Australia already on the ‘downside’ of Peak Oil
Australia has already peaked as an oil producer, MGSM Professor John Mathews said today. But the continued emphasis on fossil fuels – attempts at discovery and further infrastructure investment – mean that Australian companies are missing out on important business opportunities in renewable energies and biofuels.
Professor Mathews was speaking at the inaugural session of the Macquarie Forum, a series of public lectures to be given by Macquarie University academics from the Management and Law schools over the next 20 weeks, in Sydney’s CBD. The series is sponsored by BRW magazine.
Professor Mathews drew attention to the disastrous state of Australia’s balance of payments, with oil imports now costing $10 billion per year and accounting for no less than 60 percent of Australia’s BoP deficit.
The plunging deficit is driven not just by oil imports, but by dwindling domestic production, which has been falling now for seven years.
Seen in a longer time frame, Professor Mathews stated that the rise in imports and the falling exports of oil is a direct result of the ‘peaking’ of Australia’s oil supplies – an event that happened definitively in the year 2000.
Professor Mathews drew the implication from this that Australia’s oil producers, led by BHP-Billiton, Woodside, and Santos, together with foreign-owned Exxon and Chevron, are not going to solve Australia’s fossil fuel dependency crisis, and that the deficit will continue to grow until alternative fuels and sources of energy are allowed to come on stream.
Professor Mathews pointed to the view widely held in other countries that renewable sources of energy promise to be the biggest industry of the 21st century, eclipsing oil and fossil fuel-based systems that had their day in the 20th century. He pointed to numerous opportunities for Australian business, in bioethanol, in biodiesel and in second generation cellulosic ethanol and biomass, which are not being developed fast enough through lack of federal government leadership.
Professor Mathews said that Australians are being turned into ‘fossil fools’ by the lack of any consistent national policy in the area of renewables.
The co-presenter of this Forum was Professor Michael I. Jeffery QC, Director of the Centre for Environmental Law in the Division of Law, Macquarie University.
With very few exceptions, such as the recent remarks by International Energy Agency (IEA) head Claude Mandil, commentators on the world’s energy issues have yet to recognize the enormous contribution that biofuels producers from the South could make to solving the world’s greenhouse gas emission problems and problems to do with the peaking of oil supplies. Once the equation between biofuels and high-cost, land-intensive cultivation in the North is broken, and a quite different scenario involving production in the South is adopted, then the possibilities are dramatically changed. The argument of this paper is that a transition to substitution of 20 percent of OECD gasoline needs by 2020 could be met from the South by creating the equivalent of 18 Brazils over the course of the next decade. Such an enormous transition will not occur by itself, or through the operation of market forces alone. It needs an institutional framework, one that guarantees for the countries of the North regular supplies of biofuels produced in a responsible manner, and guarantees for the countries of the South open markets for the biofuels produced. The OECD is in the best position to bring about such an arrangement, through taking the initiative of offering developing countries a ‘Biopact’ between North and South, thereby creating for the first time a global market for biofuels. The launch of an International Biofuels Forum under the auspices of the UN in early 2007 is a step towards the creation of such an international framework where North-South issues on biofuels may be fruitfully addressed.-BA