Sweden's oil commission's 1st report on breaking dependency

[MaxWahlter]

AVBP?s Stephen Hinton analyses the report released from Sweden?s Oil Commission.

Some nine months after Sweden officially announced it was to break its dependence on oil, the commission set up to answer the question ?how? presented its report Wednesday the 28th June. This report comes against the background of news reports of deep disagreement among the members and reports from the Swedish Energy Authority dispelling any risk of energy vulnerability through ?peal oil?.

The task given to the commission was to present concrete proposals to break dependence on oil. These proposals should show how, by breaking this dependence, long term energy supply would be secured, new technology stimulated, competitiveness increased and improved use of forestry and agriculture as energy sources.

Early in the report the commission analyses in which respects Sweden is dependant on oil. Sweden produces 647 TWh. Oil makes up 207 TWh (including losses). The three sectors that are dependant on oil are Transport, 95 TWh 97% oil, Agriculture and fisheries, 70% dependant using 7 TWh and the Building trade where 67% of the energy is from oil at 2 TWh. To get things in perspective, the commission?s diagrams show how losses from nuclear energy (149 TWh) are higher than the total energy used from oil (137 TWh).

The main reason given for drastic reduction of oil combustion is its climate disruption effect through greenhouse gas emissions. This will be helped by the price increases. The Prime Minister, in his presentation of the report, underlines however the importance of the energy security dimension.

At the same time, this reduction in use of oil should not make the conditions for economic growth more difficult than today.


The next step in the commission?s thinking is harder to follow: what is meant by breaking oil dependence and the creating the conditions for achievement of the concomitant national goals? The report makes it clear that they foresee use of oil continuing beyond 2020, but that their proposals will bring about a reduction of oil use.

Five main measures:
? Overall increase of energy efficiency by 20%.
? Development of fuel from agricultural sources.
? Increase in Electricity as energy transfer medium
? Support development of biogas, but not support of fossil natural gas
? Development of EU regulations and measures

[MaxWahlter]

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.

[isenhand]

Sadly, It doesn?t surprise me.

[skeptik]

At the same time, this reduction in use of oil should not make the conditions for economic growth more difficult than today.

So the Swedes want to have their Sm?rg?sbord and eat it...

(To Swedify the well known saying)


I think they'll be lucky.

[MaxWahlter]

Comments on the oil commission?s report have been very few in the Swedish media. Perhaps because it was released during the holiday period or because the issue is so complex, that in criticising the report you show how much you do not know. SvD, the right wing Swedish national daily newspaper, however, takes the Oil Commission to task for ?giving us a vision of wood-burning?.

In its editorial from 11 July, former Editor-in-chief Hans Bergstr?m denounces the Oil Commissions six months of work as failing to deliver to a standard of what would normally be expected of a government report.
In short he says the report fails to address: - financial dimensions including budgets, investments, subsidies etc.
- the present increase in transport Sweden is experiencing.
- how research budgets will be prioritised ? by for example reducing medical research.
- the disadvantages and benefits of investing in bio-fuel alternatives against for example, stimulating exports.

Perhaps the most scathing criticism comes as he rails against the idea that Swedish crops and forestry products should be converted to fuel. As he puts it, these raw materials should be processed (at least into food) and turned into value-added products, not just burnt.

The criticism, however correct, itself begs the question of how an energy intensive society is going to get its energy to do all that value adding and exporting activity when oil supply shortfall drives energy prices sky-high. But then the commission did not address that either.

[MaxWahlter]

Once again Sweden, the first nation to proclaim its intention to become oil independent, acts disappointingly in a way far removed from what many believed were its true intentions. As reported in the Swedish daily newspapers on the 24th July, the Swedish State are to finance a research and development program to produce better environmentally suited vehicular technology. It is hoped Swedish vehicle industry suppliers as well as other companies will participate in the program to increase the competitiveness of Swedish vehicle industry. The total budget is 800 million kronor, 282 million (35 percent) coming from the State, the rest from the industry.

Says Thomas Ostros, the minister responsible for trade and economy, ?the aim of this three-year initiative is to improve the environment, reduce oil dependency and increase competitiveness.?

They hope to produce technology that industry will apply to offer more energy efficient vehicles, new engines, increased use of renewable fuels and modern hybrids.


Hardly inspiring confidence in what could be achieved, Volvo boss Fredrik Arp pointed out that bringing a new engine to market costs 5 billion. Later he said Volvo Cars needed to produce more with fewer employees and announced a cut of 1,000 jobs this autumn.

Clearly, the Swedish State are stuck between a rock and a hard place without showing they have the slightest clue of how to get out. On the one hand, Sweden is the European country most dependent on the vehicle industry for jobs. On the other having declared the intention of oil independence by 2020, they are sitting with the Oil Commissions report in their laps that suggests biofuels are the answer.


What the State and the Oil Commission have not even begun to face up to is that:


Modern road transport is a burdensome invention. Over 40% of the space in cities is dedicated to it, prime agricultural land is sacrificed to it, and the costs of much of it are externalised to an extent it is hard to see when present damage can be rectified, let alone the damage from the predicted 14% increase in volume predicted for 2020. Most of the energy used to construct, maintain and run the system actually goes into the system itself. Precious little of the energy is actually used to move goods or people.


? In the instructions to its Department of Road Transport, the government use the term ?transport system? synonymous with the road network. The wider implications of this are that more environmental alternatives like water or rail are not in their brief, but left to other (less well financed?) departments further cementing the dependence on road (and fossil fuel) transport.


? Without the energy-dense oil that 99% of all transport runs on, the energy intensity of society must be radically reduced if it is to provide a standard of living anything like today?s. No technology or biofuel can solve this equation.


? Social inventions and demand ?killing technology like urban planning, relocalisation, local food systems etc, are off the agenda thanks to the short-sightedness of the Oil Commission.


? Economic growth, stimulated by all the so-called new technology that can be invented on an 800 million budget, is a mirage and a very risky strategy. Too risky just to be accepted blindly as the way forward. The underlying assumptions, however politically explosive, need to be examined out of respect for the Swedish people who place their faith in their Government and authorities. As oil prices spiral, regardless of how much biofuel you can wring out of rubbish and forestry waste, the economy will likely shrink. If Sweden has not worked out how living standards can be kept they will be wishing they put their money into something else than an old-fashioned, doomed, transport concept.

[isenhand]

Who actually made up the commission and what organisations did they come from?

[heinbloed]

Well, it's election time in Sweden. But it's also election time in Austria. And the Greens-wich are most likely within the new gouvernment- are demanding an independancy from imported energy resources as well. Target is the year 2050.

[isenhand]

Well, the left wing block lost and now we will have a right wing block in power. I wonder what that will mean for ?oil independence?? Not really good news I think.