Global Energy Scenarios
Scenario 1. "The Skeptic" (a Business as Usual Scenario)

For your convenience, there are two formats of this scenario-draft available for your comments; please choose the one you prefer:

On-line version (this page--fill out online)

Standard Word (.doc) version (downloadable file to be filled out off-line and then emailed as per the instructions)

The other scenario drafts available for your comments are:
- Scenario 2: "Environmental Backlash"(explores potential futures resulting from environmental backlashes from nature and the environmental movement)
- Scenario 3: "Technology Pushes Off the Limits to Growth"
- Scenario 4: "Political Turmoil" (exploring potential implications of political instability)

Invitation

On behalf of the Millennium Project of the American Council for the United Nations University, we have the honor to invite you to participate in the third phase of an international study to construct alternative global energy scenarios to the year 2020.

During the first phase, the Millennium Project's staff produced an annotated bibliography of global energy scenarios and related reports. This was used to design a Delphi questionnaire that collected judgments and some 3,000 comments from about 150 participants on potential developments that might affect the future of the global energy situation. These results were used to construct draft scenarios. Your views are invited to make these working draft scenarios more plausible and useful. They are for your review only and not for circulation, as they are rough working drafts. The working draft of the first scenario is attached for your review. It is intended to be an extrapolation of past energy practices and behavior - the other scenarios will probe the effects of new technology, environmental backlash, and political instability.

The Millennium Project is a global participatory system that collects, synthesizes, and feeds back judgments on an ongoing basis about prospects for the human condition. Its annual State of the Future, Futures Research Methodology, and other special reports are used by decision-makers and educators around the world to add focus to important issues and clarify choices.

The results of all three phases of this international study will be published in the 2006 State of the Future. Complimentary copies will be sent to those who respond to this questionnaire. No attributions will be made, but respondents will be listed as participants.

Please submit your views on Scenario 1: "The Skeptic" by March 25, 2006 by answering this online form, or by downloading the Word version and then e-mail it back to Elizabeth Florescu acunu@igc.org with a copy to jglenn@igc.org and tedjgordon@worldnet.att.net.

We look forward to including your views in the final construction of this scenario. The second scenario will be availabe for comments around March 8, 2006.

Best regards,

Jerome C. Glenn, Director, Millennium Project
Theodore J. Gordon, Senior Fellow, Millennium Project

Identification
 Although no attribution are made, for demographic analysis and so that we mail you the final results in the “2006 State of the Future”, please fill out the following identification form.
NOTE: if you already filled out the identification form for any of the other scenarios, it is enough if you fill out just the E-mail field.

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Instructions
Please add your comments in the blank spaces provided and at the end of the working draft of this scenario.
NOTE: in this scenario, The numbers in parenthesis refer to the question number used in the Global Energy Delphi questionnaire. For example: "(1.01)" means section 1, question number 01: "1.1 Hubbert Peak when half the conventional oil is gone (but conventional may one day in the future include deep drilling, tar sands, and shale)"

Scenario 1: The Skeptic
 A Business as Usual Scenario
The economy lurches, inflation flares, decisions are uninspired, short term, low risk and prove inadequate, the progress of technology is modest, and despite pronouncements to the contrary, countries of the world seem to act solely in their self-interest. Corporations value profits over all other considerations. The world, much as today, responds to selfish, low-torque engines of change.
A Caldron of Contradictions
The world of 2020 is a caldron of contradictions. It is a good time for some and a bad one for others, both promising and disappointing, full of apparent opportunities and broken promises, a world of both hope and despair. There have been only moderate technological breakthroughs in energy and other fields. Environmental impacts, while not benign, at least have not yet been catastrophic. Economic growth has been cyclic; geo-politics and terrorism have been brutal sometimes and quiet at other times. In short, with some exceptions, most past trends have continued to our time. The shifts that have occurred seem to have a random quality and are applauded or despised largely on the basis of politics, ethnicity, or nationality. However, one past trend, continuing energy demand growth, has reached a crescendo, and most people in the world are now feeling its consequences.
Many historians have written about bad decisions made by governments- from the Trojan horse to Vietnam. In 1984, the historian Barbara Tuchman wrote The March of Folly, a book describing huge government mistakes that were often not subtle, that anyone even partially informed should have known in advance could be catastrophic. Good data were available. Alternate solutions had been proposed but, despite the high stakes, the future for those decision makers turned out badly.1 Why? Governments sometimes lie (Gulf of Tonkin, WMD in Iraq), or, to be generous, are misinformed. It’s often easier for officials to go with the flow than to take risks (although some of the bad decisions were risky indeed). Political Pollyanna-ism, a blind faith in beneficial but low probability outcomes rather than the more rational high probability catastrophes, clouded decisions. Bad judgment, bad luck, holding self-interests above societal interests, amorality, timidity, and xenophobia: all trumped over rationality. These myriad forces have shaped civilization over the past 50,000 years and they shape our time as well. It is indeed business as usual.
Life Goes On
The best example of today’s folly is our energy mess. The world’s current energy situation and the bad decisions that got us here certainly qualify as a colossal, global blunder, as important as any in history. The data on energy reserves, prices, and alternatives have been largely known for decades, apparent alternative solutions were on the table, the outcome of doing little or nothing was relatively easy to forecast and yet forces were in play that led to the failure to act decisively. Economic growth has been thwarted, poverty abounds, the bad guys call the shots, and moral foreign policy decisions have been compromised in the interest of satisfying the world’s need for oil, and other energy sources.

