The message from the two presentations was clear: first, urgent action on climate warming is required now. Avoidance of disastrous impacts is unlikely. Mitigation has past by as an option and only adaptation remains. Second Cheap energy will not be available in the future.  This will lead to recessions and transition to an economy that requires much less energy. 

The New Zealand  economy and our ways of living will require transformation as we respond to both these eventualities. New Zealand is going to be hit by a double shot of reality and we will need to show some real leadership to develop the correct public policy and the political leadership to support it. 

Summary of Prof Ralph Sims’ presentation.

Climate change is a major problem with too little action to date. The current trend is towards a 40C plus temperature rise that would have disasterous impacts.  The Paris COP Meeting will probably produce a non-binding agreement but require 2-3 more years of working groups to agree on the details.  57 countries have submitted their targets that cover 65% of total global GHG emissions.  New Zealand’s contribution is very inadequate by international standards.  Mitigation is no longer sufficient, and adaptation is inevitable.

Around 32% of the total global end-use energy demand is used for providing food.  Future food security is closely linked to the availability of affordable clean energy, avoidance of land degradation, fertile soils, and reliable water supplies.  We fail to consume around one third of all the food we produce.  Better post-harvest storage, processing, and access to markets is part of the solution, but anything we do must also respect the cost of the energy used!

Cities (or local level decision making not central governments) play an important role through regulating land use and infrastructure, and the provision of public transport and water supply.  Cities own public buildings, land, vehilce fleets and waste water treatment facilities.  Proximity to citizens and local businesses are important.  Professor Sims talked about great local initiatives by Palmertson North Council and the Parihaka community. We can do significantly better with innovative policy.

Possible individual actions on climate change:

  1. Individuals and businesses can reduce GHG emissions. 
  2. Convince friends and families that we are all in this and everyone should play a part. 
  3. Learn how to become more resilient to extreme weather events. 
  4. Send a message to the NZ government that they are not doing enough to combat climate change for our future generations. 
  5. Divest any investments linked with coal producing organisations. 
  6. Be prepared to ask your friends and families questions like "do you really need to buy a new car that big?” 
  7. Avoid wasting food.
  8. Plant trees.

Summary of Dr Wayne Cartwright’s presentation

Professor Wayne Cartwright argued there are three strong drivers of change

  • Physics of energy production – the amount of energy derived from each unit of energy input is declining
  • Economics of energy production – long-term trend of rising average costs of energy production, so prices will rise too
  • Global economic adjustments - probably recessions - due to higher energy prices

These drivers act in parallel with and mutually reinforce the effects of global warming and climate change

The Physics

A useful measure is Energy Return on Energy Invested: EROEI = units of energy produced/units of energy used.  

The energy available to power the economy and human living is the surplus left after deducting from the energy produced the energy required in the production. When average EROEI declines, the surplus is reduced and there is less to power the economy.  This is a matter of physics – not debatable.  The EROEI in 1930 was 100:1 (1 energy unit was used to produce 100 energy units).  In 1970 the ratio was 30:1. In 2005 it was 15:1.  The ratio for Canadian tar sands is around 23:1.

The EROEI for oil will continue to decline because production will come from fields that require more energy inputs.  The alternatives to oil have an EROEIs roughly equivalent to where the EROEI of oil is going. On this evidence, the physics of the energy future are clear:

Increasing proportions of the energy produced will be required to produce it

Declining proportions of energy produced will be available to power the rest of the economy and human living   

The Economics

The size of oil reserves is not a limitation – reserves are huge relative to the total volume of oil already produced.  The key fact for the future of energy is that low-cost reserves are close to depletion and future oil production will be from fields that have increasing costs of production which require higher prices.   Some of the low-cost oil fields are exhausted - those that remain will be substantially depleted by 2020. When that happens, the current upward trend in average oil production costs will accelerate and prices will reflect this.

Based on known technologies, there are no future low-cost approaches.  When oil and gas prices rise, costs of generating electricity from them will be about the same as nuclear, wind and solar (after its costs fall).  These costs will be more than double current gas-generation.  Hydro will be lower – geothermal will be between hydro and the others

Global Impacts of the Future for Energy 

This analysis indicates a global future that

1. Has a larger proportion of the economy devoted to energy production

2. Has substantially higher energy costs and prices

3. Has period of severe recession as economy adjusts to sustained high energy prices, with consequent geopolitical instability  

4. Uses much less energy per capita in the advanced economies

5. Eventually transforms the economy and human living to forms that require much less energy

6. Eventually transforms the finance and banking system to a structure that is more resilient and responsive. 

NZ has a partial buffer from global oil prices though its endowment of hydro and geothermal resources, because these have lower cost structures than the alternatives most other countries will have to use.  The buffer will apply most strongly if a substantial part of road transportation is electrified. The buffer will exist only with appropriate public policy – that is not currently in place. 

NZ will necessarily adjust and adapt to shifts in export market demand and competition (favourable and unfavourable), and increased exporting shipping costs. It will need to reduce its reliability and attractiveness of sources of imported goods and services, and increased importing shipping costs. NZ will be vulnerable to the disruptions in the international financial markets that NZ relies upon.  There will be structural shifts in globalised financial and corporate systems.There will be the need to transform the NZ economy and ways of living.

Robert Howell

Wayne Cartwright's slides can be found here and Ralph Sims' here

Additional information