(Transcription of original interview by Gema Castellano for Informativos.net, in December 2018. Translation: Amelia Burke —Fabricants de Futur— and Steven Johnson.)
Gema Castellano: Antonio Turiel, researcher at CSIC. We’ve discussed energy two or three times. And now we’re going to discuss diesel. It’s surprising – at least it surprises me very much – that European governments aren’t giving us a fully accurate view, of why there is this sudden transition from diesel to renewables. It doesn’t seem that the environment, health, and pollution are the main reason.
Antonio Turiel: Well, clearly, diesel engines have a real problem of pollution. CO2 emissions cause climate change. Particulates – nitrous oxide – clearly harm people’s health. But we’ve known that for decades. Further, diesel engines that meet the latest European standard, the Euro-6, have much lower emissions than any previous diesel car. So that wouldn’t seem to explain the urgent push now to get away from diesel. Climate change and the environment are also urgent matters. But if that’s really what’s worrying you, you’d oppose diesel, gasoline, aviation, merchant ships, and all sorts of things that use fossil fuels. This particular aversion to diesel probably comes from something I’ve discussed for years in my blog:
In general I think citizens view with some alarm these developments toward making fuels more expensive. And then direct taxes on diesel cars will probably be raised. Because people realize how these changes will greatly affect their way of life. Because many people need a car to go to work or do anything else. And the alternative that’s being proposed – electric cars – or, provisionally, the hybrid cars – are very expensive. Not everyone can afford one, and, further, they generally have far lower performance. And so people think, “OK, they’re taking me for a ride. They’re ripping me off”. And in a sense I think that’s true. Because, as you’ve said, the environment, while it’s important, is not the real reason behind this rush to dump diesel.
Rather, there’s a problem of scarcity. And it’s very important to discuss the matter of scarcity, the fact that production is beginning to decline. Because, first, diesel will go, but later it will be gasoline, and then all the rest.
GC: Could there be great scarcity within a few years?
AT: Well, a short while ago the International Energy Agency annual report came out. With all of their forecasting models they calculate that, at minimum, oil production will be down by 13 million barrels a day in 2025. That’s approximately 14% of today’s production. But it could be down by as much as 37% – they give that range of possibility. So clearly there’s going to be an oil shortage in the coming years. It seems inevitable now, and the IEA is starting to warn about spikes in prices, that there will be shortages, and that we will need to adapt. To be sure, if production falls over the next seven years by 13 or 14%, you can more or less adapt by taking measures to use less. But the problem is that this decline is not going to stop, it’s going to continue over decades. It’s true, we’re not going to run out overnight, but each year we’ll have a little less. And each year we’ll have to learn how to do things with less.
So could there be a great shortage? If we handle badly this situation, which is known and inevitable, then yes, of course there could be a great shortage. And the measures that are being taken are just a bandage. We’ll see if people will be convinced not to use diesel cars. And what happens after that? Stop using gasoline. And after that? Trucks and tractors…we’ll see how we sort this out.
Well, I think we need to be a bit more sincere, and tackle the problem honestly. And see how the remaining oil resources, which will be declining over decades. Because there are still some decades of oil left, but they are limited. And we should start adapting to the changes that we need to make.
And we should explain that, possibly, a model of private car ownership won’t exist. Whether it’s based on electric cars or anything else, that certainly can’t exist on anything like the scale like we have today. And face up to the change that this implies. In Spain, 10% of GDP and 9% of employed workers work in the automobile sector, directly or indirectly. And if this sector declines dramatically, pay attention to what this means for wealth and employment.
And we can talk about tourism. If there is less transportation of people – and this sector represents another 12% of GDP, and another 10 to 11% of the working population [in Spain]. We’re faced with a very complex situation that could cause a lot of instability, and I think we need to talk about it honestly.
GC: Yes, yes, above all else, honesty in talking about these things. But the governments and oil companies are searching for options. They’re trying to refine diesel from other types of sources. So what’s going on? Is the oil obtained from these of low quality?
AT: In general, once we reach maximum production of conventional crude, the alternatives available, which are limited – basically, propane and butane – which are very light hydrocarbons. We also have biofuels. But we know biofuels provide very little energy in the end, and so are not worth producing. We have the Canadian tar sands, which are longer chain. You can produce a tar, then you have to improve it by combining it with hydrogen. You need a refinery adapted to do this, you have a mountain of associated problems. And then there’s the oil from fracking in the U.S. – light tight oil – which can’t really be used to produce diesel competitively, economically, because it’s very short chain.
