The British Broadcasting Corporation’s World Service (BBC) produces a weekly series, One Planet, that delves into environmental concerns facing society. In this week’s installment, host Mike Williams spoke to James Smith, the head of Shell Oil’s United Kingdom division. Mr. Smith discussed the increasing demand for energy and the need to curb carbon dioxide emissions. In the interview, he claims that humans are approaching the peak of oil production. As a result of a reduction in the availability of so-called “easy oil”, he believes that production of oil will top out within the next decade. Currently 85 million barrels of oil per day are produced globally, with Mr. Smith claiming that the peak will be less than 100 million barrels because much of the remaining oil is in more difficult places to reach, which require more energy to extract.

Mr. Smith argues that industry must double its efficiency, essentially using the same amount of oil while yielding twice as much energy. Technological advancements such as hybrid cars are a step in the right direction, as are biofuels and new forms of energy. He goes on to state that it is imperative to “change the terms of trade for energy so it becomes cost effective to implement those technologies.” Furthermore, Mr. Williams states that a reduction in demand must be a primary goal. In order to achieve the goal of stimulating innovation, Mr. Smith argues for a carbon tax, an alternative to proposed cap and trade systems. By putting a price on carbon, companies will be forced to reduce the amount of CO₂ and innovate as consumers choose non-oil based. Initially, such a program could levy a tax of 80 to 90 USD or Euros per ton of carbon dioxide. Mr. Smith states that those costs “would be recovered in the market place.” As Mr. Williams points out, the expense of such a tax may very well be passed on directly to the consumer, although Mr. Smith replied that “we’re all going to have to pay for reducing the carbon impact of energy.”

Regardless of whether a cap and trade system is implemented or carbon tax is assessed, the need to reflect the “true price of oil” remains at the root of the issue. Currently, the price of oil (hovering just below $60 US) does not accurately reflect the entire cost of oil from extraction to combustion. Serving as the major fuel upon which the world’s economy runs, oil is here to stay. Whether there are viable renewable sources which produce less carbon dioxide (i.e. biofuels) remains to be seen.

- Eric Wilson

[image source: EcoTechDaily.com]