Should the countries of the world have known that oil-consuming countries would be held hostage to the suppliers? You bet. There were many signs: the anti-US tirades of Hugo Chavez in Venezuela, bombastic governments in Iran, political instability in Nigeria, the massive and growing energy demands of China and India, the alliance between China and suppliers such as Saudi Arabia. Back in the first decade of the new century, Iranian leaders spelled it out directly and forcefully: they said they would use oil supply as a weapon to avoid sanctions designed to force them to put aside plans to develop nuclear weapons. So, if the price of gasoline in the United States could be US$3 per gallon without a discernable effect on economic development or consumer behavior, why not US$4 or US$5? According to the US Energy Information Agency, today, in 2020, industrial countries import three-quarters of their oil from the Middle East Gulf region.2
There were some inspired moments. In 2006, President George W. Bush announced an energy plan that was to have greatly lowered U.S. dependence on imported oil by 2025, just five years from now. One might have guessed that OPEC countries would react badly since their source of income and political bargaining chip was being challenged. But they needn’t have worried; it didn’t happen. Why? Because the U.S. commitment to oil was too strong. Because no one was convinced, really convinced, that the world had reached “peak oil,” that point in time when petroleum reserves grow more slowly than production, and the oil-producing countries and petroleum companies did their best to convince the world that there was more economic oil to be found. In fact, many people are still not convinced. (1.01)
There was a public opinion survey taken the other day to see what people thought about our present situation and outlook. The pollsters found that
percent
of the people they sampled said they thought they were better off in 2005, and
percent
said they thought that in 2040, 20 years from now, things would be much better than today.
Another massive plan was proposed in 2009 by another US President in his inaugural address. He announced a program patterned after the Apollo space program but with renewable energy as the focus. (See sidebar 1.) It was a world plan, however, not just a plan for the United States. He called the program “The New Fire.” This time it struck a spark; it excited nations, science laboratories, industrialists -even those in the petroleum business, because many people had come to believe that the time of peak oil was probably close at hand, and more importantly, that the plan was serious. There were skeptics, of course. Some other factors helped convince people this time: high energy prices were going even higher, inflation was everywhere, and reserves were diminishing. It was clearly past the time for action despite limited funding, the selfish interests of certain industries, and bickering over appropriate directions within the program.

SIDEBAR 1

The New Fire:
The 2009 Inaugural Address

Governments make tough decisions. Most big decisions are tough because they have uncertain outcomes, because once made they cannot be withdrawn. Uncertainty and the risk of damaging peoples' lives keep decision makers awake at night wondering about the right path. For a few decisions on the horizon, however, risks seem very low and the potential benefits far outweigh the downside potential. For these decisions, we wonder, "Why not?"

Moving boldly ahead in energy research is one such decision. We have reached peak production of oil throughout the world. The attempts to meet the challenges of this event have been much too timid.

I propose a ten-year global goal of developing energy sources and systems that will reduce the world's rate of consumption of petroleum by half without increasing pollution, a goal that is easily measurable. The program is vast and involves many industries and nations. Over its ten-year span, it will devise new energy sources and infrastructures. It will create non-exportable jobs in the United States and in all countries that are part of the program. It will stimulate our economy and the economies of cooperating nations. It will improve economic development of poor countries that contribute to its goals. It will improve general technology, not only the technology of energy production and use, but technology in many fields, spinning off inventions affecting health and education. It may even help reduce the threat of terrorism as we distance ourselves from the perception that thirst for oil motivates our Middle East policies. Some people have argued that a sound energy policy is our best anti-terrorism move.