So with everything that’s been put on the table, producing more diesel is complicated. And given that it’s complicated – not impossible, but very complicated – you have to sell it at a sufficient but also economic price, of course, or else nobody will buy it from you – you can’t avoid this decline. The existing alternatives, besides having production limitations of their own, cannot fill the great gap that conventional crude is leaving for very long. Because conventional crude is the good stuff, the real thing. They can’t increase very much, nor do they serve all purposes, and they have many limitations.
So, really, the alternative does not exist. The worst thing is that an alternative does not exist. This is not something that’s happening overnight. We’re talking about years, even decades, declining little by little. But over these decades we will have to adapt to an increasingly complicated situation.
GC: Perhaps at this stage of the interview some will say, “Bah, the doomsayer scientist”. But we’re going to share a fact that can clarify the situation a little. There are oil companies – Repsol, for example – which say they’re shifting their business model toward electricity. Does that mean they’re withdrawing gradually from the oil business?
AT: Yes, that’s true. In fact, the statements made by Antonio Brufau, president of Repsol, were discussed at length, shortly after the summer of 2018, in which he announced that there actually weren’t many profitable oil fields left in the world, that it was not profitable to search for more oil, and that, in fact, Repsol was going to withdraw little by little from the business of finding more oil fields. They would maintain the ones they had, but that it wasn’t worth spending what they did before. Because he didn’t see a future for the business. And that they were going to invest more in the electric sector in particular. Further, at that time Repsol acquired several hydroelectric power plants. And this seems to be an investment trend. Not only Repsol, Cepsa has done the same. It’s a global phenomenon.
So, in all countries, except the U.S., the oil companies are shifting away from investing in oil fields. Precisely for this reason the IEA is warning that there will be a problem of falling production. Because investment in finding more oil fields is not happening. Because the oil fields that remain are small, they’re bad, and the oil companies know it. They’ve been losing money on this for years, and they don’t want to lose more. It’s logical, they’re businesses, not a charity. So they’re diversifying – typically, they’re moving into the electric sector. Because that’s where they see the future lies.
The only place where this is not happening is the U.S.
GC: Yes, I was going to ask you, why?
And these companies can actually operate at a loss, because they’ve been given very cheap credit and many tax breaks. In fact, it looked like the fracking bubble was ending just when Trump arrived. In 2016 production from fracking had fallen by some 15%, which is a lot. Everyone knew it was coming to an end. Then Trump arrives at the White House, and it picks ups some steam again. And it will recover or even surpass previous levels a bit. The problem is that it isn’t going to last much longer. The big problem arising in the U.S. is that so much has been invested in fracking. There are even banks like Deutsche Bank that have invested a lot in fracking in the U.S. When this bubble bursts – and it will inevitably burst. Because it’s not a viable business, it’s a very bad type of oil, it yields very little, and it costs a lot. There’s going to be a big financial crisis just from this problem, just from the problem of the fracking industry.
Now to show just how far the madness of investing in this to maintain the status quo has gone, right now in North America – that is, the U.S., Canada, and Mexico are investing more than the rest of the world in exploration and development of oil wells. More than half of the investment is theirs. It’s really incredible, when they only produce 20% of the world’s oil consumption. It’s really crazy what they’re doing in the U.S. A last attempt to scale a wall that gets higher and higher. And I think that eventually they will realize that, of course, they can’t make that investment profitable. And that the oil era, as we understand it today, is reaching its end.
GC: And how are the OPEC countries responding to this decline in oil?
AT: For some time the majority of OPEC countries have been seeking to diversify their sources of energy. They’re trying to profitably invest all of the money that they’ve earned over these years. And they’re looking for new sources. We know, for example, that Saudi Arabia has invested heavily in nuclear power plants. And also in solar farms, in part to supply their own energy in the future. And they – in general, the Gulf countries – are making many strategic investments in other countries. For example, buying large quantities of land in Africa. They’re starting to prepare for the future that will come after oil.
Qatar made an important announcement recently, at the end of November 2018, that they’re leaving OPEC in the coming year. Qatar is not one of the large exporters, but they do have substantial oil production. And they’re leaving OPEC. This is dangerous to do, because they’re close to Saudi Arabia, which has a strong military. And they’re going to focus on the natural gas business. In fact, within the hydrocarbon sector they accept that natural gas still has some time left. Not much, maybe 10 more years. And people are beginning to accept that oil is a dying business. That it will take some time to die completely, but it’s coming to an end. And that’s pretty much the direction countries are heading in, especially in the Middle East.
