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Peak Oil: Investor Strategies
for Energy Transition
Alberta,
Canada. A man stands in a giant scoop, Athabasca tar sands processing
facility.
By
Andrew McKillop
At least in
Europe, Peak Oil can be surely said to arrived in the shape and
form of party political speeches and media references to «
after oil ». In Sweden, « after oil » was announced
by the outgoing government as meaning that oil would be «
eliminated from the energy mix » by about 2025. This enables
us to calculate the needed compression rate or decay rate : about
9% per year, every year, for the next 19 years. We can admit that
anything is possible in theory, especially from politicians voted
out of power, but achieving this rate of compression within limits
of technical, financial and economic feasibility, and social acceptability
is unlikely. Only much lower annual rates will in fact be feasible.
If we turn
to the 33% of the world’s population represented by the
two giant emerging economic superpowers of China and India, with
industrial output growth rates of 10%-20% per year, reducing their
growth rates of oil demand to only 5% or 6% per year will be very
difficult, and require massive mobilization of human and technical
resources. The net result is this : there is no chance at all
of the so-called Oil Age ending tomorrow or next week. Our central
problem, challenge and opportunity is to organise and facilitate
rational oil utilisation (ROU) on a worldwide, equitable and efficient
base, within a fast changing energy mix.
As we will
see in this presentation, Peak Oil is a complex question involving
many variables, from the definition of oil and oil-like hydrocarbon
liquids, to the interplay of factors controlling world oil supply
and demand. We can say that oil currently supplies about 40% of
all commercial energy, that is about 4.25 Billion tons of oil
on a total of 10.75 Bn tons oil equivalent consumed in 2006. Eliminating
the two-fifths supplied by oil will surely not be easy –
in fact it will be a Herculean task.
The task is
heavily complicated by the fact that substituting oil with natural
gas, coal or uranium for nuclear power only exchanges one faster-declining
fossil energy resource for three other, relatively slower-declining
fossil energy resources. All of them, including uranium, result
in climate changing gas emissions directly related to the quantity
of energy produced. Substituting oil with non-oil energy depends
on many factors, including the physical, technical and economic
feasibility, social acceptability, and time needed to switchover.
In the case of nuclear power, we can that its extreme financial
costs and security risks make this so-called ‘alternative’
a paper solution to the structural energy crisis set by Peak Oil.
As North Korea is the most recent to demonstrate, there is no
intrinsic barrier or separation between « civil »
and « military » nuclear technology.
Defining
Peak Oil is complex, and several definitions are presented here,
including the ASPO definition which only focuses the total extraction
or production of narroly-defined, mostly ‘conventional’
petroleum liquids in the whole-year period of the peak year. The
definition excludes the more normally used and much wider concept
of oil, the « all liquids » definition. Using this
definition, and taking account of the 2 annual peaks of oil demand
– seasonal demand now being the most powerful price setting
variable – we are in fact a lot closer to Peak Oil than
many persons care to admit.
A better,
more operational definition of ‘peak’ is proposed.
This effective financial and economic definition is an oil price
context of extremely volatile, unpredictable and uncontrollable
price swings, able always to bounce further and higher when the
supply/demand balance becomes negative. Continuation of this will
lead to year-round physical undersupply of oil markets, if there
is no rapid cut in demand. This Peak Oil context is in my estimation
possible by as early as August 2007. Year-round extraction in
2007, on an « all liquids » base will attain about
31.9 Gb (Billion barrels), and decline from 2008.
Peak oil and
Kyoto Treaty obligations for ratifying countries will surely reinforce
the ‘rush to gas’, and certain growth of renewables,
as well as some moves to oil and energy saving in these countries,
and generally accelerate the trend of changing regional and national
energy mixes. These mixes will change faster and more than they
have changed in any previous recent period. Evolving mixes, certainly
including energy economic restructuring and reduced energy intensity
in OECD countries, that is ‘Negawatts instead of Megawatts’,
fast growth of renewables, greater energy network integration,
much more transparent energy pricing, these and other trends can
be called Energy Transition. This will above all be a time of
energy challenge, financial and economic risk, and investor opportunity.