Measured in today's dollars, the Apollo program of the 1960s cost 100 billion dollars over ten years; let's say this new energy program will also cost 100 billion dollars. Where will the money come from? From savings in military expenditures, from the economic stimulation that the program itself will create, from matching funds that other nations will contribute to the effort, and from reduced expenditures for imported oil.

Industries around the world will benefit from the program. Expedited R&D will test new energy concepts and design - experimentally at first and then on a large scale - the infrastructure to deliver the new forms of energy to consumers. The answers may not rest in a single epiphany or scientific discovery but in a network of reinforcing policies and practices that build robust systems capable of reducing operating uncertainties and making risks tolerable. Engineering and science education will be invigorated; new careers will be created.

What of consumers? They are ready. The line for hybrid cars is getting longer. Many look at the price of gasoline and wonder how long it will be before people everywhere are paying US$5 per gallon or more at the pump. Consumers understand that to control their economic future they must move to limit their countries' dependency on the decisions of suppliers.

What of the oil producing countries of the Middle East? How will they react to a plan designed to decrease their sales? The rational decision for them would be to increase production and lower oil prices so that we might lose heart and go back to the oil addiction we have learned to love. Like any addict, we have to resist. Sure, we ought to fill up our reserves when the price drops, but we must remain committed to the program. Once our resolve is apparent, the best strategy of the oil producers, if they think clearly, will be to join the parade and help search for that which comes next. Old buggy whip manufacturers went out of business when the buggy gave way to the automobile. If the whip people had entered the car business, the world, for them at least, would have been a lot different. So it is with the oil-producing countries. When the next energy wave appears on the horizon, they ought to see that it is better to ride it that to be drowned by it. In at least one plausible scenario, some of the forward-thinking oil-producing countries could help fund the global effort to find the replacement for oil.

Consider China. They will enjoy the falling petroleum prices that the oil-producing countries use to bait the West; this will be a windfall that furthers their economic development. They may even see themselves as the emerging "last consumer" enjoying the new abundance of oil as the old consumers switch to new sources. But such opportunism carries the seeds of its own defeat as new energy systems come on-line and replace obsolete engines of consumption

Japan and Europe now study future technological opportunities in periodic "foresight" studies involving thousands of experts to identify targets for their industries and R&D laboratories. With the New Fire program established, new targets will become apparent. These countries will have the choice of adjusting their R&D priorities and cooperating, or competing with the US initiated program. Not bad, in either case.

From the start, developing countries will have important research to perform, thus promoting their indigenous scientific capacity, reducing their "brain drain," and providing new goals and incentives for education. With the fruits of this program, these countries can follow more efficient economic development; they can jump-start toward an economy that avoids the energy pitfalls that others have discovered.

In September 1962, President Kennedy said, "We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win…" This is a great model for our time. We choose to solve the looming energy crisis not because it is easy but because to go on as we are will deny the world of our children the best the future has to offer, will keep the world on a path of depletion, a path promising riches for some and poverty for many. We choose to solve the energy question for the long term and not accept short-term patches. We choose to create our future and not simply let it happen.

What would make this speech more plausible?


The New Fire is Cooling

Nevertheless, the excitement kindled by the New Fire address did not result in a globally unified program as had been hoped but rather piecemeal projects that added up to less than their sum. Special interests prevailed. What a wasted opportunity! There were vigorous attempts to entice all countries of the world to subscribe to post-Kyoto agreements that would reduce greenhouse gas emissions to 1990 levels (the attempts failed), strengthening energy-efficiency standards, carbon trading plans (1.14), taxation schemes on fuel-use (in place in a many countries, 1.15), education to raise energy awareness (sounds good, but putting into practice is difficult), re-adjustment of budgets for related basic scientific research (but mainly research that was scheduled anyway). One lobby was pushing for an advanced fission nuclear reactor generation program but the safe storage of nuclear materials still stymied the engineers (1.04 and 1.06). Some projects were imaginative; e.g. seawater agriculture along the desert coastlines of the world - planting salt-loving plants on beaches of areas like Somalia in order to make biofuels competitive, providing additional carbon sinks and stabilizing coastal erosion. Solar-derived space energy, or space solar power, was generally seen as pie in the sky and way too expensive in any event; even the experts now predict it’s still two or three decades in the future (1.03). Terrestrial solar cells have been improving in efficiency but are not yet nearly efficient or cheap enough to be in wide use (1.02).
Now the world is a decade into the New Fire program and those countries that could have developed alternatives to oil have not. There have been only “band-aid” quick fixes, and timid projects that pander to special interests, not the unified and massive programs that could have been justified. The technological development programs have been largely left to the free markets and the marketplace believed that instability in energy prices should limit the levels of “prudent” investments. When people today wonder how the world has developed as it has, most often they point to

