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World scarcity of oil and gas creates chance to accelerate response to climate change

World scarcity of oil and gas creates chance to accelerate response to climate change

Call for establishment of fossil fuel buyers' cartel

The recent peak in oil prices was due to the depletion of the world's reserves rather than temporary supply problems in a number of countries, Feasta, an Irish-based research organisation claimed at the COP-10 climate conference in Buenos Aires today. (Monday, December 13th)

"The climate change discussions taking place here are based on the assumption that there is plenty of oil and gas still available to power the world economy," Richard Douthwaite of Feasta said. "That's just not true. The world's production of oil is about as high as it will ever go and natural gas production will stop rising in the next ten years."

Almost half of all the easily-extractable oil on the plant had already been used and gas stocks were depleting fast, he said. As a result, the total amount of energy available from both fuels would decline after 2015 at about 2% a year, perhaps half the rate required to bring prevent a catastrophic climate change.

"The big problem is coal. There's plenty of that and it's a really dirty fuel. If we can stop coal production increasing to compensate for the reduced supplies of oil and gas, we will have taken a giant step towards solving the climate change problem," Douthwaite, an economist, said.

He was speaking at the launch of a Feasta document, The Three Crises: Oil Depletion, Climate Change and International Debt. This proposes the establishment of an international organisation to limit coal production and to allocate the remaining oil and gas supplies on a fair basis between the peoples of the world.

"We need to take action now because high oil and gas prices threaten to collapse the world economy and this would do serious damage to both energy producers and consumers" Douthwaite said.

"Accordingly, Feasta is proposing that the energy-importing countries set up a fossil energy buyers' cartel to negotiate with OPEC, the oil and gas producers' cartel, and with the coal producing countries. The buyers' cartel would set a fair, stable price with the producers for their output which would compensate them for restricting their production and enable them to afford to make their reserves last longer. It would then distribute the fossil fuels it had bought amongst the consumers in a way which ensured that everyone ­ not only the rich - got a share."

The distribution system Feasta suggests ties in with Contraction and Convergence, the leading proposal for allocating the rights to emit greenhouse gases in the post Kyoto Protocol period after 2012. This involves the annual (or more frequent) distribution of permits giving the right to emit a certain amount of the main greenhouse gas, carbon dioxide, to everyone on the planet.

"People would sell their emissions permits to a bank when they got them, just as if they were a foreign currency," Douthwaite said. The banks would then sell the permits on to fossil energy distribution companies which would pay the fuel producers the price set by the cartel and also hand over sufficient permits to cover the amount of CO2 that would be released when the fuel was used.

An international inspectorate would check that this was done. The system would mean that everyone in the world got an income from selling their permits to compensate them for having to pay higher prices for every product made with fossil energy.

Douthwaite added that, if the fossil energy buyers' cartel was set up now rather than waiting until after 2012, it would immediately make the world economy much more stable because it would remove the risk of high energy prices causing a depression. Moreover, by preventing coal production increasing, it would be a major step towards solving the climate crisis.

"Above all, the cartel would ensure that the poorer peoples of the world are not denied all the benefits of fossil energy use. They would get an income which would otherwise have been a temporary windfall gain for the fossil energy producing countries which the latter would have been unable to spend and which would have caused a global recession. This way, the money paid to poor countries for their permits will go straight back to the industrial countries from which it came to buy export goods."

Support for the Feasta proposal has already come from two British organisations attending the climate event, the New Economics Foundation and the developers of the Contraction and Convergence approach, the Global Commons Institute.

"Many people at this conference believe that the world community is responding to the climate crisis much too slowly and that we should not wait until 2012 before doing anything more" Douthwaite said. "The Feasta proposal provides an ' everyone' s a winner' way in which we can respond now."

The full text of the Feasta proposal, The Three Crises: Oil Prices, Climate Change and International Debt, can be downloaded from http://www.feasta.org/documents/energy/three_crises.pdf (PDF document, 416K)

Note to Editors:

Feasta (the word means 'in the future' in Irish) is an international network of people interested in establishing the characteristics of a truly sustainable global economy. It has members in Sweden, Germany, Austria, the Czech Republic, Slovakia, Canada, South Africa, the United States, India, Australia and New Zealand. Based in Dublin, its English title is the Foundation for the Economics of Sustainability.

Further information on oil and gas depletion can be found at: http://www.feasta.org/documents/energylinks/energylinks.htm

PDF version

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