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Tuesday, January 17, 2012

Will the onset of energy descent force NZ into a steady state economy?

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 I wish to share this excellent article by Jack Santa Barbara of Nelson. He explores NZ's unique postion in a world facing an impending energy descent, and asks whether NZ could be the first nation to have a steady state economy.  Full article here

Here are a few extracts ..

"New Zealand will inevitably make a transition to a steady-state economy. The onset of energy descent — having less and less energy to use with each passing decade — will push it to do so sooner rather than later. The critical question is whether the transition to a steady-state economy will be by design or disaster.

As a “developed” country, New Zealand is highly dependent on fossil fuels for its economy: international tourism, the production and export of food and timber, domestic transportation, agriculture and housing. New Zealand’s economy will change dramatically as it loses access, whether through geologic depletion or market exclusion, to relatively cheap hydrocarbon energy.

New Zealand’s geographic isolation will be a major factor in its experience of energy descent. A relatively small market at the far end of the energy supply chain, New Zealand is particularly vulnerable to both reduced supplies and high energy prices — one of the easiest customers to drop in favour of larger, closer and more lucrative markets. A market-driven energy decline could be both unexpected and abrupt.

There is an exciting and inspiring alternative to this negative scenario: New Zealand appreciates that it will be the first developed country to seriously suffer from energy descent and prepares accordingly. New Zealand has a unique opportunity to provide global leadership in the transition to a steady-state economy unfolding by design rather than disaster.
If New Zealand is to make the transition to a culture and economy that is ecologically sustainable, socially just, healthy and invigorating, it will need to dramatically change the structure of its economy. Instead of exporting natural resources, it will need to export practical sustainability knowledge and expertise for all facets of an energy-descent economy — an expertise likely to be in high demand as the world wakes up to the impending crises ahead.

New Zealand has many advantages over other nations in terms of becoming a leader in practical sustainability:
• The capacity to feed itself (although it currently imports about half its food)
• Geographical isolation from most population centres, making mass migration difficult
• A small population relative to the biocapacity of its land
• A climate likely to be less affected by climate change than that of many highly populated areas
• A minimal number of large cities obliged to undergo radical adaptations in the face of global change
• Many small rural communities that could be expanded and redesigned to be sustainable
• Traditional frugality and practicality, still flourishing in much of the population
• A residual core of knowledge and skills required to restart essential local industries
• A literate and well-educated population with access to technical training facilities
• A tradition of parliamentary democracy helping to facilitate the increased levels of cooperation required for various groups to contribute to the transition.

A strategy also requires an honest assessment of liabilities. Some of the obstacles to such a new vision for New Zealand include:
• A widespread commitment to economic growth which has been responsible for the crises New Zealanders now face (New Zealanders have all benefited from this economic model and a new paradigm will challenge some basic beliefs about what constitutes the good life — for example, the role of material goods for wellbeing; the efficiency and innovativeness of corporations; the possibility of a highly industrialized economy.)
• Some vested interests intensely committed to maintaining the growth paradigm as it gives them considerable power (for example, some politicians and the elites that have undue influence over them)
• International pressures to provide for needs abroad, such as food, coal and immigration
• The nation’s current foreign debt and any additional debt it takes on
• Uncertainty about the magnitude and timing of the impending crises on New Zealand (This makes planning difficult as planning at leisure is different from planning on the brink of disaster and New Zealand has little way of knowing how close it is to the latter.)
• The possibility that the rate and magnitude of changes coming will overwhelm people and push the country to a disaster steady state faster than it can manage a transition that allows it to optimise its physical and social resources
• Inertia and despair as a result of coming to understand the profound harm humans have collectively done to Mother Earth and the extent of change required for a healthy, sustainable future.

It is prudent, given the uncertainty about the timing and magnitude of impending changes, to adopt a risk management approach — to assume that significant change can be rapid and to be as prepared as possible as soon as possible. The majority of New Zealanders is in denial about the nature and scale of the problems the country faces. When crises hit the majority, people will need massive support. Preparing stores of essential resources such as food and water, along with a capacity to teach the basic skills people will need to survive and thrive, would be both prudent and helpful."


Nigel Williams said...

I recently asked all the NZ Refineries oil companies plus Gull:

In the face of a shortfall of oil supply vs demand, "What method will your company use to allocate declining fuel supplies to New Zealand?"

Only Gull, Caltex (Chevron) and BP were kind enough to reply.

From Gull: (A full and kindly response, of which the main points were:)
"...The short answer is : The market will decide

The medium answer is : If you are correct and the price of oil increases significantly then this will do stifle demand from many economies. It will also make (currently) expensive types of oil ( deep water, bio fuels) more viable to produce so supply will increase. For the foreseeable future of my lifetime I believe you will always be able to buy “oil” it just may be very expensive and/ or look different ( a biofuel) . The oil will go to the highest bidder as it does now. Those not prepared to pay the price will make other arrangements. ..."

When I pressed as to whether they actually had any standard procedures he replied:

"...correct we don’t have that part of a procedures manual

NZ will get what it is prepared to pay for … "

Chevron (Caltex):

"...Our view is that there will continue to be adequate oil supplies in the medium term. ...

"...However, hypothetically for the sake of your paper, we could potentially expect regional allocations of fuel in the unlikely and far-distant chance of shortages. Chevron has declared the Asia Pacific Region (which includes New Zealand) a strategic priority, along with the Americas. The company is reducing its retail footprint in other markets around the world. On that basis, we could assume Chevron-controlled supply would favour this region. Hypothetically, we could expect to see buying conducted on a basis similar to “co-ordination”, with company buyers balancing the needs of the markets they are buying for over several days or weeks, depending on what stocks are already sitting in each country (ie. moving more to just-in-time)."

"In summary Nigel, we think the timeframe for potential energy shortages is much longer than your estimate; that price will settle the supply-demand issue; and that there is much work being done around finding alternative energy supply, both in New Zealand and globally. We therefore do not agree that New Zealand is likely to be disadvantaged in energy supply in the foreseeable future."

and BP (in full):
"Thanks for you query. The best source of information for your request
is the BP Statistical Review and BP Energy Outlook. You can find both of these reports at

From these reports you'll see that BP do not foresee a shortage of oil which would impact on New Zealand."

My feeling from these responses is that an oil supply disruption from the closure of the Straights of Hormuz (or from any other reasonably foreseeable cause) is unlikely to give rise to any sensible coordinated response should one third of the global oil supply be withheld at the whim of some madmen. (Whether those madmen may be found in Washington, the capitals of Europe or in Tehran is a separate issue!)

So essentially New Zealand's fuel security underpants are around its ankles, and when push comes to shove in the global oil market we will be the first to fall on our faces. And serve us right!

Were it not for my anxiety about the future of my children and my children's children my anger could be turned to jest. But instead the helpless anger seethes, and the food planting programme continues apace.

Alan Preston said...

Listen to this interview by Kathryn Ryan on Radio NZ National on the 25th of May 2011 with Fatih Birol the Chief Economist at the International Energy Agency. 'the most credible authority on energy issues' ( Ministry of Energy ) :

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