 
as being responsible.
The oil-producing countries were pleased with this situation. They controlled supply, and supply largely set prices. They were also the countries that thought they had the most to lose if technological developments produced viable alternatives to oil. Thus, when it appeared that high oil prices might justify large-scale investment in alternative energy systems, the price of oil dropped, supply tended to expand, and the economic justifications of new programs evaporated. Away from the glare of media, OPEC threatened repeatedly to denominate oil price in euros, a move that could have favored Europe and proven costly to the United States. The threat was enough to cause tension among developed countries.
India and China decided to extend their cooperative energy agreements, strengthening their earlier "Memorandum for Enhancing Cooperation in the Field of Oil and Natural Gas" which outlined comprehensive cooperation in hydrocarbon trading and joint bidding, exploration, and production. This move sounded ominous to other countries.3

There were other signals, well above the horizon, that the big energy-consuming countries were being manipulated by the producers and that there was trouble ahead. The Western consuming countries, in particular, could have seen the obvious and anticipated the outcome. Consequently, they, and to a greater or lesser degree all oil consumers, are hostage now. If you asked presidents of oil exporting countries why things have turned out as they have, they say, most often
 
On the other hand, oil company presidents say
 


The Cost of “Addiction”

The major driver of economies around the world has been the price of oil. Today, in 2020, crude oil price is over US$160 per barrel ($90 per barrel in 2005 currency), up by a factor of three in the last 20 years (see figure 1). Worse, oil prices could go over US$200 per barrel by 2025.4

Figure 1: World oil prices (in current US$)
Source: The Millennium Project based on EIA data

Despite the higher oil prices, demand has just kept rising. Figure 2 shows the history of growth of energy demand in four countries over the last two decades:5
Figure 2: Total Energy Demand Growth
Source: The Millennium Project based on data from the International Futures model of the University of Denver

Increasing demand has resulted in even higher prices in a tight feedback loop. Higher prices have encouraged changes in the fuel mix and removal of some subsidies on coal and oil (1.18), and did indeed result in some energy conservation and improved efficiency. Figure 3 shows how much global energy was required to produce US$1,000 in global GDP over the last 50 years.6 As can be seen, the world was doing pretty well until about 2005, when efficiency was at its peak (2.21). The easy conservation targets such as

 

were being harvested. The curve started rising again so that now it is on a par with 1990 or so.7 Why should that be? It took a while to see that improvements had ended. Now economists say that around 2010 the higher energy prices led the world to squeeze out all of the easy efficiency changes that were available - improving efficiency was too costly from then on.

 Figure 3: Global energy efficiency
Source: The Millennium Project based on the US DOE EIA

The environmentalists had their say––at least to a small degree. They focused on legislation and international treaties while the pollution continued merrily along. (2.8) Oh, a few policies were changed. Carbon trading became a game with loads of experts and their computer models leading the way. CAFE was beefed up almost everywhere. Another policy that changed was

 

Further, the markets were relied on to encourage development of renewable fuels, but the effects which are now all too obvious were minor (2.26); like pouring a glass of water in the ocean (and speaking about oceans, the levels are now clearly on the rise).

It was also surprising to many economists that economic growth continued at first despite high oil prices. However, there was a point when prices had their effect in 2015, when oil prices went above US$100 per barrel, and the rate of discovery of new reserves was continuing to fall behind production rates. At that point, the old complacency was eroded. People drove less, bought less, worried more, and were cold in the winter. Water problems plagued many countries in the world (1.12). Jobs were lost and rhetoric could not hide the fact that most consuming countries were hostage. Further, inflation rose and even soared in some nations. A few new industries emerged in response to these new pressures (see sidebar 2) but the net effect was a gradual erosion of optimism.

SIDEBAR 2

We Love Our Golf Carts

A new form of transportation has emerged. Some of these cars look like small Rolls Royces, others like Ferraris. Since 2010, in many countries, there has been a small industry making specialized golf carts; their users, mostly elderly people, love them. Many towns have created a special infrastructure for these vehicles, expanded bicycle paths in effect, that allow the carts to travel from the outlying residential centers to the town in safety. Certainly, they are slow, 40 mph peak, but they are very efficient since most run on batteries. A few of the carts are powered by small internal combustion engines that only sip fuel. Their use began in communities where the affluent elderly tended to concentrate. They provided reliable, short-distance transportation.

