Energy Security: The Risk of Global Breakdown

By Tuomo Kuosa

Energy Markets work as a self-stabilising system, with supply always meeting demand. When demand increases, prices go up, when the demand decreases, prices go down. However, there are many examples in world history when the whole system has melt down due to an energy crisis. The most well-known examples are the energy crises of the Roman and Mayan Empires. It is believed that Rome had experienced heavy erosion and lack of fire wood before it fell into a series of civil wars, domestic pillaging and mistrust, and finally to the migration of hordes of peoples which ended the Roman system. Another example is the Central American Mayan Empire’s three rises and falls, due to the fluctuations of weather –between decades of very dry and decades of very wet periods lasting over a hundred years.

In the energy security matrix of social systems, there are six pillars: i) sufficient supply and availability of energy throughout the planet in the short term; ii) certainty of reasonable prices of energy; iii) prevention of cuts or extortions in the energy supply chain or distribution; iv) reliable R&D in new energy resources development in order to guarantee long term energy supply; v) sustainability in energy production; and vi) ability to handle the wastes that are created and the use or production of energy in a safe and reliable way.

The global population is assumed to grow at one per cent per year on average, from an estimated 6.4 billion in 2004 to 8.1 billion 2030. The growth rate of world GDP is assumed to be 3.4 per cent per year up to 2030. According to WEC’s Energy Policy Scenarios to 2050 energy supplies must double by 2050 to meet the energy demand of all households worldwide.

Most of the primary energy demand growth comes from non-OECD countries, especially China and India. The oil demand is estimated to decrease in OECD countries mainly due to decrease in non-transport sectors. The main increase is estimated to take place in China. Electricity demand is estimated to grow in all world regions. The growth is estimated to be highest in Asia (especially in India and Indonesia) where the per capita consumption figures are still very low. Growth is expected in renewable energy, carbon capture and clean energy. For instance the European Union’s energy politics and long term strategies are to enhance renewable energy production and fight global climate change.

The demand for oil will increase by 86 per cent from 2005 to 2050, and this growth is unlikely to be met by conventional oil. This means that the 30 per cent increase in non-conventional oil, such as heavy oil, tar sands, shale oil and arctic oil, is needed by 2050. Oil resources are decreasing steadily. Cumulative crude oil production until the end of 2005 reached 143,000 million tonnes – half of it produced within the last 23 years. This means that 47 per cent of the total reserves of conventional oil discovered so far, has been consumed. Taking into consideration also the expected resources of 82,000 million tonnes, more than 37 per cent of the EUR what is EUR? has been consumed. The depletion midpoint – when half of the EUR will have been recovered – will be reached within the next 10 to 20 years. Afterwards, the decline of conventional oil production is inevitable (EIA 2008). But supply and demand of oil resources are interconnected to coal and carbon capture systems development and investments to clean energy.

Worldwide, the use of coal as an energy source remains crucial to the economies of many developed and developing countries. Natural gas demand is increasing around the world but the major areas of trade correspond to the OECD regions: North America, Europe and Asia-Pacific.

Demand for nuclear energy is increasing. The European Commission projects a rapid increase in the use of nuclear power in electricity production until the year 2050. According to WEC, in 2007 there were 435 nuclear reactors with a net capacity of 367 GWe in operation all over the world. Of these, 346 (net capacity 310 GWe) are located in OECD countries. In 2005 the share of nuclear power in global electricity production was 16 per cent and in OECD countries the share was in 2007 as high as 21.6 per cent.

As discussed above, the first pillar is heavily challenged as the world energy consumption is increasing rapidly and relying more and more on fossil fuels. Nuclear power is the only noticeable non-fossil initiative in sight, but it has been estimated that both uranium and thorium resources would be consumed in 30 years if we would rely only on those. The second and third pillars are strongly challenged as well as they are linked to the first. Scarcity of energy would directly increase the prices, and that would make energy a more appealing weapon in the international politics. Russia has shown examples of this by cutting the gas supplies to Euro for two times already.

And when it comes to the fourth, fifth, and sixth pillars, it is quite certain that as long as fossil fuels are cheap, we are not putting enough efforts to R&D to get a new major energy source. This means we are most likely going to use all fossil fuels from the earth sooner or later. The Green movement can only try to slow this down somewhat, as a sudden brake in energy production would most likely cause a global breakdown. Thus, in the short run, what is more useful than restraining energy supply, is to get an efficient global carbon capture system, and sustainable ways to handle and utilise the energy production wastes. Yet, in the long run, we have approximately 10 to 20 years to find a new major energy source, and it should be in full operation before 2050. Otherwise we would be heading towards a total collapse of the human civilisation.

Tuomo Kuosa is a Post-Doctoral Fellow at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.