jeremy leggett, hillary laureate, at the hillary symposium

The triple crunch

and the road to Copenhagen and beyond

Jeremy Leggett

2nd Hillary Institute seminar

“The Real New Deal”

5 June 2009

We are living through a triple crunch

• Financial …the credit crunch

- the banking industry had its asset assessment

systemically wrong

• Carbon …the climate crunch

- a stable climate is not even valued as an asset

in our current operating paradigm

• Oil …the energy crunch

- could the energy industry have its asset

assessment systemically wrong too?

We are living through a triple crunch

• Financial …the credit crunch

- the banking industry had its asset assessment

systemically wrong

• Carbon …the climate crunch

- a stable climate is not even valued as an asset

in our current operating paradigm

• Oil …the energy crunch

- could the energy industry have its asset

assessment systemically wrong too?

“as long as the music is playing, you’ve got to get up

and dance. We’re still dancing.”

Welcome to the AGM

We are living through a triple crunch

• Financial …the credit crunch

- the banking industry had its asset assessment

systemically wrong

• Carbon …the climate crunch

- a stable climate is not even valued as an asset

in our current operating paradigm

• Oil …the energy crunch

- could the energy industry have its asset

assessment systemically wrong too?

430 ppm CO2e today means 1C minimum

Stern Review, 2006

We are living through a triple crunch

• Financial …the credit crunch

- the banking industry had its asset assessment

systemically wrong

• Carbon …the climate crunch

- a stable climate is not even valued as an asset

in our current operating paradigm

• Oil …the energy crunch

- could the energy industry have its asset

assessment systemically wrong too?

April 2009

March 1999

October 29th 2008

The first multi-company attempt to sound an

alarm bell on premature peak oil

www.peakoiltaskforce.net

US-48

0

5

10

15

20

25

30

1930 1950 1970 1990 2010 2030 2050

Dis

cove

ry G

b

010002000300040005000600070008000900010000

Pro

duct

ion

kb/dProductionbi

llion

s of

bar

rels

Source: ASPO

USA 48 production versus discovery

US-48

0

5

10

15

20

25

30

1930 1950 1970 1990 2010 2030 2050

Dis

cove

ry

010002000300040005000600070008000900010000

Pro

duct

ion

kb/d

Production

Source: ASPO

billi

ons

of b

arre

ls USA 48 production versus discovery

0

10

20

30

40

50

1930 1950 1970 1990 2010 2030 2050

Pro

du

ctio

n, G

bo

e/a

Non-con Gas

Gas

NGLs

Polar Oil

Deep Water

Heavy

Regular

billi

on b

arre

lsGlobal production of oil and gas

0

10

20

30

40

50

1930 1950 1970 1990 2010 2030 2050

Pro

du

ctio

n, G

bo

e/a

Non-con Gas

Gas

NGLs

Polar Oil

Deep Water

Heavy

Regular

Source: ASPO

billi

on b

arre

lsGlobal production of oil and gas

Source: IEA WEO 2008

mbd

100

95

90

85

80

75

Global production of oil

The gap to make up for depletion in existing fields: Six Saudi Arabias

Source: IEA World Energy Outlook 2008

The IEA is also concerned

Source: IEA WEO 2008

mbd

100

95

90

85

80

75

Global production of oilThe gap to make up for depletion in existing fields: Six Saudi Arabias

Global production of oil

Source: IEA World Energy Outlook 2008

The IEA is also concerned

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Dubai 1990

• ..\y My Pictures\untitled.bmp

Dubai 2007

Concerns pursuant to the 2005 US DoE Hirsch report of on oil security

1. Oil supplies and GDPs are coupled in normal times, and when sudden shortages have happened

2. World production has been on a plateau since 2004, because additions of new capacity are not exceeding depletion

3. Recession is meaning cutbacks in oil exploration and development investment: a recipe for declining world oil production in just a few years