The vehicles abound in the suburbs of sufficiently affluent cities, particularly where the towns have provided special roads and paths. If we count the number of people over 65 who have incomes above US$100,000 as our market segment, we find that there are 10 of these cars per 100 people, a very significant slice. They take many forms: replicas of classic cars (car companies sell intellectual property rights to the shapes), modernistic and fantastic varieties, and rolling jokes like the Titanic version complete with smoke stacks. People buy them complete or go to small businesses that customize the factory platforms.

There were three significant catalysts to the growth of this mini-industry:

1) Provision by towns and private communities of roads reserved for such vehicles. These are not roads in the ordinary sense; they bear lower weights and hence are much less expensive; they can be shared with bicycles, roller blades, and equestrian use, and most importantly, they can be beautiful, wooded, and park-like.

2) Granting of special licenses for use of these new roads. In the old days, children of elderly parents had to tell them, at some point, that they were no longer capable of driving conventional cars safely, a traumatic experience since this was a sentence for a lifestyle change from independent mobility to dependence. Departments of Motor Vehicles found it no easier to tell elderly applicants that they no longer had the acuity necessary to drive conventional vehicles. Solution: the new golf carts provided an alternative: encroaching decrepitude no longer means immobility. The new licenses have restrictions, of course.

3) Encouragement by organizations like AARP (American Association for Retired People) and insurance companies for the elderly to drive vehicles that are safer than conventional automobiles. For the insurance companies, it was a matter of economics; for organizations of elderly persons, this opened new domains of experience for their clients.

Not only did the market grow, but unexpected byproducts appeared. To list a few: there are golf cart races at Daytona and Indianapolis, the kids hop them up, there are gymkhanas and rallies, and there are distance and duration competitions. Teen-agers are advocating a new pre-licensing class for their age group. This new vehicle category did not cannibalize the conventional car market; it layered on a new dimension.

Those countries that had non-conventional energy raw materials, such as Canada, saw the scene as shifting in their favor. The tar sands of Alberta drew massive investments and a major extraction, processing, and export industry grew. This served to expand the reserves and curb enthusiasm for the development of non-renewable sources. Now tar sands supply almost 3% of the world’s energy. Once Canada had an exportable product, it was in their interest to maintain high prices. What the USA saw as an escape from the price tyranny of OPEC proved a chimera.
The world used to think that inflation was conquered, that somehow the US Federal Reserve Board and other watchdog agencies had found the magic control knob to tailor inflation and more generally economic growth to whatever rate seemed appropriate.8 Now it is clear that the beast has come to bite us again. In the USA, in 2015, the rate topped 9%; in other countries double digit inflation was the norm, with some countries reaching near panic stages.9

Figure 4: US inflation trends
Source: S. Easson and T. Gordon, A Study of the Use of the Delphi Method, A Futures Research Technique, for Forecasting Selected US Economic Variables and Determining Rationales for Judgments, Prepared for the Society of Actuaries, October 6, 2005

Why? The number of baby boomers born in 1960 was at a peak. In 2015 they were 55 years old, and thus the retirement rate was at its peak and demand for services - particularly health care – peaked, not only because of the numbers of people demanding care but because health care was expensive, corporate retirement plans were failing and many plans required government rescue. It is true that the population growth rate has slowed around the world, and in 2020, the world stands just shy of 7.5 billion people or so in the world, up by about 25% since 2000. Nonetheless, government spending for weapons, wars, rebuilding countries in which they warred and subsequent peacekeeping bled national treasuries and deficits soared. Anti-terrorism vigilance was also very expensive. Mother Nature didn’t help either. For whatever reason - some say global warming- earthquakes, hurricanes, and pandemic scares seemed all too frequent.

The Cascade of Consequences
However, the price of energy was the primary reason for the growth of inflation, and it turned out that the oil-producing countries had more control than the regulatory agencies. Trade deficits grew in the energy importing nations. Since the price of imported oil was so high, many of the importing countries had to increase their money supply to help reduce their trade deficits. Many countries called their international loans. Action: print more money. Result: inflation. Many economists think it is lucky that inflation stayed as low as it did. The only reason inflation began to ease in many countries after 2015 was recession in most places and depression in some. The dip lasted five years and only now is recovery becoming apparent, but it’s a different and difficult world.

