Belfast Telegraph

The message is clear ... we need to conserve our energy

By Hamish McRae

So Opec was unable to agree an increase in production quotas.

That will not stop some of its members, notably Saudi Arabia, from pumping more if they want to, for quotas are more honoured in the breach than the observance: output is already running a couple of million barrels a day higher than specified.

Some facts. Total energy demand rose by 5.6% last year, the sharpest rise since 1973. Oil remains the largest single form of primary energy, with 33.6% of the total, but that proportion has been falling steadily for more than a decade.

Coal is the next, with 29.6%, its highest share since 1970, with China using nearly half the world's total of coal output.

China has now become the world's largest energy consumer, with 20.3% of the total, against 19% for the US. And Russia is for the second year running the world's largest oil producer, with nearly 13% of global production, against 12% for Saudi Arabia. This data comes from the latest Statistical Review of World Energy, published each year by BP. The hard numbers tell stories that are compelling. Here are half a dozen that strike me as most important.

The first is that oil is likely to remain reasonably expensive for the foreseeable future. Oil is a finite resource, with lower reserves than gas or especially coal, and demand for energy will continue to climb.

It is hard to see anything other than relentless growth in energy demand from the large emerging nations. If that is right prices may fall back a little but there must be a solid floor to oil prices, supported by this demand.

The second thing is the importance of gas. It is the fastest-rising of the three fossil fuels, with consumption up 7.4% last year. It may not be as convenient as oil. You cannot use it for aircraft and if you want to ship it around you either have to build a pipeline or turn it into liquid form. But that is happening, with more than 30% of world gas trade now in liquefied natural gas.

Thought number three is the rising importance of Russian oil. A decade ago Russia produced only about two thirds of the output of Saudi Arabia. It passed it in 2009 for the first time and is now increasing its lead. It is also the second-largest gas producer, with 18.4% of output, against 19.3% from the US. That puts Russia in a powerful position.

The next point is the way different regions use different types of fossil fuel. Asia is dependent on coal, using two thirds of the world's total, while as you might expect the Middle East uses very little of it. Since Asia is becoming more and more important as a user of energy, coal will continue to be tremendously important.

Flowing on from that, nuclear power, hydro-power and renewables are relatively unimportant in the overall mix. Hydro-power is really important only in Latin America.

Renewables are growing fast. They have grown three-fold over the past decade but still make up only 1.8% of the world's primary energy.

Finally, there has to be a greater effort at conservation. Oil supplies may be tight but there are the two other fossil fuels in reasonable abundance, gas and coal, and these will drive the world economy for some time yet. But if the burden on the planet is to be contained, conservation will have to play a greater role.

The UK has been reasonably active in the drive for renewables, but what we do is not material to the world mix. Germany is more important and we know that it will have to rely more on coal and gas, given the decision to abandon nuclear power. France has a huge nuclear programme but despite that it still consumes more oil than the UK.

There is evidence that price mechanisms will reduce energy use more effectively than regulation. So maybe the big message from the BP study is not that we should promote renewables but rather that we should promote conservation. Once a council is up and running ministers should have no hand in the appointment of its members.

The UK has been active in the drive for renewables, but what we do is not material to the world mix


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