GC: Looking at renewable energy, because we have to. Do renewables have sufficient power, like hydrocarbons have, to supply the world’s energy needs?
AT: This is difficult to say, and there’s a certain amount of controversy. Some experts say renewables can produce 100% of today’s energy consumption – perhaps even more, 150% or 200% – without great difficulty. Other researchers, with whom I’m more aligned, are much more pessimistic. Some are saying we probably won’t even be able to supply 20% of what we’re making today. I tend to think it’s between 30% and 40%, though technically it’s possible to produce more than that. Bearing in mind real-world conditions and unforeseen difficulties in large-scale efforts, I think we can supply 30 to 40% with renewables.
Apart from the exact percentage, there are two things I think all researchers agree on. First, there is a maximum value that now can’t grow any bigger. So when you make the transition to renewable energy. You accept that you will end up with a non-growing, steady-state economy. That is, growth in energy consumption will stop, it will reach a maximum. And there it will stay if you maintain it properly. And this means, specifically, that economic growth has ended, because economic growth is driven by the growth in available energy: When you have more energy, you can produce more goods and services, you can make the economy grow. So, the first point I think all researchers agree on is, we’re headed toward a steady-state economy. It is possible to do, it has to be done, and it’s complicated.
The second point which I think everybody agrees on is that an energy transition will take decades. We did a study in 2012 in which, with certain parameters, we estimated the effort it would take. To transition to a 100% renewable energy mix… We didn’t factor in other limitations, and I think some of these were significant, and we already knew about them. But even assuming we didn’t have these limitations to the quantity of producible energy, the result showed that you’d have to make a very intense effort over 30 to 40 years. During which time you’d essentially establish a war economy. And, further, you’d consume a very large part of known copper reserves and other strategic materials. And so we’re talking about a huge effort over a very long time.
In any case, I would insist that renewable energy sources, regardless of how much energy they can give – and I think they can give a lot, and much more than we need, but much less than what is consumed right now. But regardless of the precise threshold, it’s clear it would bring us to a stationary situation, in which an economy like the current one, which is based on consumption and growth, could not be maintained, it would have to come to a stop. It would have to be shaped differently – this is possible to do. But the economic model must be changed to be able to run on renewable energy.
GC: What is the position of Russia, one of the major natural gas producers, in this game?
AT: I think Russia is very unusual because the oil minister acknowledged about a year ago, that they estimate that their oil production will start falling soon- in any event, before 2020. And, moreover, it will fall irreversibly. With regard to natural gas their outlook is better, and I think that’s correct. But in any case we’re not talking about much beyond 2030 before they begin to suffer.
GC: 2030! That’s just around the corner!
AT: So I think Russia wants to make the most of its cards for as long as possible, and get as much out of them as they can. I think that’s roughly the position of most producers, who understand that we’re in the last round of this card game, and are seeking to obtain the maximum benefit, so they can then maneuver into the best position for what comes afterwards. Which I think is understandable. But even Russia, which has made a series of strategic alliances – for example, with China, with Germany – to provide them natural gas. What they’re trying to do is get the maximum benefit from it while it lasts. 2030 would be the maximum, after which it would decline continuously over decades. In other words, before production of oil or natural gas becomes insignificant, you’re talking about five, six, seven, eight decades – you’re talking about quite a long time. But what’s certain, of course, is that there will be less and less. And this is what you have to adapt to, you have to live with less.
GC: The car manufacturers are saying that by 2020 they will only make electric engines.
AT: I don’t think that’s true – what I’ve heard, though I could be wrong, is that the most important brands – Peugeot, Citroën, Volkswagen, etc. – won’t make new types of diesel engines, specifically, after 2020. I don’t think they’ve made any statement about gasoline. Though I wouldn’t be surprised if they didn’t make any new gasoline engine specifications. Because the bottom line is, you have to make an enormous investment to improve the current engines, which are already very good. So I wouldn’t be at all surprised if they said, no, look, let’s forget gasoline too, because, frankly, we already know that it’s going to be just three or four years, before we start having the same restrictions that we’re getting with diesel now.
