Security of energy supply - a critical issue

The G7 recently declared in favour of a target on global warming - of limiting warming to a 2 degrees centigrade average increase from the pre-industrial period, by 2050. This has already been adopted as a target by the EU and is the best scenario for the UN scientific panel on climate change. Energy is critical in all this and it is worth looking at the energy security situation of the G7, in assessing this in the run-up to the Copenhagen Climate Change Summit in December.

There are some key facts in an era of Peak Oil. The world’s oil and gas reserve base is moving eastwards, as US and UK North Sea reserves deplete and Mexican oil fields mature. The majority of these reserves are now located in the centre of the Eurasian triangle, in Russia and the central Asian Republics, and due south in the Gulf.
Among the G7 countries, only Canada has access to secure, long-term indigenous fossil fuel reserves - oil, gas and coal. The US is a major energy importer although it has access to long-term coal reserves and by 2020 the UK, from its recent self-sufficiency, it will have very few long-term fossil fuel reserves now it has closed all but a handful of its coal mines. Japan, Germany and Italy are highly dependent on imported energy, while France which has nuclear and hydro generated electricity is nevertheless highly dependent on imported energy for transport and other sectors.

Looking globally, the energy economy has entered a period of growing instability. This instability has led recently to higher oil and gas prices and then to a sharp drop as the financial and economic crisis hit home and demand fell. At the same time the large, rapidly developing countries (China, India, Brazil) have increased their energy consumption and especially their fossil energy use. For China and India, a rapid move away from fossils is not possible in the medium term, although plans for improved energy efficiency could contribute to less rapidly increasing demand in China.

China is now the second largest energy consumer, after the US, using 17.7% of the world’s primary energy, compared with 20.4% in the US in 2008 (BP, 2009). In million tonnes of oil equivalent this corresponds to 2002.5 and 2299 respectively. While there is still some debate about the calculations, China has now overtaken the US in the emissions of carbon dioxide (CO2) from energy consumption and flaring of fossil fuels - 6017.69 versus 5902 million tonnes ((EIA, 2008).

As the world economy comes out of recession, however slowly, rising demand will once again drive up prices at the pump. President Obama has ordered the US car industry to build more fuel efficient cars. He is quite right. Now is the time to dump the gas guzzler.

Good on you, Judge Chin

Many small investors and no doubt some large ones will welcome the 150 year prison sentence handed down to Bernard Madoff by Judge Denny Chin. Madoff ran the largest of the recently exposed 'Ponzi' scams. In a Ponzi scam, money from new investors, rather than actual profits, is used to pay returns to older investors. Regulators are now catching up with these scams after what 'profits' they were apparently making completely crashed with the global economy last year.

What is amazing is that the regulatory authorities have been so slow about catching out these bank-rolling criminals. Madoff was at it for decades. But he was an esteemed former Chairman of the NASDAQ, the special stock exchange for hitech companies - the core of the future global economy. As a privileged member of the financial elite, he was simply left alone to carry out his crimes. Millions of ordinary people have suffered from financial mis-selling and even theft. Many are, rightly, calling for tough new regulations of financial markets. We have not yet seen much of this - yet billions of dollars of taxpayers' money are being pumped into banks and other ailing financial institutions to bail them out - in case of the very real danger that they will collapse the 'real' economy in which we all live and work.

Madoff and other self-proclaimed 'masters of the financial universe' have a lot to answer for but we, ourselves, are responsible for ensuring that our political leaders take the necessary actions. This means that we need to act at every level. Our own city is caught in the grip of these economic forces. The Wanganui District Council should be spending time sorting out its own mountain of debt to make us less vulnerable. It should act together with other district and regional councils to build financially sustainable local government. They, like we, as individuals, are vulnerable if we remain alone and isolated, but together we can exert real pressure.

Good on you Judge Chin, the son of poor Chinese immigrants to the US. You have struck a blow for us all.