumption shown in Figures 3 and 4.

[5] We humans don’t need to figure out how to fix the economy optimally between now and 2050.

The economy is a self-organizing system that will figure out on its own the optimal way of “dissipating” energy, to the extent possible. In physics terms, the economy is a dissipative structure. If the energy resource is food, energy will be dissipated by digesting the food. In the case of fossil fuel, energy will be dissipated by burning it. We may like to think that we are in charge, but we really are not. It is the laws of physics, or perhaps the Power behind the laws of physics, that is in charge.

Dissipative structures are not permanent. For example, hurricanes and tornadoes are dissipative structures. Plants and animals are dissipative structures. Eventually, new smaller economies, encompassing smaller areas of the world, may replace the existing world economy.

[6] This is a recent video of a panel discussion on “Energy Is the Economy.”

Chris Martenson is the moderator. Art Berman, Richard Heinberg and I are panelists. The Peak Prosperity folks were kind enough to provide me a copy to put up on my website.

Video of Panel Discussion “Energy Is the Economy,” created in October 2020 by Peak Prosperity. Chris Martenson (upper right) is the moderator. Richard Heinberg (upper left), Art Berman (lower left) and Gail Tverberg (lower right) are panelists.

A transcript of this panel discussion can be accessed at this link:

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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2,764 Responses to Energy Is the Economy; Shrinkage in Energy Supply Leads to Conflict

  1. Malcopian says:

    Reasons to be cheerful:

    WORLD’S BIGGEST COMPUTER CHIP CAN SIMULATE THE FUTURE ‘FASTER THAN THE LAWS OF PHYSICS’ (What – even bigger than Arnold Schwarzenegger in his young days?!)

    https://www.independent.co.uk/life-style/gadgets-and-tech/worlds-most-powerful-computer-simulation-ai-b1760338.html

    And an excellent review of ARM versus INTEL, or phone versus laptop, and how ARM is drastically reducing electricity consumption:

    • ARM => scam coiner demand / accelerated development

    • Electricity consumption dropped a lot when LED screens began to be used, instead of cathode ray tubes. Reducing the energy consumption of portable computers will certainly help battery life, but it won’t have nearly the impact that the CRT to LED transition did on total electricity consumption.

  2. I added a transcript of the energy panel discussion to the bottom of my post. It can also be accessed here:

    Energy Panel Discussion, October 2020

  3. Tim Groves says:

    Hollywood is essential work!
    You’ve got to laugh, ent ya!

    As millions of Californians endure another coronavirus stay-at-home order, Gov. Gavin Newsom (D) has reportedly decided to exempt the state’s signature industry from his lockdown mandate, allowing film and TV shoots to continue. The decision not only affects celebrities but also the thousands of blue-collar crew members who light the sets, transport the scenery, and keep everyone fed.

    Deadline reported that the governor’s latest order doesn’t apply to the entertainment production industry, which is on the list of essential work and is thus exempt from the rule.

    https://deadline.com/2020/11/entertainment-industry-workers-exempt-from-california-governor-gavin-newsoms-new-stay-at-home-order-1234619285/

  4. Tim Groves says:

    Profanity alert!

    For months, we have watched protesters from the left interrupt and ruin the dining experiences of ordinary people in protest. We have seen tables turned, diners, accosted and even large fireworks were thrown at diners. This weekend, New Jersey Governor Phil Murphy and his family found themselves at the receiving end of a harassing protester while they dined out, presumably in Asbury Park. As the conversation heated, Murphy masked up. It was wrong when the left did it and it is safe to say it’s wrong when the right does it, but these are now the rules the left has made for society. Each day, the bar of decency is lowered in America, but as Democrat politicians embrace this sort of behavior, it was only a matter of time before something like this happened.

    https://youtu.be/0WyMTRHZg6Q

  5. Harry McGibbs says:

    “Faltering Oil Demand Is Wreaking Havoc On The Tanker Industry:

    “The tanker market is in “cash burn mode”, said the chief executive of Diamond S Shipping, as quoted by Lloyd’s List.”

    https://oilprice.com/Energy/Crude-Oil/Faltering-Oil-Demand-Is-Wreaking-Havoc-On-The-Tanker-Industry.html

    • Harry McGibbs says:

      “Fewer drivers in California consulted Apple Maps a day after Governor Gavin Newsom imposed strict lockdown measures to stem the spread of the coronavirus in some of the state’s worst-hit counties…

      “Declines in requests for mapping may signal weaker demand for fuel with governments across the U.S. restricting movements because of the worsening pandemic.

