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Oil could have a sustainable future

The money spent subsidising renewables would be better used funding research into carbon capture and storage

It must be clear to most people that the scientific data regarding global warming is real. There are many sceptics, but the data being produced by climate scientists on a day-to-day basis is telling the same story. The planet is warming up. The reason most ascribed to this phenomenon is the emission of carbon oxides into the upper atmosphere causing a greenhouse effect.

How can we reduce emissions of carbon oxides, without seriously damaging our way of life or holding back development in emerging economies? This is the dilemma that faces us. Population growth is expanding and forecast to reach 9bn by 2035. Primary energy consumption is expected to reach around 17bn t of oil equivalent by this time. It will be driven by economic growth in the developing world, primarily by China and India. The main sources of this primary energy demand are oil, gas, coal, hydro, nuclear and renewables. BP's outlook to 2040 shows that although efforts are in progress, around 80pc of primary energy will still be produced by fossil fuels.

The search for alternatives to hydrocarbons and coal as our primary means of energy has many problems, but in the main these can mainly be reduced to cost and public objection. Nuclear energy is by far the simplest way of generating electricity without emitting carbon oxides. However, it is expensive and the populace is frightened by the prospect of radiation emissions. Until we can find a way of producing nuclear energy without the risk of radiation or proliferation of weapons grade plutonium, there is unlikely to be a big surge in nuclear energy plants.

“How can we reduce emissions of carbon oxides, without seriously damaging our way of life?”

The other potential carbon-free sources, solar panels and wind generators, suffer from the same problem that they are not reliable and produce electricity intermittently. Therefore, they need to be backed up by fossil fuel generators. Other forms of primary energy producers are hydro, which is intermittent and depends on rainfall, and tidal power, which is possible but currently uneconomic. Battery technology will eventually help to bridge the gap for times when it is neither windy nor sunny. But equally, this technology needs further development before it becomes truly scalable.


Then we come to renewable fuels. This is one of the most contentious ways of reducing atmospheric carbon oxides emissions. I have no idea how we can justify taking up agricultural land to grow crops that we ultimately burn in our transport sector. Furthermore, the price of the primary vegetable oil is substantially higher than the underlying hydrocarbon fuel; palm oil ester is around 1.25 times the price of Brent Crude oil and Rapeseed oil around 1.8 times Brent. The prices of gasoline and diesel oil are 1.26 times higher and 1.25 times respectively. Thankfully, the legislators are finally starting to recognise this and mandates such as EU RED II are seeking to incentivise advanced biofuels that do not compete with crops.

The unintended consequence of the drive for biofuels is that, in some parts of the world, rainforest is being cut down to make way for sugarcane and palm plantations to generate biofuels. These rainforests are our best chance of mitigating atmospheric change, as these trees absorb carbon oxides. Given the billions that are being spent in subsidies on the renewables sector, we do not seem to be paying enough attention to carbon capture and storage (CCS). The carbon came¬in the form of hydrocarbon and coal¬from under the earth in the first place, so why not put it back there? If not, then let us plant trees on the agricultural land used for renewables instead.

Research is ongoing, but not at a sufficiently high resource level to achieve a breakthrough. If only we could channel the subsidies for so-called renewables to this sector and improve the technology, we might achieve a major shift in carbon oxides emissions.

Charles L Daly is the executive chairman of Channoil Consulting. He has spent a lifetime in the downstream oil business, working for many years in BP and Ultramar. He was a founder member, and the fi rst vice-chairman, of the UK's International Petroleum Exchange (IPE) and has lectured on a wide range of oil-related subjects all over the world.

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