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The Oil Depletion Protocol
Jamais Cascio, 2 Aug 05

(I'm traveling right now, off on a brief energy-related scenario project, so my postings will be a bit spare. Please let me know if you'd like to see more detailed examinations of any of the issues posted about this week. --Jamais)

Whether the oil peak happens over the next few months or next few decades, it's widely acknowledged that global conventional production of petroleum will see a sharp decline soon, with natural gas following thereafter. We know, in broad strokes, what needs to be done to keep that decline from turning into a global economic and political disaster, and the major recommendations -- such as an aggressive shift to alternative energies and transportation technologies, widespread adoption of higher-efficiency building designs, greater reliance on organic/local/smart agriculture techniques, and the like -- parallel what's needed to forestall the worst effects of global warming-induced climate disruption.

So how do we do it?

Richard Heinberg has a fascinating proposal, one that could reduce the risk of oil wars and economic ruin. It's simple to understand, and its logic is compelling. Heinberg, a professor at the New College of California and author of Powerdown: Options and Actions for a Post-Carbon World,calls his proposal the Oil Depletion Protocol, as it is a formalization of what is already happening worldwide: oil reserves are declining, and all too soon demand will overtake production.

What makes the Oil Depletion Protocol (ODP) particularly appealing is that it doesn't require everyone to participate to be effective. Any nation -- petroleum producer or importer alike -- adopting the ODP would benefit. Of course, the more nations that choose to adopt the Protocol, the better, in terms of both their particular and the global future.

The ODP is simple and, as Heinberg notes, the exact phrasing of it is less important than its broader concept. Producing countries will limit themselves to producing at or below their current "depletion rate" (defined as annual production as a percentage of the estimated amount left to produce); this would gradually slow production, allowing the exporters to wean themselves off of oil and shift to a non-extractive economic base. Importing countries, in turn, would act to reduce their imports every year by a set amount; Heinberg proposes that amount should be the current World Depletion Rate, or 2.59% annually.

Heinberg accepts that such a target will be difficult to achieve, and that cheating and backsliding would happen. But the logic of the proposal is clear and inexorable:

However, it must be recognized that a decline in the availability of oil is inevitable in any case; only the timing of the onset of decline is uncertain. Without a structured agreement in place to limit imports, nations will be inclined to put off preparations for the energy transition until prices soar, at which time such a transition will become far more difficult because of the ensuing chaotic economic conditions. With the Protocol in place, importers will be able to count on stable prices and can then more easily undertake the difficult but necessary process of planning for a future with less oil.

This is hardly news to those of us who pay even the slightest attention to these matters. But without a concrete target, the amount of change required can appear overwhelming. It becomes all too easy for policymakers to say, in effect, "there's too much to do, so we can't do anything."

However, for me, the part of the proposal that most hit home was the following:

Poor importing countries may object that by using less petroleum they will have to forego conventional economic development. However, further development that is based on the use of petroleum will merely create structural dependency on a depleting resource. Without the Protocol, these nations will be financially bled by high and volatile prices. With the Protocol in place and with prices stabilized, these nations will be able to afford to import the oil they absolutely need; meanwhile they will have every incentive to develop their economies in a way that is not petroleum-dependent.

Emphasis mine. This is the leapfrog driver, the recognition that the old way doesn't work anymore, and that there are better approaches available. It fits in with what I wrote back in February, in relation to a post-Kyoto future:

Kyoto will become a leapfrogging lure. China, India, Brazil and the host of fast-rising leapfrog nations will never come close to the per-capita carbon output of the US, because they will increasingly adopt post-Kyoto technologies and industries and designs -- not because they'll be strong-armed into it, nor because they'll suddenly be infused with the desire to do the right thing, but because that will be the self-evident pathway to growth. Who wants to adopt outdated technologies and industries? Who wants to follow a failed model of long-term development when a more successful one is unfolding before their eyes? The leapfrog nations may get worse before they get better, but they already know the writing's on the wall for coal-fired power plants, dirty diesel engines and smoky, choking skies.

Heinberg does his best to answer some of the more obvious questions arising from the Oil Depletion Protocol proposal. Undoubtedly other questions need to be asked -- and I would encourage you to ask them.