      “Nationwide gasoline stockpiles sit at the highest seasonal level in decades and other indicators are pointing to sluggish fuel consumption. According to Descartes Labs, which identifies a strong correlation between cell phone movements and demand, U.S. fuel consumption is at the weakest since June.”

      https://www.bloombergquint.com/markets/california-map-requests-point-to-limited-fuel-use-after-curfew

      • I looked at EIA’s “This Week in Petroleum” for last week, and it is hard to see a big problem. Gasoline stocks are slightly above the 5-year average range, but they have been far more above the average range in the past few months.

        https://www.eia.gov/petroleum/weekly/

        Stocks of Crude Oil, Distillate, and Propane also look reasonable, relative to the five year average range. Of course, we have had sluggish fuel use and high amounts in storage in the past, affecting the five-year average.

    • It sounds like the oil shipping industry was doing amazingly well before:

      The tanker market is in “cash burn mode”, said the chief executive of Diamond S Shipping, as quoted by Lloyd’s List. The amount of oil in floating storage has fallen significantly since this summer, thanks to OPEC+ cuts and a recovery in demand in China and, to a lesser extent, India. As a result, there is now a surplus of free tankers, which has brought daily freight rates—and consequently revenues and profits—down from the record high the industry enjoyed this spring.

  6. Harry McGibbs says:

    “Iraq is seeking an upfront payment of about $2 billion in exchange for a long-term crude-supply contract, the latest sign of Baghdad’s growing desperation for cash as its economy unravels.

    “The Middle Eastern country is grappling with a crisis brought to a head by low oil prices and OPEC+ output cuts. As state coffers dwindle and school teachers go unpaid, the country risks a repeat of upheaval last year that brought down the government and saw hundreds of protesters killed.”

    https://www.msn.com/en-us/money/markets/cash-strapped-iraq-seeks-242-billion-upfront-payment-for-crude/ar-BB1bi4c2

    • Harry McGibbs says:

      “Kuwait, one of the world’s wealthiest countries, is facing a debt crisis.

      “The pandemic has sent the price of oil crashing to all-time lows and pushed the petrostate toward a reckoning with its longtime largesse, just as a parliamentary election approaches in December.”

      https://egyptindependent.com/oil-rich-kuwait-faces-reckoning-as-debt-crisis-looms/

      • seems to me that the mullahs and their mates never venture into the place of infidels that is OFW

        otherwise they would have seen this coming years ago

        • If you are of the opinion that Gulfies (and other energy carrier exporters) are not to some degree versed in OFW / Surplus topics I’d like to ask you for just few extra minutes of your time, we can discuss that once in a lifetime opportunity to buy my Bavarian castle on the cheap..

          Now, seriously they have seen ample warnings about this coming their (our) ways years ago, but the mitigation strategies were inadequate postponing or merely shuffling and juggling with set aside fin assets. Also diversifying into longer term nonviable sectors in this context, e.g. the case of Emirates and their tourism, global airline biz etc. It could be also a thing about sequencing and timing, believing they can dodge the bullet for a little while longer (vs other players), which is not that uncommon if compared to Chinese policy papers and their envisioned global role in future decades.

          We can imagine the reality as several threads of smoke lines (mega trends) running in parallel where at some junction turbulence appears and the flows are interrupted into various chaotic vortexes.

          In simple terms, it’s very hard to ride this horse.

          • fact remains that the mullahs have less awareness of what to do than you or me.

            nations are like people.

            given a lottery win, the tendency is to spend and spend, slow horses—fast women—it will last forever.

            Even ‘investing’ part of the winnings is ultimately futile because all ‘investments’ depend on oil to sustain their value. (and yes that does include land)
            See Saudi ‘technology hubs’—great stuff.

            once a lifestyle has been established, the demand is that it should go on forever. Technology is the thing—technology delivers wealth.

            but it can’t, so every politician struggles with fraudulent arithmetic, while the masses riot outside..
            And eventually get inside. With predictable results.

            I get brickbats on OFW from those who still think we have a political problem, and that prosperity is something to be voted into office.
            This is why I think 2024 -on will be even worse, because the economic system will have depressed itself still further, despite Biden’s intentions.

            This is the bottom line everywhere, not just in the mideast.

