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It is reported that Willie Walsh will, on behalf of the IATA will promise to cut the airline industry’s emissions by 50% over 2005 levels, by 2050. It is further reported that the airline industry is taking such a pledge in order to sidestep what they expect to happen to them otherwise. Which is raucous protest by the rallied (and ever swelling masses) of concerned citizens, and censure from the soon-to-be-assembled set of speakers due in to Copenhagen in 76 days time. In effect, Willie has realised that the price the airlines must eventually pay to be allowed to continue trading is on the same sliding scale as that used to calculate passenger tickets. Leave it until later before you commit on the decision, and for the same outcome you just get charged more and with less choice.

Have the airlines finally got on board with the programme?

The choice of 2005 as the baseline year is the first red flag that all might not be “final and best effort” down at the IATA HQ. 2005 was one of the peak year for airline emissions this decade - prior to the recession-led slump in airline travel that has resulted in a fairly dramatic drop in emissions from the sector during the 2008-2009 period, and interestingly also before the run up to $147 p/bl oil prices. During the recession airlines have parked unneeded aircraft left and right, mothballing planes that nobody could afford to fly on any more. They have therefore chosen for themselves a baseline year that allows them plenty of scope for growth in airline movements and passenger numbers compared to now.

The airlines have also calculated that their efforts to cut emissions will result in higher costs being passed onto travellers. So it should - if the idea is to dissuade passengers from flying and encourage them to consider alternative means of transport, for example a national high speed rail system. However early reports indicate that the IATA estimates that the incremental cost will be around the £40 to £50 mark for a long haul trip. Interestingly this is the same price range for a charge applied to a would-be traveller by one of the flight-offset companies. I’ve written before here that offsetting doesn’t really make a lot of difference, and also that a £40-£50 charge on top of the cost of a long haul flight isn’t likely to make that much difference at all to a potential traveller’s decision as to whether to fly or not. For short-haul flights, the ones that are actually more likely to be unnecessary (you can catch a train from London to Paris but you can’t from London to Sydney) the incremental cost is likely to under £10, possibly under £5. Certainly not enough incremental cost to have anyone caring about whether they fly to Majorca on holiday or Paris for a meeting. After all, Ryan Air and the like charge that much just to allow you to breath inside the aircraft.

It will also be significant what percentage of the industry’s planned cuts come from carbon offsets, from reduced capacity, from fleet efficiencies, or from biofuels. The latter is particularly worrying - powering all the world’s aircraft with biofuels will use so much of the world’s arable land we won’t even have enough left spare to grow the peanuts to give to all the passengers (Oh…I forgot you don’t get free peanuts anymore anyway).

What would be nice is if the industry recognised that it is not just in the flight business, it is in the communications business. During the recession business travellers stayed out of the skies in sufficient numbers that the IATA Chairman stated recently that “teleconferencing has become a competitor to business travel via flying”. The airline industry needs to embrace this trend, not continue to fight against it. Having fronted Willie Walsh up to speak on their behalf, they perhaps now might consider the merits of joining forces with the growing teleconferencing industry to examine how communications hubs can best be developed to serve the business executive. Heathrow runway and passenger terminal expansion plans can be torn up now and they can start immediately on something like this instead.

Embracing “game changers” like teleconferencing might also help the airlines deal with the ever rising cost of petroleum based feedstocks for airline fuel. Willie Walsh himself is not stranger to the impact of high oil prices on airline viability and profitability, with BA shedding pounds and staff as oil climbed to $147 p/bl during 2008. Oil prices are not coming down to sub-$70 in the longer term. That too will represent a serious challenge to long term airline viability.

The IATA’s announcement is a welcome one. It ought not however to be seen as the airline industry rolling over sweetly and wagging its tail in a happy-go-lucky manner as climate campaigners coo and rub its stomach. The devil is in the detail regarding how the industry will achieve its promised cuts.

The debate, if you can call it that, in the US over health care system reform is a truly bizarre spectacle, and one that is an abject lesson in how to distract an argument away from the core subject being discussed.

The indisputable fact is that approximately 40,000,000 people in the US cannot afford access to basic health care services. By “basic” I refer not to agonising decision over whether to have nipple enhancement or not while you’re in to get your breasts done. No…by ‘basic’ I mean services like non cosmetic dental care, A&E care, blood pressure and cholesterol diagnosis and treatment, diabetes diagnosis and treatment, natal care, and services to repair all the wear and tear experienced during the average first 18 years of life. The bottom line here is that the current system, the status quo, is structured such that 40 million mothers, fathers, grandparents, sons and daughters have zero ability to pay for services to fix health problems that are chronically painful and perhaps life threatening. With no “health care net” available either “no ability to pay” translates into “zero access”.

To reiterate what is an important and fundamental point. The current population of the UK is approximately 60 million people. If 40 million people in the UK were similarly effectively blocked from access to health care then two thirds of the population could not go to the dentist or doctor ever. The current population of Australia is 21 million - so if you deported all the doctors, nurses and dentists from Australia and closed all the hospitals and clinics you’d still only be halfway to denying 40 million people basic health care services.