In any case, it’s clear that, even it were just diesel, it’s already a sign of where things are headed. In other words, the large automakers also see that the business is coming to an end, and they have various business plans. There are certain scenarios they would prefer. Obviously, they would prefer a massive introduction of electric cars. But they’re aware that it’s unlikely to work. And the model they’ll probably end up with, assuming the business can keep going, is that of car sharing – very extensive car sharing. So the volume of business would greatly shrink. I’ve come across figures of a 95% contraction, meaning, it would shrink to one twentieth of what it is now. Nobody knows, obviously, what is going to happen. But these are signs that they also understand that we’re approaching the end of an era. And they don’t want to spend billions in R&D that, in the end, will not yield profits.
GC: It’s clear that there’s a dramatic change of paradigm, a 180-degree turn, and also in consumption. There are already companies offering the possibility of not having your own car, but renting a car, instead, when you need it. And there are also countries like Spain where public transit is not bad at all. It’s much worse in the U.S., which hardly has public transport. This is the solution, isn’t it? Having your own car will be a thing of the past, don’t you think?
AT: Well, or for the very wealthy classes. I think the model we’re considering, basically. Because a car is clearly a very expensive thing. But I think the people who can afford one will have one. With classic engine specifications for sure, conventional combustion engines-gasoline or diesel.
GC: The trend towards pedestrianization in the cities also seems to be a way of the authorities telling us that there will no longer be cars for everybody, is it not?
What bothers me is that the reasons for this are not being explained properly. So, there are the goals of fighting climate change, which are important, without a doubt. But there’s a more urgent problem, which is that there won’t be fuel to run all of this. So it makes me feel a bit jaded, and a little angry, to see in France, with the revolt of the yellow vests, that there are people beginning to oppose the science of climate change, as if it were a fraud, a hoax, or a lie. And that is not true.
GC: Let’s go back to what we were talking about at the start of the interview: Why are governments not informing the population about what is really happening? Because the large protest in France, which even cost lives, is occurring amid a lack of information.
AT: Because if you tell the truth, the stock market will crash. Because if you tell the truth, you are saying that economic growth is finished. If you tell the truth, you accept that the amount of available energy is not going to increase. And therefore the economy cannot grow, GDP cannot grow. And if GDP cannot grow, it means that investments on the scale being made right now are pointless. That the consumer society is coming to an end. That the society of growth is coming to an end. If you face the truth, that we have reached our natural resources’ limits of capacity, you are facing the fact that capitalism as we know it has come to an end. That is the reason why it is not being talked about. And it’s also the reason why, in regard to climate change, after so many decades of knowing there is a problem – and it’s certainly a very grave and serious problem – really nothing has been done about it. Because responding to the problem implies the same: Reduce, in this case voluntarily, our use of fuels, our use of energy, which ends up having the same effect: It threatens the foundations of capitalism. So, why is nothing being done? Why not tell the truth? It’s to avoid threatening the foundations of capitalism. And we’re trying to hedge our bets. To see if we can find an escape route – a miraculous source of energy – renewable energy sources have to give a huge amount of energy – the idea that if we kick this can a little further down the road, we can find something that will save the day.
GC: We could end the interview here, because we’ve covered all the topics. But I’d like to ask just one more question. Because we haven’t mentioned these means of transport. Let’s talk about the world market with the large ships – sea transport, and aerial transport.
AT: Regarding sea transport, here in Catalonia itself there is interesting news. Here there are big businesspeople, who work in connection with the maritime sector, who right now have a high demand for sails. They are making very modern and sophisticated sails, which enable the freighter ships – they don’t provide the main propulsion – but they enable them to gain one or even two knots. Which is pretty good, because freighters travel at relatively low speeds, at 7 or 8 or 9 knots. This means fuel savings. And in some way it’s setting the foundations of what could be the future of maritime trading – which, looking back, is the history of maritime trading. Because there was trade with the Indies and America based on sailing ships. And some very competitive sailing ships evolved. The clippers, large sailing ships with many masts and many sails, that reached speeds that were faster than even today’s freighters. Not with as much capacity, but probably with 30 clippers, you could do the same as an average freighter today. So I think the trend in sea transport is to recover the art of sailing, which was feasible, which worked. It’s perfectly renewable and within anyone’s reach.
But what I think is doomed is aerial transport, it’s doomed to a very severe decline. Because, naturally, it takes an enormous amount of energy to defy the laws of physics – not really defy but…
GC: And with bigger and bigger airplanes.
GC: Antonio, it’s been a real pleasure. And we can draw a conclusion that information is power. And there are people who indeed have information, and are making the most of it and pursuing new business models. Thank you very much.
AT: Thank you, too.
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