            “Democracy is the child of plenty, poverty makes it an orphan and it starves to death.”
            (NP law)

          • Nehemiah says:

            They have always known their petrostates will eventually crash. Like the old Saudi saying, “My grandfather road a camel, his son drove a car, my son flies in jet plan, his son will ride a camel.” In reality, I suspect the wealthy autocratic families who rule these countries have invested their profits abroad and are ready to bail out if their countries experience a disorderly crash. The losers will be their subjects.

          • Robert Firth says:

            Or as the Chinese say, “骑虎难下” (ride tiger hard get down)

        • Xabier says:

          Pious Muslims believe that resource shortages -and bad crops, pests, etc – are due to Divine disfavour caused, of course, by sin.

          So when you can’t heat your house Norman, it will be because you were such a wicked old devil!

          Repent! Repent!

      • How do we define a wealthy country? Maybe that isn’t right.

    • their approach to finance is purely Dickensian

      “something is bound to turn up”

      methinks they will still be sixpence short of a pound in 2 years time

    • An up-front payment for oil is very much like a loan. It also guards against a drop in oil prices in the future. Venezuela entered into agreements like this with China, and we can see where it got Venezuela.

      • Nehemiah says:

        If you get a guaranteed supply in return, it is like a futures contract. You may disagree, but I think this could be a win-win deal IF it can be enforced for the full length of the contract. The buyer will over pay now, but under pay a few years in the future. (I know, you disagree. Hopefully we will both be around several years from now for one of us to say, “I told you so!”)

  7. avocado says:

    Another philosophical question: Does life imitates art (or we could say “models” or “plans”), as a poet suggested, or is it the other way?

    https://www.rt.com/usa/507618-utah-monolith-kubrick-aliens/

  8. Harry McGibbs says:

    “The surging coronavirus is stoking fears of a fresh downturn for the world economy, heaping pressure on central banks and governments to lay aside other concerns and do more to spur demand.

    “Hopes are mounting that Covid-19 vaccines will become available as soon as December, but widespread delivery will take months and infections are rising again in many large economies. Authorities are responding with more restrictions to limit the virus’s spread at the price of weaker economic activity…

    “…policy makers [are] hearing calls for more stimulus, even when central banks are already stretched and starting to worry about froth in financial markets. Meantime, politicians from the U.S. to Europe are clashing over just how much they can and should do with fiscal policy.”

    https://www.bloomberg.com/news/articles/2020-11-24/world-economy-risks-buckling-into-2021-despite-vaccine-nearing

    • Harry McGibbs says:

      “Policymakers are often accused of preparing to fight the last war. But now, for once, perhaps that’s exactly right. The aftershocks left by the 2008 financial crisis have only been exacerbated by coronavirus.

      “Central bankers and finance ministers are still faced with a triple threat of secular stagnation, liquidity trap and a growth model centred on leverage.”

      https://www.ft.com/content/55161e29-27cd-4f9f-ae03-ab6ade9bc04d

      • Exactly! Our problem is really the last war, and we are not winning it. It looks like COVID, but without the overlay of the financial problems, it would be far less of a problem.

    • Nehemiah says:

      That Astra-Zeneca vaccine that was just announced sounds very promising. It is based on well established vaccine technology, not the untested new tricks that some others are trying to develop. However, it will take time to scale up production, and to persuade enough people to take it so that herd immunity can emerge.

  9. Harry McGibbs says:

    “Bank of Canada deputy downplays risks of consumer default wave:

    “The massive policy response from the Bank of Canada and the federal government successfully prevented the country’s financial system from buckling, though vigilance is still needed, according to a top central banker.”

    https://www.bnnbloomberg.ca/covid-recession-could-strain-household-debt-bank-of-canada-1.1526684

    • Harry McGibbs says:

      “Canada’s stagflation problem: Stagflation is an economic ordeal characterized by the combination of rising inflation levels amidst low growth and therefore high unemployment. In this environment, the rising cost of goods and services outpaces the purchasing power of individuals and households in the real economy.

      “Canada is a nation burdened by some of the highest debt levels of any advanced economy today. A confluence of record-high leverage levels for households, provincial and federal governments, and the private sector will complicate Canada’s economic recovery moving forward.”

      https://www.fxstreet.com/analysis/canadas-stagflation-problem-202011221451

      • Canada’s economy has not been doing well, either, recently. This is as much of a problem as anything else.