Chinese Cars for the World

China’s demand for oil now, in 2020, exceeds that of the USA and the EU; in fact, it accounts for 30% of the growth in oil demand since 2000. China, by 2010, was the world’s largest consumer of many commodities: aluminum, copper, steel, and coal. What fueled this huge increase in oil demand? High economic growth was responsible, to be sure, but more importantly, the primary mode of Chinese private transportation changed from bicycle to automobile. In 2000, the country had only 10 motor vehicles per 1,000 people, compared to 765 in the USA. By 2020, China had 200 motor vehicles per 1,000 people, and most industry analysts forecast more growth to come.
As important as the Chinese domestic market was to the country, it was their export market that changed the face of the world and the world's energy situation (1.05). China's economic policies favored the development of the automobile industry. In 2000, Chinese automobile manufacturers produced over 2 million vehicles; sales volume was up by 14%; automobile manufacturing was the path to the future.10 Feng Fei, vice minister of the State Council of China's R&D Center, said in 2004: the auto manufacturing industry has stepped onto a stage for large-scale production in China." He predicted that China would be able to export sedan-chair cars on a great scale"11 and they did. (See sidebar 3.)

SIDEBAR 3

Sedan Chairs

Sedan chairs? Ah, there's the clue.

When China entered the WTO, automobile manufacturers around the world saw China as a great potential market for their products, and the export of automobiles to China became an important marketing target in Detroit, Stuttgart and Tokyo. It was easy to multiply the projected population of China by the number of cars per person in the USA, Germany or Japan to get staggering figures about the potential of the Chinese automobile market. Furthermore, with China in the WTO, import tariffs would be limited.

However, there were impediments to this dream of Cadillacs in Beijing and BMWs in Shanghai. China was not about to give the market away to foreign companies, particularly in view of the petroleum consumption, overcrowding, and pollution it implied. Thus, a development plan was initiated in Beijing to nurture the young domestic automobile industry, to encourage the design of a car compatible with Chinese needs, and to find ways in the interim to use imported vehicles to fill the gap between domestic production and demand.

The foreign car manufacturers saw the blip in demand as a hopeful sign and built overcapacity based on this expectation. Bad decision.

The Chinese car evolved from the boxy, three-wheeled motorcycle sedan car that became popular in Chinese urban centers early in the century. The new sedan car that was designed for domestic use was very light, had a small engine capable of running on pure ethanol or gasoline, was available in three or four wheel configurations and, best of all, had a sleek looking plastic body, mostly recyclable. An early gimmick was that, if the car failed, it could be turned in for a new one. The pricing was initially subsidized by the government; but when sufficient volume built, the cars were profitable at half the price of the imports. International competition withered.

Then the exports began in earnest. There was a bit of customization for foreign markets, primarily added electronic systems. Imagine a car that looked great, carried four people, got 75 mpg at a peak speed of 75 mph (this became known as the 75 squared spec), with a range of 400 miles at a price of under US$10,000. In the electric version, the mpg was basically infinite. The world's auto manufacturers continued to build their products, but fewer than they had hoped, focused on niches and image, and became suppliers of parts and aftermarket add-on to the Chinese cars. Many failed, many merged.

By now, in 2020, the Chinese sedan car design has evolved to a true all-electric vehicle. This year, China produced over half a million units; all other countries together produced another half million.(1.5) Electric cars made great sense in China; the technology was well understood and it was seen as a way that the country’s coal could be used (via generation of base load electricity) to provide mobility and minimize pollution in urban centers. Most large cities banned entry of vehicles that burned gasoline or diesel fuels (1.09), so the move to electric propulsion was welcomed around the world. Many countries gave tax credits to purchasers of electric vehicles. The export market was waiting for the Chinese electric cars. Consequence: despite their attempts to survive by introducing new engines (for example, Stirling engines, 1.07) old-line automobile companies failed, oil companies consolidated (1.11).
The World Energy Supply
The net consequences of these developments on the world energy supply are summarized in the Table 1. As might have been guessed, the shares provided by oil and conventional coal have dropped considerably since 2006, and natural gas (1.13) has held its share. Despite the scientific interest in fusion energy, including important research by the Chinese, the process is still seen to be a very long way off. 12

Table 1:
Evolution of the world energy mix (Business as Usual Scenario)