Meanwhile, for the other 260 million or so Americans who do have access to health care, services and treatments are eye poppingly expensive. However, be careful your eye doesn’t pop too far out as it may not covered by the health insurance scheme provided by your employer - which is shelling out an estimated US$12,000 per employee per annum to pay for that insurance (providing insurance for the employee and up to 3 dependants). That’s US$12,000 more that could be paid directly to the employee as wages if the employer did not structurally have to cover the health insurance costs. If you think twelve thousand bucks is chicken feed, it is worth remembering that that figure is the about the US minimum wage - though it is also worth remembering that if you were an employee actually on minimum wages, it is unlikely that your employer would also be providing health insurance making you perhaps one of those 40 million people unfamiliar with the inside of a doctor’s waiting room.

This author speaks from experience with regards to the platinum coated pricing schemes of US health care as we had a son born in New York state during the family’s four year tenure in the USA. It is worth providing a short summary of those costs to provide perspective:
- total time mother/son spent in a hospital: 12 hours (the minimum time before you’re allowed to check out after giving birth)
- total time doctor spent in room: 60 seconds (to sign a form)
- nursing staff: 1 “in and out” with the majority of nursing provided by self funded midwife
- drugs and other interventions: zero (yes you read that right; no drugs, no interventions)
- use of “machines that bleep”: zero
- use of ambulance or similar: zero

In short - you would struggle to describe a birth experience that required less support from neo-natal services other than a home birth.

Total cost: just shy of US$8000; with the employer provided insurance paying for 90% and leaving us with a 10% or US$800 deductible. Just what was worth eight thousand dollars of medical treatment remains a mystery to this day.

Meanwhile the US is ranked by the WHO in almost all indicators, except for cancer survival rates, far below Oman, Morroco and Colombia, as well as the UK, France, Germany (just keep listing other major European and Scandinavian countries here), and Australia. The USA ranks 37th.

To summarise: the US has a health care system today that under-delivers against important key performance indicators (infant mortality, average life span etc), is eye wateringly expensive for those treatments it does provide, and leaves 40,000,000 people with zero health care. Oh, and by the way the status quo is projected to bankrupt the country entirely as it will fail to scale further as the populations increases and ages.

The debate therefore ought to be a simple one - does the US maintain this status quo, or does it seek to reform health care in such a way as to drastically improve the USA’s WHO rankings , provide basic services universally, and reduce the overall costs to prevent budgetary collapse.

However that isn’t the debate that is taking place. The debate that is taking place is over whether the provision of universal health care is “socialist” (translation: pinko subversise communist), and whether fantastical death panels will rule over the worth of Grandma’s life (Sarah Palin says she can see the Death Panels from her medicine cabinet). Take these two distracting and emotive topics, add a little dash of Glenn Beck to the aforementioned Salt of Palin and you’ve just hijacked what was a needed and sensible debate, and you’ve turned it instead into a roiling mess of argument that churns onward and achieves nothing. Or more accurately, it achieves the maintenance of the status quo.

Which brings us naturally to the topic of peak oil (this as my old friend George Watt would say, is a “neat little seque”). The connection here is twofold and less tenuous than you might think. Firstly, oil provides the energy that enables modern health care. Secondly, and more directly relevant to the main point here is that the debate over the timing of peak oil has been allowed to overshadow the necessary debate over the future of (petroleum based) energy prices.

The truth of the matter is that we will only definitively know when global oil supplies have peaked once we’re well down the slope of decline. Far enough down perhaps to have put behind us a few (more) instances of supply having insufficient scope of growth to meet real demand. There is much evidence to suggest that we’re already basically at the peak point, or just beyond. However arguing this point tends to just around in circles. It is very easy for peak-deniers to point to the status quo and argue that “Providers report significant reserves as they have in the past. They didn’t stop pumping last year. So they won’t stop pumping this year. And anyway, we can just drill a few more holes in the Alaskan tundra if we need more.” Such drill-baby-drill responses are the peak-oil equivalent of the pinko-communist-death-panel responses in the US healthcare debate. The main purpose, intentional or otherwise, is to maintain the direction and rate of the status quo and delay or prevent structural change and improvement.

The real discussion that needs to be taking place concerning oil is whether cheap oil will continue to be available. “Cheap” is of course a relative term. Ignoring for a moment that (not insignificant) fact of the infamous US$147 p/bl price peak, by “cheap” means “the median price of oil over the period during which it has fuelled the development and growth of the current economic model.” Furthermore, given that the maintenance of the social/economic/world-balance-of-power status quo relies on the oil price remaining somewhat near that median price, what are the implications for the economic decisions that are made countless times every day, that are based on the price of oil?

