The world is faced with a looming oil supply crunch that will require the United States to tap into all available energy sources and reduce its CO2 emissions, according to a draft report by the National Petroleum Council, an advisory body to the US government.
The US must moderate its growing demand for energy, diversify its energy sources and cut CO2 emissions if it is to meet the global energy challenge, according to the draft NPC report, “Facing the hard truths about energy“.
The draft report was prepared under the leadership of former ExxonMobil chief executive Lee R. Raymond and presented to US Energy Secretary Samuel Bodman on 18 July. A final version is due for adoption in September.
The report is remarkable because it breaks with the formerly widely-held view in the US that technological advances and new discoveries would make oil a reliable source of energy for the foreseeable future. It comes only days after the International Energy Agency issued a similar warning, predicting an oil supply crunch in five years (EURACTIV 10/07/07).
“The world is not running out of energy resources”, the report states. “But there are accumulating risks to continuing expansion of oil and natural gas production from the conventional sources relied upon historically. These risks create significant challenges to meeting projected energy demand.”
To tackle these risks, the NPC recommends five “core strategies” to “assist markets in meeting the energy challenges to 2030 and beyond”. These include:
- Moderating demand growth by “increasing efficiency in transportation, residential, commercial and industrial uses”;
- Expand and diversify energy production by tapping into ”all available economic energy sources, including coal, nuclear, renewables, and unconventional oil and natural gas” such as extra-heavy oil and bitumen;
- Integrating energy in all other related policy areas including trade, economic, environmental, security and foreign policy;
- Boosting R&D efforts to create long-term opportunities;
- Reducing emissions of global warming gases “including the establishment of a transparent, predictable, economy-wide cost for CO2” and a regulatory framework for carbon sequestration and storage.
However, the report adds that these strategies will only cut US dependency on imported oil by one third by 2030. Analysts at Goldman Sachs recently predicted that oil prices could reach $95 a barrel by the end of the year.
The recommendations are similar to measures agreed by EU leaders in March based on an ‘energy and climate change package’ presented by the European Commission earlier in the year (see EURACTIV LinksDossier).