“The era of cheap and abundant energy is ending”
“The era of cheap and abundant energy is ending.” This has been the warning of the scientist and disseminator of CSIC, Antonio Turiel, in the presentation of his study The energy crisis in the world today, which was organised by the Johns Hopkins University - Pompeu Fabra University Public Policy Center (JHU-UPF Public Policy Center) and took place in the UPF Barcelona School of Management (UPF-BSM) on Friday 25th March.
The event was opened by David Sancho, Vice-rector to the rector for Organization and UPF Group, who stressed that "the debate around public policies and the collaboration between universities are very important. The JHU-UPF Public Policy Center opens a framework for debate on the best policies, in order to open avenues for improvement in highly complex contexts. UPF has a forward-looking vision of addressing social and political problems from the perspective of planetary wellbeing. This vision is a good way to approach complex problems such as the one we are dealing with today, and the JHU-UPF Public Policy Center is a clear example of this".
The General Director of the UPF-BSM, José M. Martínez-Sierra, also intervened, saying “it is an honour that our house can contribute something to this project. I want to recognise and value the fact that two institutions such as the UPF and the JHU have agreed to create and promote an institutional relation in a transatlantic and global Center; this does not happen every day.”
There were further speeches from Josep Lluís Pelegrí, Director of the Institute of Marine Sciences (Institut de Ciències del Mar, CSIC); Keshia Pollack Porter, Co-Director of the JHU-UPF Public Policy Center and Joan Benach, Co-Director of the JHU-UPF Public Policy Center, who highlighted that “the energy crisis is still little known: we need critical debate on this issue, which is why the JHU-UPF Public Policy Center is addressing it in this event and in the study that we are presenting today.”
Russia is the only country in the world that has accepted that its production of gas is going to decline, and this explains a lot of why it is doing what it is doing
Going into the heart of the matter, Turiel reviewed the recent past that has led to the current situation: "The great disinvestment in which oil companies, which had multiplied their upstream effort by three from 1998 to 2014, have since decreased it by 60%". This happened, according to the scientist, because "in July 2014 the US Department of Energy reported the formation of an oil bubble in which these companies were losing a lot of money, with Brent barrel prices at record highs".
According to Turiel's study, the International Energy Association (IEA) acknowledged in 2010 that peak oil production occurred in 2006 and would never rise again. In 2012, the body recognised that conventional oil production was already falling, while unconventional oil (biofuel or fracking) was more expensive and companies were stopping to invest in it. In 2018, the IEA warned of several oil price peaks until 2025: in its forecasts there is a 34% imbalance between oil supply and demand. And then we come to 2020, when they warned that oil production may fall precipitously until 2025. "The only way to avoid the worst case scenario is with an abrupt renewable transition", says Turiel, remarking that at that time "for the first time, gas also declined" and states that "Russia is the only country in the world that has accepted that its gas production is going to decline, and this explains a lot why it is doing what it is doing", in relation to its invasion of Ukraine.
In this context, we are seeing a rapid decline in diesel production and a sharp drop in diesel, because there is a lack of quality oil. This is also happening with coal, whose production rose until 2014, and with uranium, which peaked in 2016 and has already fallen by 20%.
Obviously, in the long term, we will have to be based 100% on renewable energies, but this 100% of energy will not be the same amount as it is now
“We are left with the renewable transition. Obviously, in the long term, we will have to be based 100% on renewable energies, but this 100% of energy will not be the same amount as it is now,” warns the expert. According to Turiel, “renewable energies have many limitations: maximum potential, dependency on scarce materials…”
"The IEA knows that this is impossible and recommends hoarding certain critical materials to meet transition plans. In order to reach a clean transition by 2050, a 100% increase in the production of lithium, and 40% of other materials, is needed. The prices of these materials are rising critically because of the scarcity of energy to produce and treat them," explains Turiel.
To conclude, Turiel made forecasts of short and medium term trends "all aggravated by the war": "There will be a worsening of the food crisis due to the lack of fertilisers; there will be shortage or rationing of diesel; an extension of electrical blackouts due to the need for gas in the electrical grid; a decrease in international trade, due to the rising cost of diesel; a shortage of raw and processed materials - the chip crisis will last until 2025 -; greater conflict with transport and the primary sector; higher inflation and lower income; revolts in countries where food does not reach; growing authoritarianism and perhaps eco-fascism and neo-feudalism."
Another transition is possible, based on efficient and local sources, but it must be a more traditional and less technological model, which implies renouncing infinite growth
To close the session, Turiel predicted that "another transition is possible. The most efficient and desirable transition model is much more local and less technological, doing things very differently, taking advantage of energy in more traditional and less technological ways. But this implies renouncing infinite growth and is contradictory to the dominant economic theory," he concluded.