The outlook is such that it is almost certain, on balance, that anything but the status quo will result. For example, OPEC has for some time now called for a price range of between US$70 and US$80 p/bl as being the minimum that can support the necessary infrastructure and exploration investments required to maintain supply levels. Shell CEO Jeroen van der Veer stated in June of this year that “(All this) points to new price spikes and volatility further down the road.” The same Kuala Lumpur hosted Asian Oil and Gas conference heard BP CEO Tony Hayward state that a target price of US$60 to $80 p/bl is also in BP’s sights in order to pay for required investments.

A per barrel target price of between US$70 and $80 p/bl is a very interesting one for a number of reasons.

For a start, it represents the upward slope of prices for petroleum and oil-derived products (fertilizer and plastics feed stocks) that are felt downstream by consumers and industry. The Wall Street Journal reports that petroleum prices as a percentage of disposable income more than doubled between 1981 and 2008. This is enough to change consumer behaviour, and certainly enough to alter the balance of cost calculations for heavily oil dependent industries.

Secondly, it is worth looking at the 2006 study performed by the US Department of Commerce titled “Macroeconomic and Industrial Effects Of Higher Oil and Natural Gas Prices”. The D.O.C. study was designed to predict the effects on the US economy (and by extrapolation all other developed economies) of an oil price that is maintained in the range of US$70.00 to $80 p/bl for two years or more. Not surprisingly, the study found depressive effects on GDP, industrial output, consumer disposable income levels and more. All other things being equal such a price would also result in an additional 500,000 people becoming unemployed due to cross sector job losses, compared to an oil price range in the US$50 to $60 p/bl range.

Those resulting changes occur for a very simple reason: as oil prices increase (and therefore the prices of products derived directly and indirectly from oil increase) the decisions made by individuals whether acting as individual consumers or in their capacity as business decision makers changes too. Spend less, invest elsewhere, carry less employees, locate and manufacture elsewhere. Scaling upwards to the strategic and structural as oil prices continue to go upward from US70+ we eventually reach a point where airlines downsize and go out of business en masse, and where commuters desert their SUVs and catch a train or a bus instead. Jeff Rubin, former Chief Economist of CIBC Worldmarkets is quoted as saying “I think we’ll see a return to triple digit prices (per barrel oil prices) very early into an economic recovery”. His book titled “Why Your World is About to Get a Whole Lot Smaller: What the Price of Oil Means for the Way We Live” is worth a read as a basic outline of his thinking.

This therefore is the discussion we ought to be having - how do we achieve a soft landing for society as oil prices increase, and the associated economic decisions are reworked? Sure, there are clearly some, like Mr. Rubin who are sounding the drum. However the majority of individual and corporate decision makers continue with the assumption that energy prices will remain roughly in line with those enjoyed during the past 50 years, and that therefore the same structural economic system will continue. All the rest have either not noticed at all, or have been distracted by the circular debate regarding peak oil.

All of which is a segue if I ever seen one. And a sick one at that.

At school, I was taught that “mankind consumes two types of resources; renewable resources and non renewable resources”. Vague memories come to me of that being a core aspect of the early stages of either the economics curriculum or that of what was fuzzily called “Social Sciences”. The latter subject embraced everything from geography to politics to society, and if memory serves me was led for a while by one of the more interesting teachers to have chalked the blackboards during my formative years. I seem to recall that a number of prepubescent young ladies found the subject of renewable anything utterly engrossing as long as it was explained by a certain foppishly haired Social Science teacher.

Anywhere, there you have it, we have a group of important people (mankind, one presumes the woman were off doing things like cooking the latest Margaret Fulton pavlova recipe) doing the important things they are destined to do (consume stuff) while the world sits there doing exactly what it ought to do (provide resources for the consuming of). Furthermore, the world either provided all those resources as a one-off (gold, diamonds, hit singles by The Vapors), or in the form of an almost magical cut-and-come-again manner (trees, water, foodstuffs, The Magic Pudding. Thus enlightened a classroom full of eager eyed students were that little bit readier to be sent out to play their parts in the great circle of consumption and commerce that is modern life.

Except for one little oddity: oil.

Oil, which logic dictates ought to be classified as a non-renewable resource has thus far been treated as a renewable. Oil supplies have truly been treated as though they are the Magic Pudding energy supply. However, given that the source of oil is what you get when you compost prehistoric algal blooms for a really long time, under conditions of heat and pressure it stands to reason that oil must be a non-renewable resource. Finite algae = finite algal bloom derived product. QED.

Meanwhile, oil literally powers the engines of commerce, while being the feedstock for diverse products from fertilisers to plastics. The history of the 20th century, and the conflicts and problems of the 21st could not more intimately connected with the history and realities of oil production then they are. We are literally living in an oil based society.