The Oil Depletion Protocol may not be the best way to manage a transition to a post-petroleum world, but it has potential. It has the advantages of being relatively straightforward, scalable, and of clear benefit. Will it happen? Is it possible? Who knows? But there are definitely worse choices.

(Via Energy Bulletin.net, and suggested by Peak Energy Jon S. -- thanks!)

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Comments

Glad to see you picked this story up. I'd love to read what people think about implementation. What can we do to make this happen?


Posted by: Liz on 2 Aug 05

as much as I would love to see something like this work, upstream systems, as I understand this one to be, rarely work because there are so many ways of cheating. The only thing that is going to change behavior is economics or sheer brute force. And behavior will go back to when it was when the force goes away.

here's a classic example in the astronomy world. Light pollution is a serious issue. There are many safety, health, environmental reasons to use the minimum lighting necessary shielded so all the light goes on the ground. Does this get any traction? No. Why? Because lighting is too cheap and people associate high glare, ugly lighting with safety.

until there's an economic reason to make people use lower wattage quality lighting to give them better visibility, they are not going to do it. It just isn't happening.

When light pollution advocates push through regional (city, county) lighting control ordinances, inevitably businesses try every single way they can to evade paying less for lighting. There are even some groups (auto dealerships usually, Brooks Drug specifically) that view it as their right to shine light in the sky all night long and leave their lots fully illuminated from sunset to sunrise.

until we can change the economics to rational ways that don't allow cheating, protocols like these don't really work.


Posted by: Mr. Gator on 2 Aug 05

What Mr. Gator said, but one more thing:

Who wants to follow a failed model of long-term development when a more successful one is unfolding before their eyes?
This is backwards in both ways:
  1. All the developed nations did follow that model, so it can hardly be said to have failed.
  2. Nobody has ever followed the model that is unfolding; that road is laid through terra incognita.
Making a post-oil future means lots of research plus economic and cultural flexibility.  Nations which have little or no installed base have more options regarding what to adopt (thus the third-world success of cellular telephony over wirelines), but until those mechanisms have enough installed base elsewhere for experienced people to filter out, their success in implementing large-scale improvements is likely to be spotty at best.

This would be one matter if it was the success or failure of individual industrial ventures at stake; those go under all the time, and the world goes on.  This time it's the foundation of the entire world's transport sector and much of its industry, and failure will occur on the scale of nations or even bigger units.  It's easy to see how people could become desperate; it is already happening in Nicaragua and Yemen.


Posted by: Engineer-Poet on 2 Aug 05

America lucked out big time in that we have several backup fuel sources that are if anything much larger then oil ever was. We dont WANT to use em but if worse comes to worse we can depend on them if other nicer methods fail to do the whole job.

Alot of people have no options.. They cant grow thier fuel they have no other sources of fuel and they dont have money. Its getting nasty.


Posted by: wintermane on 2 Aug 05

As a twenty year old college student working full time to support my life I am terrified. Many of us americans are reliant on cheap energy and it sucks. I don't have enough money to drop my life and buy some land to live on. What can I do?


Posted by: Mike on 2 Aug 05

I think this proposal does seem pie-in-the-sky :: at the present time.

I can already imagine some of the criticisms - it amounts to a kind of global price fixing, which runs contrary to (free) markets as they are generally understood.

However, post peak, what this really does (ideally) is give market forces a chance to work on the alternative sources of energy.

that, plus simple conservation, should get us to 2030 in good shape, if oil peaks in the next 5 years as seems increasingly likely.


Posted by: Jon S. on 2 Aug 05

@Liz

> What can we do to make this happen?

Start writing your congressional representatives.


Posted by: Jack on 2 Aug 05

Writing your Congressman isn't going to do anything, because it is increasingly obvious that oil depletion is coming on too fast; any First World politician who voluntarily gave up oil supplies that they could simply have bought out from under someone else would gain the wrath of their people.  It's going to suck to be in most of the world, though.

As for what you can do, Mike:  buy a Honda Insight if you need a car, become acquainted with LEED efficiency standards, and get good with all the technical issues involved.  If you are in a position to help people save energy (and thus money) you'll be well-situated for the next decade.  In the mean time, don't throw away that bicycle.