The changing
energy mix will generate, and arise from new and emerging consumer
and user needs, expectations, values and ways of using energy.
It will demand new energy economic infrastructures, and surely
provoke sometimes contradictory political and national economic
policy stances, that is intensify the opposition between «
top-down » and « ground-up » models and processes
of change. Separating the two is the key to mapping likely sequences
of change, and identifying investor opportunities, and strategies
for Energy Transition.
The second
« ground-up » group of motors for change includes
local, NGO, community, municipal, urban and urban regional associations
and collective entities, and their responses to the basic market
signals of fast changing energy mixes and Energy Transition :
higher energy prices and declining energy security.
The individual
and collective perception of these signals, emerging quite fast
in the large, mature urban markets of OECD countries, and soon
emerging in urban areas of nonOECD countries, generates clearly
identifiable opportunities, in a wide range of energy and energy-related
economic domains. My proposed investor holding, the IET Fund,
addresses these emerging opportunities across a range of vehicles,
with the basic objective of mobilising and moving investor resources
to the task of Energy Transition.
DEFINING PEAK
OIL
Several definitions
are possible, and a large number are in circulation, contributing
to confusion of political, media and public opinion on the subject.
We can list the following definitions:
-
ASPO-Association for Study of Peak Oil definition – the
maximum total extraction and production of oil in a 12-month period,
this period being the peak year
- Peak production rate definition – the maximum total extraction
and production rate, held for a certain period, say 390 days,
in the so-defined peak year
- Peak demand rate definition – the maximum possible daily
average demand satisfied by world supply before physically undersupply
intervenes
- Peak oil price definition – maximum possible price attained
in a given year or period, following which oil demand and production
durably decline
All
these definitions require a subsidiary definition of what “oil”
means. ASPO’s definition is ‘petroleum liquids’,
including condensates, extreme depth offshore oil, heavy oils
and certain syncrudes, but some national ASPO groups use much
more restricted definitions. Conversely the US EIA, for example,
uses a wide definition of ‘oil-like hydrocarbons’,
including maize bioethanol.
Another problem for defining oil production and production capacities
is the question of net versus gross production and capacities.
On a worldwide basis, loss of production on land and especially
offshore, and loss in transport, storage and utilisation totals
at least 1.5 Million barrels/day (Mbd), about two-thirds the current
national consumption of France or Italy.
Depletion:
ASPO’s widely recognised specialty is technical study of
depletion rates and factors. The massive data bases of ASPO groups,
worldwide, enables us to confidently forecast likely net addition
to world oil production capacities after depletion. This is now
low and erratic from year to year. For 2006, net capacity growth
is unlikely to exceed 1.05 Mbd, far less than world production,
transport and storage losses!
World
demand and Peak Oil: Extracting and producing oil or ‘oil-like
hydrocarbons’ has no sense at all unless it is used, about
91% as fuel and 9% as a raw material and lubricant. World oil
demand is an astonishingly neglected subject as I can attest by
the number of my study proposals on this subject rejected as ‘not
interesting’. What we can say is that world oil demand is
now almost totally disconnected from world oil supply, and that
the approx. 35% of world oil that is either priced by major markets
like NYMEX and Singapore, or priced close to day quoted prices
on these markets, has its price governed almost exclusively by
world demand and its seasonal variations.
The world oil pricing system, treating oil on the same basis as
seasonal fruits and vegetables is highly speculative, opaque and
inappropriate for the ‘lifeblood of industrial civilization’.
Worse than this, the near total de-connection between demand and
supply is shown by this simple figure: as noted, net additions
to world oil production capacity will be unlikely to exceed 1.05
Mbd (+ 1.2%) in 2006. Conversely, world oil demand net of substitution
and oil-saving technology will likely grow by 2.2 – 2.4
Mbd in 2006 (+ 2.5%).