Consumption

2005
Consumption
(mil TOE)

2020
Consumption
(mil TOE)
Gain/Loss
(mil TOE)
Percent Change
TOTAL
(sum of components below)
11,409
15,544
4,135
36.2
Oil
3678
4,300
622
16.9
Natural gas
2420
3,600
1,180
48.8
Coal (conventional)
2778
3193
415
14.9
Traditional biomass and waste
793
1400
607
76.5
Nuclear fission
624
790
166
26.6
Hydro
634
750
116
18.3
Other biomass
Methanol
Ethanol
370
388
18
4.9
Unconventional oil from tar sandsand shale
88
350
262
297.7
Coal processes total from liquefaction, oxygenation, gasification
-
500
-
-
Solar (Photovoltaics, solar power towers, solar thermal, and space solar)
11
100
89
809.1
Wind
8.5
100
92
1076.5
Nuclear fusion
0
0
0
-
Methane gas hydrates
0
22
22
-
Geothermal
4.8
50
50
941.7
Tides
.1
1
1
900.0
Source: The Millennium Project based on 2006 energy survey

Overall, global energy use has grown by over 36% since 2005. Conventional oil supply has grown at a much slower pace (17%), so it is losing its market share. However, note that oil from tar sands has grown rapidly and now supplies about 3% of the world’s total. Conventional coal has also grown more slowly than the total (15%) and hence has lost share, the new coal processes such as liquefaction and gasification have grown rapidly and now make up about 3% of the total. Not only has natural gas grown greatly, but it is now contributing an amount of energy that is of the same magnitude as coal and oil. Nuclear (fission) and hydro continue to supply significant amounts, 4-6% of the total. All of the other so called promising renewables are still waiting in the wings. One spot that’s a bit brighter than the rest in this grey picture (no pun intended) is terrestrial solar energy. Although space solar projects (1.03) have foundered as a result of


terrestrial solar (photovoltaics, solar thermal and solar power towers) now accounts for a healthy 1% of the world’s energy supply.
Opportunistic Terrorism

The intersection of these developments with global terrorism deserves special attention. Terrorism is still a major concern. There have already been small attacks during the past two decades, and many people expect that they will grow in scale in the next 20 years, able to disrupt supply by 5-10% for at least 1 month. (1.16). Some analysts think the anti-oil mission of the terrorists is to cause democratic governments and secular economies to fail so that fundamentalist governments can take their place in some oil-producing nations. There may be another reason:
 

Killing of people over the last 20 years was a strategy designed to illustrate the weakness and fragility of non-fundamentalist countries. With the obvious need for oil, it was apparent that there were other means to provoke failure and illustrate, and perhaps intensify, the inherent weakness and fragility of the countries they perceived as decadent. Initially the approach was to attack the oil fields and the institutions and infrastructure of the oil industry. Military presence in the oil fields was increased in response to this threat. Ports and pipelines were vulnerable so new ports and pipelines were built offering parallel paths to the markets. By and large, though, security was spotty and only partially successful.
Terrorists hatched a plan. In great secrecy, in a dozen places, biochemists loyal to their cause were directed to produce self-replicating micro-organisms designed to contaminate oil with contagious human pathogens. Bugging the oil, they called it.
This was not the only oil/biotech program underway. Many biomethane projects were being pursued to find more cost-effective ways of converting agricultural crops, and cellulose in general, to fuel (2.13). A dozen legitimate laboratories have been attempting to develop strains of microbes that, in one application, could be injected into depleted wells to digest heavy oil residuals and produce less viscous crude that could be more easily pumped to the surface. In another application, anaerobic microorganisms were designed to convert the residual oil to methane.13

 The contraband organisms looked much like the legitimate organisms, and they were injected into half a dozen wells in the Middle East. When mini-epidemics developed among the oil field workers, there were celebrations among the minions of the radical terrorists. They announced their success and in so doing created a wave of fear about the extraction, processing, and use of oil. This was better and more effective than exploding a bomb under a pipeline. At a considerable cost, the oil companies had to bio-isolate their workers and prove to various Environmental Protection Agencies around the world that refining oil also pasteurized it.
Finally
So, yes, I am a skeptic. It seems to me, I’ve heard it all before. What people miss most about the old days is
 

Today there is too much pessimistic thinking about energy. Reserves have grown in the past when depletion was forecast, and now many people in the industry say it will happen again. As for developing new energy systems, I think with effort and fortitude the world powers can solve the problem; they can do anything they want to do. But the Super Bowl is on TV so let’s worry about it tomorrow.


What would make this scenario more plausible and useful?



Thank you very much for your participation.

ENDNOTES

1. Arnold Toynbee, Jared Diamond and others have made similar observations about lousy government decisions.

2. This is an actual EIA forecast.

3. In fact, India and China signed such an agreement in 2006. Source: Millennium Project Environmental Report, January, 2006.