Oil’s status as a non-renewable resource, combined with its unique role as the foundation for society’s structure and everyday actions means that we must ensure that we have a plan for the eventual decline of supply. Now if that eventual decline was a long time off, say 100+ years from now, then we would still have enough breathing space to engineer a switch away from using this resource the way we do today (notwithstanding the fact of oil’s role as principle AGHG pollutant - but climate change is a whole other issue). But if a material decline in supply levels were to be only a short time away, say between 10 and 30 years, then good governance would dictate that humanity ought to be applying some of that unique ability to forward plan that is said to differentiate Homo Sapiens from the rest of the animal kingdom. In short, the urgency with which we take action to seek alternatives to oil ought to dictated by how long it is until oil supplies materially decline.

Back in the 1950’s the “science” of calculating just when an individual oil producing field’s production rate will begin to decline was formulated by M. King Hubbert. Hubbert’s seminal work resulted in the concept of what has come to known as “Hubbert’s Peak” - referring to the point at which an oil field’s production peaks and then begins to decline. I’ve written at length on the science and history of Hubbert’s peak here, and here (latter link opens a PDF which provides an introduction to the concept of peak oil). However the fact that we might be approaching the decline in worldwide production capacity in the near term rather than the long term has continued to be treated as a fringe theory by much of the mainstream, and certainly by the markets.

However the Chairman of the International Energy Agency Dr Fatih Birol is an individual one would hardly label as “fringe” or as being an individual prone to conspiracy theories. Therefore his statements as published in UK newspaper The Indepedent are of the “sit up a little straighter and pay attention” variety.

Dr. Birol is quoted as saying “One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for that day. The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously,”

How seriously?

The IEA Chairman’s statements come on the back of the agency updating its calculations regarding the health of known oil fields, their remaining capacity, and the potential for there to be significant reserves yet to be found. The IEA recently updated its estimate of the rate of decline for production from 3.7% per year to 6.7% decline per year. That means two things; firstly that the rate of decline is increasing, which would tend to indicate that we are at or near the peak point already (maybe just before, maybe just after the peak). And secondly it means that for oil production capacity to remain steady, we need to find new supplies equal to the capacity being removed from the system through the very natural phenomena of individual oil field decline - at a rate of 6.7% per year. Meanwhile, the global demand for oil holds steady and is forecast to grow as emerging economies such as India and China ramp up their needs.

Business as usual just doesn’t seem to make a lot of sense in such circumstances.

Which is why it is both refreshing to see Dr. Birol’s statements being made in the mainstream press. It is also very concerning that 24 hours later it was all as if nothing ever happened. Which perhaps just goes to show that Homo Sapiens might not be that good at forward planning after all. I am betting that there is not a single organisation I will speak to in the coming 12 months that will have flagged this issue as being one that is fundamental to the question of its business strategy, looking forward to the decades ahead. I await the pleasant surprise of a contrary experience. Meanwhile, its back to the fringes of conspiracy theory. At least while there I will have the good company of Dr. Birol, Jeremy Legget, Matthew Simmons and a whole host more.

A recent tweet by Monkchips caught my eye; “good question from @tomraftery. regarding smartgrid resilience how will we defend against electro magnetic pulses?”.
Having recently written about smart grids the question of potential security risks is a good one in my view. I got to thinking that the question of whether the vendor spokespeople had anything scripted to say was interesting, and perhaps indicative in a small sample way of the lack of strategic risk analysis in the vendor community. But the really interesting question is the other one; are smart grids inherently more at risk from an EMP incident?

“Compared to what?” is the first response. Compared to the status quo of national and international grids powered by baseload and demand plants fueled mostly by fossil fuels? Compared to individual off-the-grid power generation by the likes of smal PV and wind based renewables? Smart grids and the status quo approaches rely on networked generation, so they both carry the added risk of a cascaded failure, where a failure in one part of the grid unbalances neighbouring zones. Individual power generation failures cannot cascade; all failures are local failures.

Meanwhile smart grids share the same generation methods and technologies that are used in individual off-the-grid generation. A mix of renewable generation techniques including PV, wind, wave, water, thermal tower and the like would be used, as suited to the local environmental conditions. Is such equipment especially vulnerable to EMP? If the vendors Monkchips spoke with are indicative it might be safe to say that EMP shielding is unlikely to be a current design feature on standard, commercially available installations. There is inherently more electronics distributed throughout a smart grid than in the status quo grid, therefore it is fair to say that on a component basis the equipment used in smart grids is damaged more easily by EMP.

In a smart grid, some of those electronic components will be involved in managing the flow of electricity across the grid; controlling and measuring consumption and contribution whilst maintaining a baseload current. So a failure due to EMP would not only knock out local generation in the affected area, it would also knockout the controlling grid management nodes. There is in this case the potential for cascade failure flowing out from the area directly affected by the pulse.

In reality however, the status quo grid is today national and international structure of both radial and interconnected design. Switches between network branches control the flow of electricity, dictated by spot market price fluctuations and efforts to balance the grid to baseload demands. Switch changes are made both manually and automatically. The existing danger of cascade failure was famously demonstrated in the 2003 failure of the grid in the North East of the USA. This article (http://www.newsmax.com/weyrich/emp_radiation/2008/06/25/107194.html) holds the view that the existing grid is already gravely at risk from cascade failure.