Terror of
the 100-dollar Barrel: For a variety of reasons related to the
spectre of ‘triple digit oil prices’, world oil demand
data is highly opaque and contradictory. Almost all major institutions
with an interest in energy, such as World Bank, OECD IEA, US EIA,
the 5 major oil corporation, Eurostat and others claim or imply
that world oil demand is now at ‘historically low rates’,
of about 1.5% pa. Even ASPO groups retain a world demand inflator
of only 1.7% pa. The underlying rationale – totally contradicted
by real macroeconomic mechanisms in play, that we can call ‘Petro-Keynesian
Belle Epoque growth’ – is that high oil prices lead
to price elastic fall of demand.
Demand
forecasting: I will present a few ground-up and transparent calculations
concerning the world automotive industry, to show that world oil
demand growth is very surely alive and well. We can note that
with about 75 Million cars and car equivalent land transport vehicles
produced in 2006, and world human population growth in 2006 also
being about 75 Million, that we are now at the state of ‘For
every baby a new car is born’. About 98% of these new vehicles
operate with petroleum hydrocarbon liquids and GPL, not hydrogen,
flexfuel, bioethanol or biodiesel, despite the talk of After Oil.
Close to 35% of world oil demand, and around 50% of demand growth
can be traced directly and indirectly to land transport vehicles.
Each car equivalent unit needs about 5 barrels oil equivalent
(boe) of energy to produce, of which about 2 barrels will be liquid
hydrocarbons. Other forms of transport – world airplane
construction and movements, world shipbuilding and ship movements
– need to be analysed by oil demand impact, to which we
add the habitat, construction and public works industry, the agriculture
and fisheries industries. Concerning electric power production,
we can note the ‘perverse factor’ of climate change,
increasing summer peak airconditioning electricity demand in many
countries, as well as irrigation agriculture power demand. Worldwide,
oil-fired electric power production is certainly not declining.
In brief, we quickly arrive at my estimate of 2.2 – 2.4
Mbd growth of world oil demand for 2006, net of substitution and
oil-saving.
Iceberg
lettuce and oil price peaks: World oil demand variation due to
seasonal factor is very surely increasing, but the annual changes
are difficult to estimate. I present schematic series of seasonal
demand estimates and forecasts for 2005-06-07 using an extended
“all liquids” basis for defining ‘oil’.
What we can see is that the Northern Hemisphere ‘summer
motoring, airplane movement, airconditioning and irrigation demand
peak’ could attain 89 Mbd.
There is no certitude world supply can meet this. In the same
way that Iceberg lettuce, tomato or forest mushroom prices explode
and implode, depending on supply and demand, world oil prices
can surely follow suit. This will continue until and unless oil
is removed from the current ‘free market’ pricing
system, and treated as a vital but declining resource.
Unlimited
demand potential: While supply is surely limited, shown by the
very weak growth in world output capacity despite 6 years of ever-rising
annual average prices, world oil demand potential is effectively
unlimited. As I show in the Presentation, all the OECD countries
have extreme oil intensities or average consumption per capita,
led by the USA at about 25.5 barrels/capita/year. If by miracle,
planet Earth was allocated a half-dozen extra Ghawar, Cantarell
or Burgan fields, enabling China and India to attain the present
US oil intensity, their combined oil demand would run at 150 Mbd
and their annual consumption would be 54.75 Billion barrels. Even
at ‘moderate’ European country oil intensities –
around 12 bcy – China and India would generate a demand
of about 70 Mbd, or about 58.5 Mbd more than their present oil
demand.
Returning briefly to the car industry, we can note the role of
this industry in producing explosive oil consumption growth. Taking
‘before car’ and ‘after car’ in economic
success story countries such as South Korea, we note that their
oil demand can increase 10-fold (900%) in as little as 35 years.
Rational
Oil Utilisation (ROU): Nothing in theory, but only in theory prevents
China, India, Brazil, Turkey, Pakistan or other industrialising
countries reproducing the Asian Tiger, oil-driven economic success
story.
