Abstract

The 'discussion' in Sweden prior to the recent election contained two statements that received international attention. The first was by the then prime minister, Mr Persson, that nuclear energy was "obsolete", and the other was by the energy minister, Ms Sahlin, that Sweden would diversify out of oil in the coming 20 years. Unfortunately, these are not consistent.

'Non-oil' in the form of biofuels and hydrogen will require a sizable input of energy, and many of us believe that obtaining VERY LARGE quantities of these items will unavoidably require a substantial resort to nuclear. This does NOT mean that wind and solar should not be employed, but what it does mean is that these are insufficient for obtaining large quantities of biofuels and hydrogen in the short or medium run. Furthermore, while a diversification out of oil is not just desirable but essential, the non-oil community may for both technical and political reasons require more energy than ever.


“Sweden surprised the world by announcing its intention to get off oil” as Tam Hunt informed the readers of EnergyPulse (2006), probably the leading forum in the world on energy matters.

The world doesn’t include me though, because I have learned to expect all sorts of moonshine from Swedish governments. “Nuclear energy is obsolete,” the present Swedish prime minister once told his constituents, although he knows as well as you and I that a renaissance is in the cards for nuclear energy, and probably sooner rather than later. Someone who accepted Mr Prime Minister’s statement at face value though was his energy minister, who knows as much about energy as I do about brain surgery. I suspect, however, that she knows more than the European Union energy minister, since that gentleman thinks that talk about peak oil is idle chatter.

Some elaboration is in order. Mr Hunt and his colleagues want Santa Barbara (California) to ‘be off’ oil by 2033, as indicated in his article “If Sweden can do it, can’t Santa Barbara?” One of the best things about EnergyPulse is the comments on the articles published in that forum: these are superior to any comments that I have heard at any energy conference or seminar anywhere in the world, and as to be expected, many strenuous objections to Mr Hunt’s outlook were published. These included my own humble remarks, however I’m not certain any longer that he is completely wrong. The key thing here is that there is a great deal of difference between the 2020 date set by Ms Energy Minister and 2033, because (ceteris paribus) by 2033 it might be wise to have as little to do with the buy side of the oil market as possible, especially if you take the peak oil hypothesis seriously, and despite the pedagogically valuable counter-arguments by Somsel (2006), Giegler (2006) Rawlingson (2006) and Gould (2006).

I’ll put it as follows. Even if the logic in Mr Hunt’s presentation and subsequent rejoinders are faulty, the price of oil might be such by 2033 that it would be best for every motorist in Santa Barbara if he or she had access to something other than an oil-based fuel for their vehicles. Accordingly, trying to figure out some way to abandon oil by 2033 – or even well before – might turn out to be a rational economic decision, even if it is grounded in the kind of irrational devotion to economically suboptimal environmental scenarios in which Mr Hunt and his colleagues specialize.

The real deal

If you believe in ‘peak oil’, and I have some difficulty understanding how anyone could fail to believe in it, then it certainly is not impossible that global oil production could reach a maximum before 2020, and so getting Sweden “off” oil might be interpreted as a brilliant move. Actually however, when the peak arrives, a previous Swedish departure from oil would be due to luck rather than strategy, because to my knowledge no prominent Swedish politician has publicly demonstrated any sympathy for the ‘peak oil’ concept, and in addition the so-called ‘Oil Commission’ as well as the Swedish Energy Authority have both turned thumbs down on this kind of phenomenon.

Of course, as with Ms Energy Minister, the persons involved with these important establishments could hardly be described as possessing star quality where energy matters are concerned. In fact, where this subject is concerned, it might be appropriate to paraphrase a celebrated remark by Upton Sinclair: “It is difficult to get someone to understand energy economics when their salary depends on not understanding it.” The Energy Authority’s pseudo-experts and tagalongs have decided that oil price and production are “cyclical”, which is only a hair’s-breath from the harebrained belief by the Cambridge Energy Research Associates (CERA) that oil production will eventually display an undulating plateau. As for the ‘Commission’, Professor Azar gave his principals the crank assurance that in reality there is a hundred years of oil left. For what it is worth there is considerably more, however what counts is the production peak, and the possibility exists that delaying this to e.g. 2020 or perhaps slightly beyond will only be possible if the people who buy large amounts of oil pointed guns at the people who sell it, and perhaps not even then.

On a somewhat more exalted plane, the International Energy Agency (IEA) and the U.S. Department of Energy (USDOE) seem to be thinking in terms of 2030 as the date for peaking. Their arguments as to why this will be so strike me as being completely without any scientific value, and so I think we can say that if Mr Hunt appears in Sweden this autumn with the intention to flaunt his ambitions for a 2033 demise of oil, he should face up to the prospect that well before this somewhat remote date, he could find himself having to contemplate oil selling for the $324 a barrel predicted by Patrick Artus – a highly productive and well known French academic who is now with an investment bank. Everything is relative in this old world of ours, which is one way of saying that if the time has arrived to kiss oil goodbye, then on at least one level 2020 or thereabout makes a great deal of sense.

An interesting topic that will not be examined in detail at the present time is how the energy minister and her associates arrived at 2020 instead of e.g. 2025 or 2015, but here I recall a conference in Paris where I was told by a certain gentleman that when he and his colleagues predicted the price of various metals, they did not bother with nuisances like logic, models or empiricism, but at some point after a ‘working dinner’ that featured copious quantities of expensive wine, simply pulled the numbers that they provided their naive clients out of the smoke filled air. Accordingly, if there were any serious calculations attempted on the subject of Sweden’s energy future, I suspect that they mostly concerned how many votes would be won by announcing a 2020 date for closing and nailing shut the oil window. A sufficient number of votes would eventually be transformed into more plane tickets for Ms Energy Minister and her crew, which in turn meant more opportunities to bask in the presence of the high-and-mighty in Brussels and Strasbourg. If making this most precious of all outcomes take place required a bogus announcement about “going off oil” by such-and-such a date, then so be it.