Arguably, smart grids might actually be more resilient than the existing switch grid networks in two important ways. Firstly, the modern equipment may detect an up or downstream fault faster, make a decision faster, then enact a switch change faster than current systems. The difference may only be milliseconds, however that may be the difference between cascade or otherwise. Secondly, smart grids are intended to have a more granular switching capability, though they will likely share the same suburban and rural trunk and backbone transmission as is already used today. “Lower” down the food chain from the suburb level subgrid might be street level controlling nodes and so on. The greater granularity of such control nodes may also isolate a cascade faikure within a smaller zone.

So far its a fairly even match. The generation nodes in smart grids and local off-the-grid designs is likely to be less EMP resilient than a coal fired power station. On the other hand both the smart grid and the status quo share a risk of cascade failure. The smart grid design may even be a little more resilient to cascade failure.

But there’s one more thing worth considering; that is the question of whether there is a material risk of an EMP incident anyway. An EMP incident isn’t something that is likely to occur everyday; the detonation of a nuclear weapon high in the atmosphere would do it. There are a few other ways, but all require nothing less than considerable money, skills, madness, and balls. A hostile EMP incident will either be an active of war launched by a nation state, or one of terrorism by an unallied group. There is also the possibility of friendly fire by way of an industrial accident, or the failure of one or another item of ill maintained national critical infrastructure (whether privately or publically managed).

If the EMP incident was as a result of friendly fire then it is highly unlikely that an atmospheric nuclear detonation would occur. If the attack was an act of terrorism then it is on the balance more likely that an EMP pulse could be generated locally to a generation plant or other critical element, and less likely that a nuclear bomb could be procured and exploded in an aeroplane or launched in a rocket to explode over the target company. Again, the affect would therefore be localised and unlikely to result in catastrophic cascade failure throughout the grid.

In the event that a nationwide EMP incident did occur, the country is probably at war. At that point all this discussion is perhaps interesting, but whether we have a smart grid or the status quo grid probably isn’t our biggest problem. Other than the fact of course that it is arguable that there will be more international conflict ahead of us if we continue the status quo approach, fuelled by resource shortages and social disruption resulting from the effects of climate change.

Henry David Thoreau said, “We are double-edged blades, and every time we whet our virtue the return stroke straps our vice”.

And so it is with technology and the energy supply model underlying it. What wonders the profligate use of petroleum based fuels and coal has brought to mankind over the last century. Borrowing profusely from the energy stores of the past has allowed us to break free from the limits otherwise placed on us, had we needed to continue relying solely on plant based energy sources for fuel, and animals (and human slaves) and the occasional use of wind, water and gravity for motion. Supporting as it has the major technology innovation driven macro economic cycles of the 20th century we must recognise that even our current plans (such as they are) to move to widespread use of renewables for electricity supply would not be possible without the construction and technology innovations fuelled by the petro industry.

Our current perilous state is the end result of two human failings.

Firstly, we have treated as an externality the economic and environmental cost of the pollution generated through burning coal and petro fuels. The treatment of pollution as an externality is not just a problem of human behaviour; it is clearly also a systemic failure of market fundamentals, and one that must be addressed even as we seek a way out of the current global economic unravelling.

Secondly, we have failed to plan sufficiently for the eventual and entirely logical decline in the availability of oil supplies. The extent to which we have collectively found it convenient to ignore the clarion calls regarding the peaking of oil supplies is breathtaking.

Yet here we are; facing the environmental unravelling that results from a century of spewing greenhouse gases into the atmosphere, the collapse of the market systems as a result of self deception as their true operational nature, together with the real likelihood that peak oil is a “now” not a “later”. You couldn’t plan that nexus better if you were the scriptwriter for a Hollywood disaster movie.

While the irony of our current problems should not escape us the technology that it has allowed us to develop might however provide the means for us to avoid some of the worst of the potential resulting scenarios. It may be argued that in the long term (meaning: really long term) human society needs to evolve to an entirely different model (and why not - we have seen already in human history the existence of several different models that have been effective in their day, given the needs and limits of the time). However in the short to medium term we must recognise that we cannot simply stop doing every activity that is currently performed and that in this new reality is recognised to have an unacceptably large ecological footprint. To attempt to do so would be far too disruptive of the current social order to be acceptable. Instead, we must use technology in different ways in order to provide low GHG emission alternatives to current heavy GHG emission ways of working and living.

Of all of the changes we must make, the two areas that will require technology-supported alternatives to most desperately are travel and electricity supply, and they are in fact linked.

Lets first look at travel. The four most common forms of polluting travel are (road based) vehicular, sea-borne bulk carriers, air, and rail. Which is worse is a moot point as far as progressing the discussions along in the short term, especially given the debate over the actual impact of jet propelled, high altitude flight. For simplicity’s sake it is worth assuming that they’re all bad, and they will all need to be drastically curtailed and/or re-engineered if they are to remain viable.