Something to really write your Congressman about (state, not Federal):  set state standards for vehicle purchases which prefer plug-in hybrids or GO-HEV's for all new vehicle purchases.  If the auto companies can rely on 100,000 sales a year if they build cars that can run half their mileage on electricity, they'll make them for you too... and if you can make your own "motor fuel" with a solar panel or wind turbine, you will be largely insulated from oil depletion.


Posted by: Engineer-Poet on 2 Aug 05

If your short on money id suggest getting a very small car and learn to avoid 18 wheelers... You shouldnt expect gas to go up all that much more any time soon as its fueling the alternative oil industry as well as the biofuel industry and quickly those 2 groups will fill the gap for at least 10-20 years or so. As long as you can handle say 3.5 bucks a gallon to 4 your safe until you can afford a cheap mini-hybrid/plug in thats bound to come out in the next 10 years.

Learn to handle cold during the winter get used to dressing better indoors( er if your in a place where it gets cold) if your in a place that gets hot ponder painting your roof white and planting alot more shade trees and such... oh and get used to sweating...


Posted by: wintermane on 2 Aug 05

Mr. Gator - isn't it a case of political will, as opposed to the need for (Adam Smith-style) rational economic justification? Consider the counter examples of low flow shower heads/ toilets and catalytic converters. Thoughts?


Posted by: Rod Edwards on 2 Aug 05

If oil usage does peak in the next couple of decades, it will be because users have shifted to cheaper substitutes not because there is not enough oil to produce.

For those who believe in oil "peaking" in the next few years... I would suggest a large investment in oil futures. With the millions that you make from this, you can then help create an alternative energy future.


Posted by: Joe Deely on 3 Aug 05

Joe, if oil doesn't peak in the next five years, it won't affect Hubbert's model at all, which is demonstrable on a field by field basis.

I don't `believe` in oil peaking, rather, I think it is a likelyhood, given the known and inferred facts on global oil reserves, and the lag time from a major discovery to full production. (5-10 years)

And frankly, given the gathering storm of global carbonation, Heinberg's proposal also works as a turbo-charged Kyoto treaty.

The salmon are in heaven, eating the souls of the shrimp, eating the souls of the plankton, cause they sure aren't down here - not this year.


Posted by: Jon S. on 3 Aug 05

Jimmy Carter, who had a good intuition for systems, proposed a variable oil-import tax back in the 70's. If oil imports increased, the tax would go up; if they decreased, it would go down. It would have worked like a thermostat. Over time, the nation could decide the best "thermostat setting." Of course, it was widely misunderstood, roundly criticized and never saw passage.

But it's still an interesting idea, as a variable carbon tax. (It should be a carbon tax, otherwise coal substitutes for oil and that won't help us with climate disruption.) What if fossil fuels were taxed by the relationship of their CO2 output to the amount of CO2 in the atmosphere. If emissions rise and CO2 levels rise, the tax increases sharply. If emissions fall and CO2 rises (as it will for decades to come) the tax remains roughly constant in real terms. If emissions fall AND CO2 falls, the tax goes down. Or something like this - the main idea is a tax on carbon that adjusts with feedback through an objective indicator.

Just a thought.


Posted by: David Foley on 3 Aug 05

Rob Edwards: regarding low flow toilets, shower heads, and catalytic converters. All of these features were legislated with sufficiently broad geographic reach that it was difficult to eliminate or bypass any of them.

this is not to say that people didn't try. if memory serves, one of the Midwestern states on the Canadian border was a common smuggling route for high flow toilets so people could enjoy a single flush experience.

Catalytic converters were frequently bypassed in the early days because they didn't work well and people would carry adapter hoses so they could put the cheaper leaded gas in the tank.

given enough incentive, people will cheat. This goes for individuals as well as nationstates (i.e. US and Kyoto). Treaties are fine but as a politician who I generally dislike said, "trust but verify". In other words, build a system which operates the way you want with intrinsic mechanisms and use extrinsic verification and correction of gross failures.

I have a lot of experience with cheating in one domain (anti-spam) I developed a system (camram.org) in which it is extremely difficult to cheat. But should some form of cheating show up, it's relatively easy to throw the switch and prevent any cheating at a much higher cost.

we need a similar system to enforce the oil protocol. We need to come up with some mechanism by which we raised the cost of energy with a sufficiently broad geographic and economic reach that people can't cheat. Personally I think carbon taxes are the way to go. I would be more than willing to pay the carbon tax as long as I can keep my house/office relatively cool with some form of heat pump technology (ie under 80 and low humidity).

so yes, political will is necessary but the day-to-day mechanism needs to be economic. Without that, cheaters win and honest people will stop playing by the rules which means a system collapses.