We must however accept, very soon, that this is no longer possible,
and for many reasons in addition to Peak Oil, such as runaway
climate change and geopolitical rivalry in the Middle East, aggravated
by struggle for access to and control over the world’s remaining
oil resources.
We first note there is no chance whatsoever that the Oil Age will
end tomorrow or next week. What is urgently required are openly
debated, internationally agreed measures for ROU, and planned
Energy Transition away from fossil fuels.
ARE WE CLOSE
TO PEAK OIL ?
The
fact that ‘After Oil’ has entered the vocabulary of
political leaders, at least in Europe, and world media constantly
refers to ‘declining oil supplies’, together with
rapidly increasing citizen and consumer demands for protection
of the environment and a shift to ‘clean renewables’,
all these facts and factors suggest that we are close to PO.
This may indeed be serendipitous timing ! Already in July-August
2006, world oil demand on a wide ‘all liquids’ basis
was likely running at around 87 Mbd. We also attained a historic
nominal-price high of about 78 USD/bbl (barrel) at the time, but
this was quickly explained away as due to the ‘geopolitical
risk premium’, placed by so-called oil price experts at
10, or 20 or even 30 USD/bbl. Any number will do if that contributes
to nicely large speculative trading changes of the daily price.
This ‘geopolitical risk premium’ disappeared in August
with the last Israeli F-16 raids on Beirut, but the Iran nuclear
crisis, or saga continues; the Iraq war is a rising threat to
region-wide stability; the Palestine-Israel conflict continues,
and the so-called ‘Clash of civilizations’ or ‘Islamic
menace’ is a media favourite and fonds de commerce for the
rush-to-print Al Qaida book industry.
World oil demand entered its second, and largest seasonal trough
from late August, and this simple factor can easily be identified
as the real basis of oil price falls since then, and ending very
surely by mid-November or before, depending on seasonal weather.
The fact that a historic oil price peak was attained with the
2006 Summer demand peak suggests that world demand was then at
the limits of physical supply. This theory can be checked and
analysed, and I can propose several methods for doing so.
Mid
East and Central Asian geopolitical instability: This region holds
at least 55% of remaining world oil reserves. All major oil import
dependent countries have a vital interest in this region. The
traditional methods for assuring vital supplies of oil do not
necessarily start with military invasion and occupation, but they
certainly include this option. The problem, of course, is there
are big new players in this ‘game’, as well as many
historical and traditional players, many of them local, but as
yet not declared.
My next book with the title ‘The Next Oil War’ treats
this dangerous endgame struggle for control of the world’s
largest remaining oil reserves, to a backdrop of religious schism
and conflict, and its risky ‘divide and rule’ options
for external players seeking increased leverage.
Prices
and PO: We return the probable most ‘operational’
definition of Peak Oil, the price at which world oil demand finally
exhibits price elasticity, demand growth shrinks to zero, and
world supply adjusts to emerging energy mixes with a declining
oil share. Ideally, the rate of decline of this share would be
at least equal to the decay rate, or decline rate of world oil
output after PO, placed by ASPO at around 3.5% pa from either
2009 or 2010, using ASPO definitions and ASPO’s unrealistically
low demand growth inflator.
A price-induced energy mix shift away from oil, enabled also by
ROU, could in my opinion be triggered by oil prices attaining
about 95 USD/bbl. At present we have no sign whatsoever of any
meaningful shift way from oil in the world energy mix.
The urgency of the situation is deliberately downplayed by institutions
such as World Bank and OECD IEA, claiming that PO will occur ‘sometime
after 2025’. Using published data from the World Bank and
IEA, and data from the World Bank consultant M. G. Salameh’s
presentation to the ASPO5 Conference (Pisa, July 2006), we obtain
an estimated world oil demand of about 115 Mbd in the 2020-2025
period. This is at least 28 Mbd above current day average production
capacity. Adding 28 Mbd to world capacity, net of depletion, will
require the discovery and sustained production of about 3 “new
Saudi Arabias”, 6 or 7 “new Irans” or 20 “new
Iraqs” of the post-2003 liberated variety.