Sea-borne bulk carriers are the easiest to deal with, so lets get that topic out of the way first. The easiest way of avoiding pollution resulting from an activity is to not perform the activity in the first place. The vast majority of bulk carriers are either carrying crude or refined petrochemicals or derived products or coal; raw or semi refined minerals; components that are destined to used somewhere else as part of a highly distributed supply chain; or completed manufactured goods. The shipping of petro products and coal in bulk will clearly decline anyway as we remove these products as primary energy supply sources. Highly distributed and long tail supply chains look increasingly unviable when we recognise those costs that are currently treated as economic externalities, and in doing so account for those costs in the price of the resulting product and service. Already companies are beginning to re-examine their supply chains in light of GHG emissions, and work is underway to further refine the Scope 3 calculations of the GHG Protocol by the World Resource Institute in order to provide further clarity regarding the details of supply chain reporting. In a similar fashion, we can expect a reduction in long distance shipping of manufactured products, especially as the embodied footprint of such products is more commonly calculated, reported, and as a result priced in to the product. In such a scenario a locally produced product will become more desirable than an equivalent product manufactured remotely. The accounting for the pollution resulting from the fuelling of the remaining shipping movements will naturally encourage a re-examination of nuclear driven ships, and the use of wind power.

Rail meanwhile needs to be powered by either clean sources of electricity, or through acceptable bio-fuels. These same two energy sources are also required for road based vehicular transport. We must however get much smarter in our use of technology if we are to make rail transport again acceptable as a common form of mass human transport. Currently rail journeys are more often than not an exercise in frustration, uncoordinated as they are with bus services, and with the thicket of overlapping rail service providers that has resulted from privatisation of the rail network in many countries. Successfully getting from A to B via rail services is an unnecessarily complex wrestle with numerous timetables, ticketing systems, and interchanges - none of which have seen much effort to simplify. It needn’t be so. If we made the same effort toward taking the friction out of rail transport as we have to making car travel easier and more enjoyable we would go a long way toward making mass rail services far more attractive as a form of human transport. Coordinated web based services for timetables and ticketing is a start. Telecommunications based services to enable information to be readily available to travellers is also required - why can we buy a GPS mapper for a vehicle for $100 but can’t be similarly helped to navigate from one train to another or from train to bus to address. Location based services must be extended to encourage commuters out of their vehicles and onto public transport. Meanwhile, we must also look to move much of the bulk transport of goods off the roads and back onto the rails. The decline of the use of rail as a viable bulk material transport method is illogical, should be reversed, and will certainly become more attractive as road carriage costs are internalised into the economic model.

Road travel in its current form will only continue if fuelled by either acceptable bio-fuels or clean electricity. It is likely however, and perhaps desirable in the greater scheme of things if we also achieve a drastic reduction in the overall use of cars as a form of transport. It is important to recognise that we have managed to engineer into society an unnecessary reliance on vehicular travel. Urban design must be rebalanced such that the use of a car is not required for much of everyday living. It is illogical that we have decimated the economy of the local shops through the adoption of huge shopping centres for which we have no alternative but to drive to in order to use. There is much talk today by the USA’s Obama administration regarding the links between Wall Street and Main Street. The reality is that the death of Main Street (or the High Street if you’re in the UK) has more to do with this engineering out of local economic resilience as it has to do with the failures and corruption of the banking and finance markets.

Removing cars from the road will however also require us to provide technology-based alternatives to many activities. For a start, telecommuting must be made more common and far easier. This will require many changes and the provision of enabling services, not least of which will be the provision of secure broadband services to everyone. In fact, high speed communication links are perhaps the most important enabler of change if we are to at all engineer our way out of both the problems of climate change and those presented by peak oil.

And what of “clean electricity” supplies? Aside from altering the fuel stocks used for generation, away from coal and natural gas and toward renewables, the most important change we must make will be a fundamental change in the energy generation and distribution model. In order to engineer the required resilience into a smart grid system we must move from the highly centralised and concentrated generation model that we have today, and move to a highly fragmented and widely distributed micro-generation model. Such a network will have a dynamic and rich mix of renewable generation sources as well as tapping into the stored energy sources that are parked (electric) vehicles and the like. Successfully achieving a resilient and balanced power supply that supports both baseload as well as peak demands will require co-ordination of the supply and demand “nodes” as well as the grid that connects them. This co-ordination is what is meant by the term “smart grid”. Telecommunications infrastructure is again the enabler, providing the means to monitor and manage the various consumptive or contributory nodes.

That just leaves us with the little problem of air travel. Simply put, even if we develop an acceptable source of biofuels the days of mass air travel are rapidly drawing to a close. All the highly publicised experiments by various airlines in the use of biofuels are nothing more than a distraction and a con. Airline travel will be severely curtailed. Humanity may eventually get used to that - keeping in mind the fact that for all the protestations to the contrary by holiday makers and airline executives the reality is that international and domestic long distance travel is something that we have only recently managed to fall so deeply in love with. Those same airline executives as well as the forty-something holidaymaker would do well to be reminded that as recently as their own childhood humanity managed to do quite OK without racking up half a million air-miles each per annum. Again however we must face the reality of the short term, and again telecommunications must step up to meet the demands now built into our personal and business structures of behaviour. Telepresence enabled communications provides a useful alternative for the business executive, and with the right investment may even provide some acceptable alternatives to flying around the world in order to have Christmas dinner with that distant relative whom you didn’t really like all that much anyway.