Let’s see what we’ve got so far. To begin, testimonials by Tam Hunt and Ms Energy Minister declaring that the time has arrived to kick the addiction to oil. While agreeing that the oil situation is a problem, I’ve made it my business to call the ambitions of Ms Energy Minister loony-tune because she doesn’t have the slightest idea as to how they can be realized. Tam Hunt conceded that “even if she isn’t the (Albert) Einstein of energy, her aspirations and her ability to promote visionary goals are marvellous”, but I’m afraid that he missed the point. In the Swedish context she is both the Einstein and the Newton of energy, while the engineers and managers who shake their heads when they hear her sounding off have been reduced to know-nothings.

In both the paper being referred to here, as well as other contributions, Mr Hunt has demonstrated that he is in the mood for a comprehensive environmental makeover of Santa Barbara, based on what he interprets as Swedish experiences, and in some ways similar to the copycat ambitions of Ireland, as described by Bjorn Lindahl (2006). Please let me mention something that I told some students in Milan: no country has gotten so little from its explicit environmental investments as Sweden, even if to a considerable extent this is balanced by the economic and environmental significance of nuclear energy. As to be expected, any positive reference to nuclear is ignored by Mr Hunt and his friends, because what they desperately want is for efficient nuclear assets to be summarily replaced by economically suboptimal window-dressing. What about ‘peaking’, which must always be mentioned when oil is the subject. Well, the global discovery of oil peaked about 1965, and l980 was the last time that the amount of oil discovered was larger than its consumption. I’ve decided that this tells me almost everything I need to know about that subject. Of course, even if this observation wasn’t relevant, you can be sure that at least some of the major oil exporters – and definitely Saudi Arabia – are not going to export as much oil as the IEA and USDOE say that they will. Why should they? Would you if you were in their place?

A conclusion

I suspect that Ms Energy Minister is being led to believe that in the course of going off oil, ethanol has a lot to offer, and perhaps wood-based ethanol. There is a great deal of wood in this country, and so this might be worth considering, but as yet the details are unclear. However even if it is found that the economics makes sense, a country as energy intensive as Sweden would be foolish to launch experiments involving a mass adoption of unconventional energy sources unless they were in a hurry to ride into the welfare sunset.

According to Earl Cook (1976), “There is no reason to expect the transition from a low energy society to a high energy society to be irreversible. If the energy support of a high energy society fails, it must again become a low energy society. The great difficulty is that the low energy phase can be regained only at the expense of a degeneration in living standards and life-styles”.

A degeneration in living standards and life-styles! Sounds pretty grim doesn’t it, although many of the young party-goers to whom I had the pleasure of teaching economics and finance in Stockholm and Uppsala would feel proud to inform anyone who inquired that they were willing and able to reduce their use of energy. On the same occasion though most of them – and especially the finance students – would make it clear that they wanted and expected full employment, pensions, high quality health care and education for themselves and their families, ‘summer houses’ near a beach, a very great deal of leisure that involved extensive foreign travel, public order, and interior temperatures high enough so that ‘pile caps’ and padded dinner jackets did not displace Armani and Boetang creations in the more fashionable restaurants and discos. Defence was also occasionally mentioned, however with the end of the cold war this is not so important, and in any event the Swedish military has been gutted in order to scrape together a few battalions for service somewhere on the rim of the Kalihari.

I also have the impression that the good Tam Hunt was greatly impressed by energy innovations in Malmö, especially the closing of two of the most efficient reactors in the world that were located near that fine city. As bad luck would have it though, if things continue in the present mode, it’s not inconceivable that Malmö will be a shambles by the date when he dreams that his own lovely Santa Barbara is an oil-free paradise.

Let me conclude by saying that Tam Hunt is a very articulate and indefatigable student of energy issues, even if I can’t agree with his conclusions; and “If Sweden can do it, can’t Santa Barbara?” is a fair question. So fair that it can perhaps be improved on: “If Sweden can do it, can’t California”, where by “it” I am not referring to the waffle about oil launched by persons like Ms Energy Minister, but a future in which that great state, like Sweden, generates 45 percent of its electricity in nuclear facilities that have a world-class economy and reliability.


REFERENCES

Banks, Ferdinand E. (2007).The Political Economy of World Energy. AnIintroductory Textbook. London and Singapore: World Scientific
Cook, Earl (1976). Man, Energy, Society. San Francisco: W.H. Freeman and Company
Giegler, Don (2006). Comment on Hunt. EnergyPulse (www.energypulse.net)
Gould, Len (2006). Comment on Hunt. EnergyPulse (www.energypulse.net)
Hunt, Tam (2006). ‘If California can do it, can’t Santa Barbara’. EnergyPulse (www.energypulse.net)
Lindahl, Björn (2006). ’Oljeslukande Irland valjer Sverige som sin förebild’. Svenska Dagbladet (Monday, 10 April)
Rawlingson, Malcolm (2006). Comment on Hunt. EnergyPulse (www.energypulse.net)
Somsel, Joseph (2006). Comment on Hunt. EnergyPulse (www.energypulse.net)

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* Professore Uppsala University - ferdinand.banks@telia.com

Pubblicato su www.AmbienteDiritto.it il 30/09/2006