        • Nehemiah says:

          There is no easy solution for our energy and some other problems, but many of our financial problems could be fixed by a severe deflationary depression and tsunami of private and public defaults. That may sound horrifying, but, let’s be realistic, the total level of debt in the global and many national economies simply cannot be repaid from economic growth. Default now or default later.

  10. Herbie R Ficklestein says:

    Mister BAU doesn’t like his Cheese MOVED…

    STEP ON THE GAS
    American oil and gas companies are asleep at the wheel on methane emissions
    Natural gas flaring in Texas. The US gas industry is behind on methane regulations.
    https://qz.com/1936769/us-oil-and-gas-companies-opt-of-out-methane-emission-agreement/?utm_source=YPL&yptr=yahoo
    Tim McDonnell
    November 23, 2020
    In the global race to eliminate the world’s greenhouse gas footprint, some sources of emissions are easier to fix than others. One of the lowest-hanging fruits should be methane emissions from the oil and gas industry, which occur at every stage of production and distribution either through leaks or intentional flaring. Yet US oil and gas companies—the world’s largest producers of both products—have demonstrated once again that they’re not interested in fixing the problem.
    On Monday, 62 oil and gas companies representing 30% of global oil and gas operations joined a new voluntary agreement to report and reduce methane emissions, organized by the Environmental Defense Fund, the UN Environment Programme, the European Commission, and the Climate & Clean Coalition. Not a single one was American.
    Globally, methane emissions from oil and gas production amounted to about 82 megatons in 2019. That’s much less, by volume, than the industry’s multi-gigaton carbon dioxide footprint (not to mention emissions from actually burning the stuff). But because methane is up to 36 times more powerful than CO2 at capturing heat, it is disproportionately potent. As a result, reducing the oil and gas methane footprint by 75% would shave nearly 10% off the planet’s total greenhouse gas footprint, according to the Environmental Defense Fund. That’s more than taking every vehicle in America off the road.
    The solutions are neither complicated nor expensive: Plug leaks, replace faulty old compressors and other equipment, and stop venting so much of it during drilling. Because conserving methane also means producers are capturing more gas to sell, solutions largely pay for themselves: According to the International Energy Agency, oil and gas methane emissions could be halved at zero net cost, using existing technology.
    “This is the most immediate and cost-effective thing anybody can do to slow the rate of warming, now,” said Mark Brownstein, EDF’s senior vice president of energy.
    In other words, this is a no-brainer. Yet the industry has been slow to recognize this problem or take meaningful steps to curb, or even measure, its methane. And American companies have proved to be more recalcitrant than any.
    The EDF agreement replaces a 2014 version that had only 10 companies, and requires participants to work toward a 45% reduction in the industry’s methane emissions by 2025, and a 60-75% reduction by 2030. It includes big names like BP, Total, and Shell, as well as smaller companies from Europe, Thailand, Algeria, the UAE, and elsewhere.
    In a way, it’s no surprise that American oil and gas companies are choosing not to participate. They lobbied the Trump administration to roll back Obama-era methane regulations, which it did in August, and have been notoriously lax about even attempting to monitor emissions. But recently, that has come back to haunt them. Earlier this month French authorities scuttled a proposed $7 billion deal to import liquified natural gas from Texas, specifically citing concerns about the lack of methane regulation in the US. That’s a potentially huge problem, since the global energy system is increasingly dependent on gas. Whatever reasons there may be to ignore methane, they aren’t worth being shut out of the global gas market, Brownstein said.

    • comedycentral says:

      So LNG becomes like the tax stamp on cigarettes… or organic ‘label”. Got its carbon capture stamp. check Got its methane minimum release stamp. check ALL SYSTEMS GO. burn guilt free.

    • All of the proposed solutions cost money (and energy). Oil and gas companies are doing very poorly now. They don’t have money for reducing CO2 emissions. Building natural gas pipelines to take the natural gas away is very expensive.

      If push comes to shove, oil and gas companies may just stop producing.

      • Nehemiah says:

        Here is how it always works: some well are more lucrative than others. The losers get shut in but the lower cost wells continue to produce. However, total production is lower, and eventually shortages develop, and users start bidding up the price. However, even if current prices cannot cover the total cost of a well, it may still continue to operate if the upfront costs are sunk and current production is providing positive cash flow.

        • Artleads says:

          I hope this can work for a bit.Maybe even long term. It will perhaps be the same money we have today, but we’d think about it differently.

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