Telecommunications therefore is perhaps a great saviour in many ways as we re-engineer our current personal, working and industrial models. However there is also one more role it needs to play - that of helping us to accurately account for the embodied ecological footprint of the goods and services we consume. As the embodied footprint of a product is linked to the distance that we transport it and the mode by which we transport it, location based services will increasingly be relied upon in order to accurately account for that travel. We must become far more aware than we are today of the complex shifting back and forth of products that takes place before they reach their final consumption point.

All that remains is for us to find the will to move forward. A reasonable question might also be to ask whether our various telecommunications providers have the vision and the strategy to play a role in delivering the infrastructure and services we will need from them. Lets continue to shout the demand down the phone line to them, and hope for more than confused static in return.

Sometime in the next one thousand, four hundred and fifty eight days its all going to get really ugly. There will be no single day of reckoning, but rather a wave of reckonings - somewhere around 303,824,640 of them. According to no less an authority than the CIA 303,824,640 was the USA population back in mid 2008, though there have been a few burials and births since then so perhaps this piece of intelligence, like so many others from the CIA should be taken with just a pinch of salt.

Arguably more than a few have already tipped into the realisation of just what is in store for them should the newly elected US President, Barack Hussein Obama II actually bring into reality the promise of a low carbon economy. Most however are still dazed by the spectacle of the inauguration to give it real thought. Carrying on his shoulders the hope of so many Americans (and no small number of the majority of the world’s population i.e. the rest of us) that he can steer the USA away from its socially, morally, and physically destructive ways, President Obama cocoons many from the reality of what those changes might mean for them. When they’re told, or when they find that they can’t do today what they could do yesterday, stand well clear ladies and gentleman of the spinning fan blades.

The Obama/Biden administration is the first to unequivocally state that anthropogenic global warming (AGW) is reality, and that it represents a major risk for the survival of life. While there have arguably been many missed opportunities to say more on the subject during the 2007/2008 election cycle and during the limbo days since the election it is worth quoting again from the Vice Presidential debate of 2008:

“MODERATOR: Senator (Biden), what is true and what is false about the causes (of global warming)?
BIDEN: Well, I think it is manmade. I think it’s clearly manmade. And, look, this probably explains the biggest fundamental difference between John McCain and Barack Obama and Sarah Palin and Joe Biden — Governor Palin and Joe Biden. If you don’t understand what the cause is, it’s virtually impossible to come up with a solution. We know what the cause is. The cause is manmade. That’s the cause. That’s why the polar icecap is melting.”

Obama gave further nod to the road ahead when, in his inauguration speech he said:
“And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to the suffering outside our borders, nor can we consume the world’s resources without regard to effect. For the world has changed, and we must change with it.”

On those scores the Obama/Biden ticket would have got my vote (had I been entitled to one), though in fairness to my Inner Sceptic I should hasten to add that action is what will make the difference not words. And it is that action which brings me back to my original thesis: its going to get real ugly some time during the next four years.

Of those three hundred and three odd million American people there are very few who really get what those words might mean to them and their daily lives. It is one thing to hear the words, it is another to listen to them, it is yet another thing to internalise them and absorb the implications. The challenge ahead no longer lies with convincing a nation’s leader of the reality of AGW, the challenge ahead lies in bringing the citizenry of that country along the same road. I suspect that for most, it is today somewhat akin to the cynical exercise of going to Church on Sundays. Being inspired by the rhetoric of the preacher, washing out the stains of a few sinful acts in the confessional, praying with heartfelt earnestness for the redemption of those who have lost the way on the true path…and then going right back to the same shit way of living by Sunday evening.

So sometime during the next four years, those 303,824,640 or so people are going to find that navigating the road ahead involves their participation. The problem hasn’t been solved by a newly elected President dropping one sentence into his inauguration speech. The problem won’t be solved the by Washington twiddling a knob or two on the economic and social control panels that mysteriously manages (or not) the ebbs of flows of the macro economic maelstrom. Nor will it be solved by changing a light bulb or two, turning down the thermostat a degree, and manufacturing the same old stuff in the same old way but with a nod toward any resulting device having a better energy efficiency than last year’s model.

Obama’s implementation of his campaign words will instead involve changes in the running of every day American life. And seeing as so many other countries are followers and imitators of that social and economic model a lot of other lives too. Yours. Mine. Your neighbours. Your parents and your friends. What we drive, whether we drive. Where we holiday and how we get there. What we eat, how that food is grown and where it is grown - and therefore when it is available. Where and how we design our communities and buildings. How we define success and freedom and how we reward it. What our expectations for economic and social growth are. Which businesses make sense. Which businesses need to be deliberately shut down. These are just a few of the smaller questions that we must address as we enact change.