Achieving this in 15 years is simply impossible. It is surprising
that supposedly ‘serious’ institution continue to
publish these fantasy figures.
It is sure and certain, however, that oil prices above 80 USD/bbl
will help to transform the easy talk of ‘After Oil’
into organised, real world action for the simple reason there
is legitimate doubt that the world will even sustain world oil
production above 90 Mbd.
Concerning narrowly-defined “conventional oil”, we
can note, PO occurred at least 5 years ago, and possibly as far
back as 1996-1998.
SUMMARY OF
KEY ESTIMATES AND FORECASTS
2006
net additions to world output capacities: 1.05 Mbd
2006 net annual demand growth: 2.2 – 2.4 Mbd
Peak summer demand August 2007: 88.5 – 89 Mbd
Total annual extraction and production 2007: 31.9 Billion bbl
Oil price range Dec 2006-Feb 2007: 65 – 80 USD/bbl
Oil price range Jul-Aug 2007: 75 – 95 USD/bbl
Operational Peak Year: Jun 2007 – Jun 2008
THE CHANGING
ENERGY MIX
Concerning
oil, we can note that oil depletion, forcing a rapid increase
in extreme depth offshore oil, increased land condensates production,
increased syncrude and tertiary solvents-based extraction, has
led to ‘The Lighter Barrel’, now averaging about 1165
litres-per-ton, compared with under 1100 l/ton in the 1970s and
early 1980s. Not unassociated, but in fact physically and geologically
linked with this, we have the so-called ‘Gas Bridge’
or continuing very fast growth of world gas production, network
interconnection, and fast increased dependence on the very few
major suppliers – notably Russia for European consumers.
Cynics can call this a bridge to nowhere because Peak Gas is as
sure and certain as Peak Oil. In addition, gas reservoir depletion
is not at all like oil reservoir depletion, with a fast and unpredictable
decay rate or decline after peak is attained. Peak Gas is probable
by as early as 2015-2018.
This essentially leaves coal and uranium as fossil energy sources
for the post-2025 world underlining, if needed, how vital it is
to develop ROU, rational gas utilisation, energy conservation
and the renewable sources. It is sure that ‘clean coal’
technology exists, if expensive, and that uranium reserves at
acceptable
extraction
prices certainly exist, but the growth rate of demand on these
relatively static reserves will determine to what extent they
can palliate decline of oil and natural gas reserves. Regarding
nuclear electricity, and other than its extreme financial cost,
almost every day brings further proof there is no ‘firewall’
or barrier between so-called ‘civil nuclear’, and
real ‘military nuclear’. Every single nuclear reactor
among the approx. 445 ‘civil’ reactors in service
worldwide is a potential Chernobyl.
Changing forecasts:
If w turn to official and ‘consensus’ forecasts for
the changing energy mix these are easy to obtain and view, for
example the imaginative projections published in the IEA ‘World
Energy Outlook’ series of publications. The best way to
appreciate these impressionist rather than impressive artwoks,
and their unimpressive predictive capabilities is to compare energy
mix forecasts produced at certain dates, say 1990, 1995, 2000
and 2005 for the same future dates, say 2010, 2015, 2020 and 2025.
The constant large change of forecast mixes, for the same date
in the future will leap from the page.
Consensus
views: Consensus views, or claimed consensus views are in fact
mobile and changing. One example is the 1990s ‘consensus’
view used by IEA and other institutions, claiming that Saudi Arabia,
Iraq, UAE and Kuwait could or would produce a total of about 40
Mbd in 2020. This kind of ‘consensus view’ has totally
disappeared from currently published artworks, or energy mix forecasts
of the IEA. A better and more reasonable forecast would be 16
or 17 Mbd, with domestic oil consumption of the four exporters
at about 4 Mbd, and net export capacity around 12 or 13 Mbd.
