Happy days are here again

November 15, 2012 | 00:00

Happy days are here again

It's official. Peak oil is dead. If the United States can become an oil exporter again in the future, surely we no longer have to fear an energy crisis?

The International Energy Agency (IEA) in its new World Energy Outlook 2012 draws the rather spectacular conclusion that the US (or North America) will be awash in both oil and gas in the coming decades (see below).

Actually, things are not nearly that simple, as the IEA's Chief Economist Fatih Birol explained to me in a fascinating interview I had with him on Thursday morning in The Hague. It will still be a tremendous task to make up for the depletion of existing oil wells and to bring sufficient oil to market to meet demand, Birol said. (More on this in our Monday edition.)

Nevertheless, oil fever is catching on. Following the American example, more and more countries are taking a fresh look at their hydrocarbon resources. Italy is a case in point. As our Italian correspondent Heather O'Brian reports in a new article for EER, the Italian government (post-Berlusconi) has, for the first time in many years, come up with a national energy strategy. One of the more remarkable elements in this plan is that Italy wants to ramp up its domestic oil and gas production significantly.

Does the new oil and gas boom mean the end of the renewables revolution? Far from it. As the IEA notes, renewable energy has taken its place in the sun and is here to stay (although it adds that investment in renewable energy is currently under heavy strain almost everywhere). Solar power in particular has a strong potential, having obvious advantages as a local, decentralized source of power.

The Italian plan underscores this point. Already one of the world's leaders in solar power, Italy wants to boost its renewable energy targets even further.

The Italian government also, very interestingly, wants to promote gas trade and become a gas trading hub in Southern Europe. This is important because Italy so far has been one of the pillars of the traditional closed gas market based on long-term contracts that has been prevalent in Europe. (Call it the Berlusconi-Putin axis.) Now Italy has apparently decided to embrace the European Commission's pursuit of a competitive internal energy market. (The Monti-Brussels axis?) This could be a very important success for "the internal energy market" in the EU.

So what does it all mean? Can we look forward to a world with energy aplenty and competitive markets that will ensure that this energy is delivered efficiently to all customers? All is well that ends well?

Well, there are still some small matters that are not included in this rosy picture. The climate, for example. Hadn't we agreed to reduce the use of fossil fuels on account of their CO2 emissions? And if this turns out to be very, very hard (and it will be very, very hard), wasn't there a consensus that we needed carbon capture and storage (CCS) to make the continued use of fossil fuels possible without increasing CO2 emissions? Yes, there was – except that it now turns out that – in Europe at least – the CCS programme is turning out to be a complete failure.

Our Brussels correspondent Sonja van Renssen, who has followed the EU CCS dossier very closely, has this shocking story for you. In yet another breaking-news report for EER, Sonja notes that it is likely that the EU CCS programme will end up with just one project – at a French steel plant that has been closed for a year….

But let's not end on a too sombre note. You can't win them all. We will assume – for now – that happy days are around the corner.


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