Some of them have undoubtedly already twigged. A largish number who perhaps already have one of these plastered on the back of their Chevy Suburban. Any slick talkin’ Dem-o-crat who tries to wrestle the keys for their Chevy from their clenched fist and swap it for the electronic keyfob for a shiny new Prius (or even a Chevy Volt) is probably going to find themselves staring down the barrel of a constitutionally legal firearm. These people are going to resist with every braincell, every dollar, every decision, and perhaps even with their physical might any effort to have them change their day to day way of life.

There are to be counted also the relatively small number of people who already truly understand the personal implications of dealing with AGW. They have proactively made personal decisions, and have set themselves on a course somewhat different to the day to day path followed by mainstream. They are the Eco-Amish. They already walk. They already eat a little differently. They already holiday locally. They already teach their children that unbridled economic expansion derived from profligate consumption of fossil fuels might well be mainstream, but it is also a truly dangerous thing.

Then there are the rest of them. To quote the newly elected President - change is coming. What worries me isn’t whether the newly installed US administration says and believes those words, it is whether the everyman understands the truth of those same words. And most importantly, whether the everyman accepts the change to them that delivering on those words means.

Hang on for the ride, this is where it gets really interesting.

What a slippery and exciting ride its been during 2008 for oil prices. Just a few months ago the world was feeling dizzy from the heady fumes of $147 a barrel oil and petrol sniffing was becoming so expensive a habit it almost had the necessary exclusivity to become widespread among the rich and well heeled. Even the most loyal of Chelsea Tractor drivers began to be dazzled by the hypnotically spinning numbers at the petrol bowser as they filled their tank. “Peak oil” made it from the vocabulary of the conspiracy theorists to the business pages of the broadsheets and dire predictions were made regarding the availability and cost of fuel supplies. But just in time for Santa to refuel the sleigh, New York Crude has fallen to below $34 a barrel, lower than any time in the last four years.

The gleeful exclamations of those who continue to wish for a world awash in cheap and plentiful petroleum fuel sources can be heard even over the roar of the newly restarted four barrel Holly V8s. Not for them a future of restrained oil supply, just “business as usual”. Now if only Chrysler and GM weren’t under Congressional and Executive pressure to build girly electric cars, we could all go back to the nirvana that is a multi-tonne SUV’d future.

But is it fair to point to the current crashing of oil prices and assume that we are in fact back to the days of cheap energy? Firstly it is appropriate to recognise that OPEC is committed to a price well above the thirties, albeit they recognise that North of $140 might be good for the hip pocket in the short term, but it is globally economically unsustainable in the long term. The fundamental factors behind oil pricing are the same as any other commodity - the balance of supply and demand. Above $100 a barrel oil prices began to contribute to the economic drag that was already beginning spreading from other factors. Though OPEC made substantial noises that they would increase supply to stabilise the price the reality is that relatively little extra capacity was able to brought online, not helped by the fact that not all members of the cartel wanted to play the game as they were in it for the short term gains.

More influential were the speculators, whose trading created an additional detachment effect that further dulled OPEC’s ability to control prices through altering supply.

What of the future? OPEC’s inability to much increase supply flow actually lends support to the views of industry insiders such as Matthew Simmonds who cast doubts on the accuracy and truthfulness of the claimed remaining reserves of the Saudi (and other major worldwide) fields. The IEA continues to cast doubts on the ability for us to find further significant fields, and despite the “Drill, baby drill” bluster expressed during this year’s US election campaign, the reality is that exploration of new fields offshore of the US or in ANWR make little real difference to global supply levels.

Oil price is also a bit like a piece of elastic. Once stretched, it will never return to the same size again. Now that OPEC has seen that the world will go as far as $140+ before choking, they will not settle for a long term price of less than $50. Even they hear the warning bells ringing from the calls to decouple Western (read: USA) economic growth from Middle Eastern oil. Such efforts will take a decade or more before they are successful, but in the long term OPEC must realise that the days of taking trillions from Western pockets are drawing to a close. Best to suck out as much money while the wallet remains at all open.

OPEC is now attempting to again stabilise the price, this time upward. At an OPEC meeting this month, Saudi Arabian oil minister Ali al-Nuaimi again indicated he thought US$75 per barrel would be “fair and reasonable,” adding that anything lower could lead to more, not less, instability. Ali al-Nuaimi reportedly saying “When oil is priced lower, such as it is now, there will be less investment and less future supply”. We should need no clearer indication that OPEC will cut supply to keep prices high, and furthermore are signalling that any existing field capacity will require difficult, innovative, and increasingly marginally effective (translation: expensive) extraction methods.

Conclusion: The strategic approach is to recognise that the future does indeed require us to migrate off petroleum based energy sources as soon as possible.