Current ‘consensus
views’ on the world energy mix of the 2010-2020 period include:
-
Certain but perhaps only short-term ‘Gas Bridge’,
ie. fast growth of gas utilisation
- Certain but relatively low growth of coal utilisation, mostly
‘dirty’
- Official consensus view that currents fast rates of electrification
(about 9% pa growth of electricity demand) will be sustained for
at least 10 years
- Certain but rarely admitted decline of OECD country oil intensity,
perhaps rapid
- Certain and rapid growth of renewable energy production
- Continuing uncertainty regarding the role of nuclear energy
Gas
Bridge and Electrification: Most of these views can be criticised,
and especially the Gas Bridge theory, and continued very fast
electrification in OECD countries as well as nonOECD countries.
We should first note that many countries, eg. practically all
countries in Asia and the Mid East, are increasing their gas consumption
at over 10% pa, and some like China and India at more than 13%
pa. World demand trends for gas are very comparable to world oil
in the period of fastest growth, that is about 1960-1975, immediately
preceding the first Oil Shock. World gas reserves are far from
limitless, and gas transport infrastructures, especially LNG,
are expensive. Gas reserves in the Middle East and Central Asia,
we can note, are already the focus of intense geopolitical rivalry.
The potential for “gas shock”, much stronger than
that of January 2006, is most certainly real and possible.
Electrification was a favoured theme of Lenin, for communising
the masses, and also a founding idea of the European Community,
but thermodynamically it is an aberration. Study of what electrification
does to the energy economy is a ‘worst of all worlds’
story, notably ratcheting up economy-wide energy intensity, including
oil intensity, and especially during periods or phases of strong
economic growth. The capital costs of electricity production,
especially if we project fast growths of wind and nuclear electricity,
will themselves act to depress future growth of electrification.
Top-down
and Bottom-up: official consensus energy mix forecasts are almost
exclusively ‘top-down’ views of the energy economy,
the economy, and society.
From the ‘bottom-up’ we get different, more flexible,
and above all real world responses and signals for change of the
energy mix, in responses to the same cluster of causes. These
causes include resource, technology, financial, economic, political,
legislative, environmental, associative and social determinant,
factors, demands and constraints. Spanning a range of these ‘motors
for change’ we have the Kyoto Treaty, and various ‘Kyoto
processes’ for attaining national target obligations in
the 35 or so ratifying countries.
Energy consumers
in the urban markets of the OECD countries, and in nonOECD urban
markets more simply react and respond to the following perceptions:
energy prices are high and set to rise further; energy security
is declining; urgent action is needed to reduce environment deterioration
and to slow climate change.
Combined with Kyoto Treaty obligations in the ratifying countries,
this results in a powerful number of levers for change of the
energy mix.
Kyoto Treaty and the changing energy mix: The mediatised promise
of the Kyoto Treaty, to almost painlessly stop or limit what is
essentially runaway climate change, must be separated from actual
and real provisions of the Treaty, as negotiated and modified
over the last 10 years. In the ratifying countries, however, it
is sure that 2007 will be a hinge year for energy policies, investment,
energy pricing, the regulatory framework, because from 2008 compliance
will be programmed into the 2008-2012 period. The Group B Associated
Countries, currently only covered by low-impact measures such
as Clean Development Mechanism (CDM) credits, may quickly widen
Kyoto-related their energy sector investment potentials, depending
on ongoing discussions and negotiations. The ‘reverse application’
of CDM programmes in the ratifying countries, and extended to
cover urban habitat, energy, transport and food supply development,
offers very large potentials in the near-term.
ENERGY TRANSITION
Energy
Transition means the large and structural change of national energy
mixes. At the world level, if there is rational oil and gas utilisation,
and rapid worldwide development of renewables, it is likely the
tapering-down of world oil consumption can be manageable, rather
than catastrophic. This will notably include long-term and continued
decline of oil intensity in the OECD countries, the relatively
short-term ‘Gas Bridge’, and other changes within
a context that will however remain unsure and unwilling.