4. This curve is based on EIA data on world crude oil price, historical data for early January in each year is shown. The extrapolation was made using the statistical software package "CurveExpert." The best fit was found to be a quadratic function of the following form: price = a + b * (year) + c * (year)², where: a = 918925.83, b = -921.31907, and c = 0.23093318. The r² was 0.844 using data from 1989 to 2006. The Delphi panel was also asked to provide an estimate for the price of oil in this scenario in 2020 (2.07). Responses placed the price at $90 per barrel, which assuming a 4% inflation rate would place the 2020 price at $162 per barrel.

5. The data for this chart comes from the IF model of University of Denver (Barry Hughes). It is the model's base case for UNDP and may be accessed at http://www.ifs.du.edu/

6. Historical data from US DOE EIA, http://www.eia.doe.gov/pub/international/iealf/tablee1g.xls

7. To produce the forecast shown on this curve historical data points were fitted by a quadratic function of the form BTU/US$1,000 GDP = a + b * (year) + c * (year)², where: a = 37630846, b = 37528.666, and c = 9.3573531.
The fit was excellent yielding an r²= 0.995. The curve fitting software was CurveExpert Note that item 1.10 in the questionnaire projected that "the amount of energy consumed per dollar of GDP worldwide drops 25% from today's value" would happen in this scenario by 2040 or so; the curve used in the scenario was chosen, however, to project a less optimistic future.

8. The data for this figure is based on S. Easson and T. Gordon, A Study of the Use of the Delphi Method, A Futures Research Technique, for Forecasting Selected US Economic Variables and Determining Rationales for Judgments, Prepared for the Society of Actuaries, October 6, 2005. The method for preparing this chart included a Delphi inquiry of economists and actuaries and Trend Impact Analysis in which an extrapolation of historical data was amended to take account of anticipated future developments. The figure shows one of several possibilities discussed in that report; it is the one that most closely matches this scenario. The full report can be found at: http://www.soa.org/ccm/content/areas-of-practice/finance/research/del-st-of-econ-var-report/

9. Inflation rate varies greatly from country to country. For example, in 2005, according to the CIA World Factbook, Japan had -0.2% inflation, China 1.9%, Germany 2%, UK 2.2%, USA 3.2%, Brazil 6.8%, and Russia 12.9%.

10. From: http://www.china-window.com/china_market/china_industry_reports/china-automobile-market-s.shtml

11. From: http://english.people.com.cn/200306/02/eng20030602_117574.shtml

12. From: http://www.angolapress-angop.ao/noticia-e.asp?ID=409853. Early in 2006, the Chinese media carried this announcement: "a full superconducting experimental Tokamak fusion device, which aims to generate infinite, clean nuclear-fusion-based energy, will be built in March or April in Hefei, capital city of east China's Anhui Province. Experiments with the advanced new device will start in July or August. If the experiments prove successful, China will become the first country in the world to build a full superconducting experimental Tokamak fusion device, nicknamed "artificial sun," experts here said. The project, dubbed EAST (experimental advanced superconducting Tokamak), is being undertaken by the Hefei-based Institute of Plasma Physics under the Chinese Academy of Sciences. It will require a total investment of nearly 300 million Yuan (37 million U.S. dollars), only one-fifteenth to one-twentieth the cost of similar devices being developed in the other parts of the world."

13. From: http://www.geobacter.org/press/2000-04-14-camchr.pdf. Derek Lovely, head of the Microbiology Department and graduate student Robert T. Anderson have found that bacteria living just below the earth's surface can be coaxed to rapidly convert oil to methane gas in oil-rich soil. Their findings, spelled out in an article in Nature (2006), have important implications for the petroleum industry… Last summer, Lovley and Anderson examined the site of a contaminated aquifer where crude oil had spilled, 30 feet below the surface of the earth near Bemidji, Minn… The two were studying anaerobic metabolic processes of microbes living in and around the oil spill… The researchers incubated the sediments in the laboratory under conditions that mimicked those found in the subsurface of the earth. Surprisingly, as soon as Lovely and Anderson added the radiochemical hexadecane with a carbon-14 tracer to the sediment, methane gas carrying the carbon-14 isotope was produced "without a lag." The two concluded that the microbes in the soil were converting the hexadecane and other oil components in the soil to methane gas, in the same way deep dwelling microbes might complete the methane process naturally… Says Lovley. "In some cases it might be beneficial to use microorganisms to convert the oil in reservoirs to methane because methane is easier to extract than oil."

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