Why Oil commission fails to deliver route to oil independency

Last week, the commission on oil dependency, tasked with charting Sweden’s way out of dependency, issued its report. The Swedish Parliament and public sector is to review the proposals for decision after the elections in September. Disappointingly, the report fails to address the heart of the issue - dependency and management of risk for societal collapse - instead it chooses to concentrate on technical solutions for energy supply. The commission’s failures illustrate the magnitude and breadth of the challenges facing the western world and the lack of capacity of the present political and scientific bodies to address it.

Many were overjoyed when Sweden announced its intentions to walk along the road to oil independence. And on the face of it, a list of suggestions for stimulating alternative energy sources is a useful result. However, the report’s fundamental flaw is that is does not address the risks involved in Sweden’s dependence on oil for the provision of a standard of living for its people. The report spends less than one page on this aspect. On the other hand, it does identify that of the four areas of operation, transport, agriculture, industry and housing it is only the transport and agriculture sector where no alternative is available. Independence, to the commission, is not the same as zero consumption. Independence means there are alternative, renewable sources available.

In fact, according to the report, Sweden is not actually at any risk from oil depletion. The authors take pains to point out that the reason for the commission’s work is to fulfill Sweden’s climate obligations. They state their belief that neither peaking of oil production nor spiraling oil prices presents any risk to the transport system and thereby hardship to the economy or the Swedish people.

Although not mentioned in the report, this is actually the view of the Swedish energy authority. Their recent report sees no risk in bottlenecks in refining capacity, political unrest, peaking of production or failure to find new reserves.

This means that the oil commission has not addressed the issue of how to manage oil dependency. They reduced the problem to “what to put in the fuel tank”. This is quite a leap of faith. The transition will require massive investment. If oil supplies do fail to keep up with demand, the resulting slowdown of economic growth, reduction of taxes etc would mean the substitutes the commission believes can be found will lack financing.

The commission also takes a leap of faith concerning the time factor, which their report does not address. Take the most ambitious part of their report: transport. Consider they have a window of fourteen years to stimulate the equivalent of 50% substitution of biofuels in the Swedish vehicle park based on today’s consumption. (Some degree of this will be achieved by efficiency savings.) The proposals after debate and analysis will be enacted in next year’s public sector budget to take effect first in 2008. That leaves just twelve years. Trends are going in the opposite direction: 5% increase in car sales, 9% increase in trucks and medium size trucks are up 17% just this year. The recent Hirsch report shows clearly how only a crash program can achieve the level of impact required.

The commission assumes technology can simply replace and expand current levels of energy intensity to promote economic growth. They call themselves technology optimists, meaning that by putting in appropriate measures, technological development and spread will be stimulated enough to provide a means for both economic growth and energy supply.

These assumptions are also seriously flawed. Let us take the first one: that new technology can supply the equivalent of current levels of energy intensity. This is an untested assumption, and a dangerous one. Technology failing to deliver will leave Swedes living in a high energy dependant society with nothing to fuel their economy or even energy to power agriculture.

Secondly, just because a technology performs its task adequately does not mean it is a guaranteed commercial success. Technical performance does not mean commercial success, it is merely a prerequisite. So, even if the Government’s stimulation packages result in new wonderful technology, there is no guarantee of commercial success. Especially as most European nations could not produce enough biomass to fuel even public transport.

Thirdly, energy-saving technology has historically resulted in increased energy use. (The Jeavons paradox.) For example, homes are more energy efficient today, but use more total energy as they are larger.

Interestingly, of the packages suggested for government intervention, (excluding research, which has an impact in a longer time frame,) three of five are directed at the vehicle industry. In presenting his report, the Prime Minister underlined the importance of the vehicle industry as Sweden has the highest percentage employment in the industry of all European nations.

Therefore, the proposals for technological development are biased towards subsidizing and stimulating the vehicle industry. The transport system using personal vehicles is not in question, the commission’s aim being to preserve the industry.

It is far from clear that any European country apart from Sweden has enough biomass to produce fuel to bring about and drive this transformation. And it is far from clear that it is even possible to support growth of transport in Sweden. But even if it were possible, a sustainable non-oil using society cannot support a large vehicle production industry or even entertain the idea of a society on the car and lorry.

The path suggested by the oil commission then, is extremely risky. A report from The Royal Swedish Academy of Agriculture and Forestry analysed and compared two scenarios, one technology optimism, the strategy preferred by the commission without question , and the other a crash program to reduce energy intensity levels. The report asks what the consequences would be if each strategy were to be wrong. If technology optimism fails, millions of people would be left without a way to clothe and feed themselves as the cheap energy they relied on no longer is available. If the low energy option fails, you have a society without economic development , but at least with food, clothing and housing and social cohesion. The commission, if they have read this report, seem to have ignored its conclusions.

The commission’s results illustrate that the problem of a societal infrastructure driven by cheap energy is a multi-layered problem and requires much work from many different angles until actionable insights can be produced.

Since December when they convened, there has been a round of construction of roads, large shopping centers around cities and closure of local shops. Sweden is becoming more oil dependant by the day.

Like large corporations that realize they must break themselves up before the competition does, nations must decide their strategies. Transition to low energy intensity before they are forced to, or place their faith in yet-to-be-realised technology. Sadly, many believed Sweden was leading the way. In reality, it is clinging to an outdated concept of societal structure based on mass transport.