4. This means global GDP will be dragged down by descending global oil production, causing ever deepening recession

5. The lag time for mitigation is long: alternative technologies will take at least a decade to have major effect

6. This means double recession, prolonged, before recovery

Source: Bob Hirsch, April 2009

ITPOES recommendations: 1. National

1. Appraise the risk from premature peak oil, and plan proactive and reactive strategies

2. Draw up a national energy plan to deal with the premature peak-oil threat • maximise energy conservation and energy efficiency • accelerate investment in renewable energy and sustainable

renewable fuels • national skills programmes in energy• expand national oil and gas programmes (if possible)

3. There is no time to wait in drawing up and implementing a new national energy mobilization planincluding:• The renewables industry is confident that 100% renewables energy

supply is possible in 20-40 years. Give them the opportunity to prove it.

• Nuclear decisions should be taken rapidly, and governments should ensure that uncertainties over the nuclear renaissance should not act as barriers to the mobilization of energy efficiency and renewables.

Mobilisation rates

Climate change policy response scenario

Peak oil “descent”scenario

Peak oil “collapse”scenario

End goal for replacement of oil use

Within 42 years

Within < 20 years

Within < 10 years

Annual rates of oil replacement with respect to 2008

2.38% c. 5% >10%

Source: ITPOES 2008

ITPOES recommendations: 2. International

1. Call for, or enact, greater transparency about oil reserves including• minimal programme of verification by a small United Nations team

as a confidence-building measure has been proposed by G-8 governments.

2. Combine multi-lateral efforts to deal with oil depletion and climate change in the post-Kyoto climate negotiationsincluding • rapid trialing of CCS• unconventional oil should not be exploited if its net carbon footprint

is higher than that of conventional oil

3. Accelerate “green new deals” already underway, at home and abroad.

Mobilisation forces

Governments Business People

Survival trajectory

Status quo trajectory

www.nef.org

21 Ju

ly 20

08

Governments

• Green new

deals

• Grey new

deals

Surv

ival

Sta

tus q

uo

The potential for energy efficiency and RE

Invest £ 1 billion:

….create 20-40,000 clean jobs

….save minimum £ hundreds of millions per year, rising to billions

Governments

• Green new

deals

• China - US

leadership?

• Grey new

deals

• The “return

to 2007”

syndrome

Surv

ival

Sta

tus q

uo

FEBRUARY 2009

Business

• The cleantech

revolution

Surv

ival

Sta

tus q

uo

UK’s first solar street: S Yorkshire HA

FT, 21st Oct 2006

Source: UK PV Manufacturers Association, May 2009

Feed-in tariffs and jobs: the case of UK PV

Business

• The cleantech

revolution

• Enlightened

leadershipSurv

ival

Sta

tus q

uo

Business

• The cleantech

revolution

• Enlightened

leadership

• Big oil

recarbonising

Surv

ival

Sta

tus q

uo

Gulf of MexicoBusiness

• The cleantech

revolution

• Enlightened

leadership

• Big oil

recarbonising

• No room for

serious

renewables

Surv

ival

Sta

tus q

uo

MARCH 2009

People

• No return to

2007

• Self-help

innovation

• Top Gear

etc

• The rise of

the Far

Right

Surv

ival

Sta

tus q

uo

A battle for hearts and minds

Governments Business People

Survival trajectory

• Green new

deals

• China - US

leadership?

• The cleantech

revolution

• Enlightened

leadership

• No return to

2007

• Self-help

innovation

Status quo trajectory

• Grey new

deals

• The “return

to 2007”

syndrome

• Big Oil

recarbonising

• No room for

serious

renewables

• Top Gear

etc

• The rise of

the Far

Right

Who to believe?

oil

gas

gas

oil

LCBP (Low Carbon Building Programme)

SEPTEMBER 2009

Num

bers

Time

The Law of the Few

The Stickiness Factor

The Power of Context

“Look at the world around you. It seems

like an immovable, implacable place. It is not. With the slightest push – in just the right place – it can be tipped.”

Malcolm Gladwell

TIPPING POINT

The “seeing is believing” effect

Thank you

jeremy.leggett@solarcentury.com

www.solarcentury.com

www.solar-aid.org