Fossil fuels are here to stay, says expert

Gordon Jaremko
CanWest News Service
Monday, October 17, 2005

Doom-and-gloom forecasts for gas, coal and oil are wrong, says SFU prof in a new book

EDMONTON -- Reports of the death of fossil fuels are greatly exaggerated, a prominent Vancouver scholar and public servant has concluded after a research odyssey burned off his preconceptions and academic training about energy.

"They call me the fossil fool now," Mark Jaccard joked recently between lectures he was giving in Edmonton.

But the Simon Fraser University professor and former chief executive officer of the British Columbia Utilities Commission was only half-kidding.

Cambridge University Press in England will this fall publish a book by Jaccard that breaks away from a recent gush of literature claiming current supply scares, price spikes and environmental resistance are the death rattles of oil, natural gas and coal. The volume will be titled Sustainable Fossil Fuels: The Unusual Suspect in the Quest for Clean and Enduring Energy.

It has been assumed for decades societies will gradually switch to renewable energy forms and wean themselves off oil, gas, coal and atomic power, Jaccard said.

But he concluded the assumptions he was taught were wrong. His forthcoming book forecasts that oil, gas and coal will still satisfy 58 per cent of world energy needs in the year 2100.

That market share will be down from today's 85 per cent but still require high production because total global consumption of all energy forms will grow as developing countries strive for North American-level living standards.

That includes China, whose seemingly endless industrial and transportation needs will see it battle the United States and other trading partners for investment opportunities in the Canadian oilsands. China now buys most of its imported oil from the Middle East, Indonesia and Africa. It is also expanding its presence in central Asia, a rapidly growing energy producing region, as well as South America.

Heating, cooking, transportation and electric power are bound to become steadily more expensive, Jaccard said. Costlier sources of fossil fuels will be tapped. Producers and consumers alike will face stricter environmental standards. Expensive alternatives such as wind and solar power will spread. A revival of atomic power awaits regions with the greatest need for new supplies.

But obtaining energy to maintain current living standards, and support new services and gadgets requiring energy, will not bankrupt North American consumers, Jaccard predicted.

By the end of this century energy will burn up about eight per cent of family budgets, he calculated. That will be up from today's six per cent but still barely half the 16 to 20 per cent of Canadian and American household money, work and time that went into gathering and preparing fuel and tending primitive appliances in 1900, Jaccard said.

Periodic cost increases above the long-range average trends are built into the global energy market and play a role in stimulating economic evolution, he suggested.

Current steep oil prices, for instance, are part of a natural trend to replace dwindling traditional supplies from conventional wells with costlier new sources such as Alberta's oilsands.

"Prices will jump around," Jaccard said. But governments can help make energy changes easier by introducing policies that help markets adapt to changing needs and technologies, he added.

For example, clear, long-range emissions-reduction targets should be set by climate change policy makers so industry can engineer new projects to make steady improvements, he said.

He urged Canada to try a system of "niche market regulation'' used in California. The state stimulated cuts in auto emissions and helped spawn hybrid electric and gasoline cars by requiring manufacturers to make small fractions of their fleets comply with low- to zero-pollution targets, Jaccard said.

CALCULATING THE TRUE COST OF ENERGY PRODUCTION

It takes energy to make energy -- and a lot of it -- in the northern Alberta oil sands.

Bitumen projects will burn 1.01 billion cubic feet of natural gas a day by late 2006, the National Energy Board says in a new forecast. That will be a 40-per-cent increase from 2004 and about twice as much gas as all the homes in Alberta burn.

The growth in gas consumption roughly matches the pace of increases in oilsands output, which is forecast to hit 1.2 million barrels per day by late 2006.

The consumption growth rate is expected to moderate as new projects adopt emerging methods of cutting their use of gas -- or making their own fuel -- for heat-driven bitumen extraction systems, synthetic-oil upgrading and power generation.

But energy will remain a big oilsands expense. FirstEnergy Capital Corp. forecasts that as production grows to two million barrels daily by 2010, annual operating costs will more than double to about $10 billion from $4 billion in 2004 with increasingly expensive gas driving much of the rise.

The Alberta government will pay a share of the tab. Oilsands royalties are collected on the net value of production to the industry, after subtracting expenses.

Ran with fact box "Calculating the True Cost of Energy Production", which has been appended to the end of the story.

© The Vancouver Sun 2005