NonOECD transition: The four-fifths of the world’s population
outside the OECD countries will experience a very different trajectory.
Taking notably the cases of China and India, these two supergiant
economies will firstly and surely transit towards the OECD oil
intensive and energy intensive economic model. Their current extreme
low oil intensities can be compared with those of South Korea,
Taiwan, Singapore – the Asian Tigers – when these
countries launched their copybook and fast economic expansion
they sustained from the early 1970s. Today South Korea has an
oil intensity of about 16.5 bcy.
It is surely significant that China, today, uses about 1.1 Billion
tons of coal per year and that reduction of this coal burn, together
with the US coal burn of about 0.9 Billion tons/year would be
desirable to reduce the rate of climate change. However, if China
was to start a switch away from coal, reducing its annual coal
burn by 50%, and substitute this with oil, China’s oil demand
would increase by about 45% above its current oil demand. China
is already the world’s second biggest oil consumer, and
third biggest oil importer country, after the USA whose import
demand, at about 13.5 Mbd, is about 25% more than the combined
total of Chinese and Indian oil consumption. Any argument that
high oil prices will penalize the economic growth of countries
such as China and India, causing them to reduce oil imports, is
totally discredited by economic and financial data regarding China
and India, whose current (mid year 2006) foreign exchange reserves
stand at a combined figure of about 1400 Billion USD.
Energy Transition must therefore be discussed, agreed and planned
taking account of such realities. I have made various proposals
to this end, recently published by ’Global Cement and Global
Fuels’ magazine. No acceptable plan or programme will be
possible without full participation by world oil and gas producers,
with powers in the setting of prices and decision on supplies.
INVESTOR
STRATEGIES AND THE IET FUND
We can surely hope there will be ‘top-down’ responses
to what is a worldwide problem, or crisis, but we will surely
not ignore existing and emerging ‘ground-up’ investor
opportunities generated by Energy Transition on today’s
real world.
At present these opportunities are concentrated, or most easily
exploited in urban markets of the OECD countries and certain nonOECD
countries.
These Energy
Transition-linked and –driven opportunities arise from a
few, widely stated consumer and user perceptions, amplified and
structured in many cases by community association, NGOs, municipal
and urban authorities, private business owners, and other economic
players large and mature urban markets.
These drivers
of the IET Fund concept can be summarised as below:
-
Energy prices are high and set to rise further, due to opaque
and unsure supply systems, to resource depletion, and to fiscal
and tax burdens set by the State
- Habitat, transport and food supplies and services are of rising
cost and declining quality, with decreasing autonomy and freedom
of choice for ‘captive’ consumers
- Environment deterioration and climate change are serious issues,
requiring individual and citizen action
- All or most market solutions offered are high-cost and/or ineffective,
not consumer friendly
The IET Fund
proposal addresses this new and emerging cluster of consumer and
business needs, with a range of proposed investor vehicles spanning
the key sectors of energy, habitat, transport and food supplies
and services in urban markets. The strategy is above all low cost
and local supply, tapping into and complementing local associative,
community and collective action in the domains considered.
Further details
on the IET Fund proposal are available on request.
Thanking you for your attention
Andrew
McKillop
is a Founder member, Asian Chapter, Internatl Assocn of Energy
Economists and Former Expert-Policy and programming, Divn A-Policy,
DGXVII-Energy, European Commission. Author of several books on
energy, environment and development published in UK, Canada and
USA.( xtran9@gmail.com ) His latest book ‘The Final Energy
Crisis’ (ISBN 0745320929) is distribute by Pluto Press,
London. Its views are not necessarily those of PETROLEUMWORLD.
Editor's
Note: The preceding article is the text of the conference by Andrew
McKillop, at the Oil & Gas Investment conference," in
Geneva on November 3,2006, Organized by Academic & Finance
S.A., and Carriere Consulting Group.
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News 11/05/06
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