Posted by: Mr. Gator on 3 Aug 05

Mike, check out local community organizations who are already dealing with Peak Oil. Seattle's www.seattleoil.com is a good example. Our message board shows the high level of cooperative thinking we are all capable of when we work together to confront this massive challenge.

Chris


Posted by: Chris on 3 Aug 05

Actauly low flow toilets and shower heads are one of the things that gave environmentalists and conservation a very bad name. Its also one of the reasons pulling a number out of your ass and capping things to it is viewed about as nicely as flaming balls of anthax coated dung. The number of people who simply resorted to superflush toilet mods and multi head showers...


Posted by: wintermane on 3 Aug 05

OK, while we are thinking about somewhat pie-in-sky procedures, why not go the whole way? That is, make the price of energy-any energy- equal its true cost . The true cost being what it takes to return this precious planet to its previous state or a better one before the energy was generated.

Oil, for example, would carry a price equal to the total true cost summed over time and place of everything that happened to get it to your diesel engine. And when you used it, you would have to bear the total true cost of whatever you did with it. Same for coal, wind, solar, and so on. That would make oil expensive, coal even more expensive and wind cheap. Lovely!

And why would anyone or any nation want to do this?
Simple self interest. We are all the same, and those coming after us are all us too, maybe even more so. So since we are them, what we do to them we are doing to ourselves. Our job in the here and now is to make ourselves-in-the-future as well off as possible.

That is of course, much too true for most people to swallow, so there are some other reasons closer to here and now. Whoever did this would be able to sell their solutions to those who did not do it and hence got caught with expensive and finally impossible energy sources.

Sure, I know full well that true costing is as hard to sell as ice cold showers in January, but even starting to think about it is valuable. And trying to make it happen is fun and profitable for those who have already done some of what needs doing.

ps. I have a couple of low flow toilets and they work great. It is also fun to hear that mighty whoosh when you hit the lever. Gives you a sense of real finality to the whole thing.


Posted by: wimbi on 3 Aug 05

Jamais, I just posted something on this..."kind of the how would we actually make this happen" angle? it seems to me that the only real choice is local action...but perhaps I'm too pessimistic about the federal government and its involvement any time soon.


Posted by: The Oil Drum (profgoose) on 3 Aug 05

Actually, wimbi, you might not want to do it.

If some other nation, such as Elbonia, didn't charge its citizens and industries for effects which were felt externally to the country, they could freeload on the improvements made by others.  It's a case of "No, after you... I insist."


Posted by: Engineer-Poet on 3 Aug 05

Of course they would. But does it matter? Let us say that the great gadgets I am having fun working now on actually do turn out to work, and here in the USA an enlightened leadership sees to it that they are true costed and as a result everybody here uses them, and we get one step closer to paradise, but those blasted Elbonians, wading around in stinking coaldust up to their knees, steal my stuff and run off with it.

So they are better off, but so am I am better off and we all are better off, because we are breathing less coal dust.


Posted by: wimbi on 4 Aug 05

That's only true if the effluent remains local.  If it spreads globally (like CO2), your burden depends on what people all over the world are doing, not just what you are doing.

The US could cut a half-billion tons of CO2 emissiond per year, and still suffer increases if China and India continue to ramp up.  We'd enjoy none of the benefits from the energy or the savings from not having to retool, either.  This is one case where everyone really does have to go along.


Posted by: Engineer-Poet on 4 Aug 05

Am I blinded by excesses of optimism? The bad Elbonians who presently profit from bad stuff eventually die or are thrown out of power by their pampered offspring who have degrees from Stanford where they have been corrupted by liberals to go for good stuff.

So, it follows as the night the day that we have gotta develop the good stuff for them to go for.

If not we, who? If not now, when? If not here, where?


Posted by: wimbi on 4 Aug 05

It's going to take arm-twisting.  If every Elbonia-wannabe is allowed to freeload the system cannot work, but if the freeloaders are not allowed to trade with the rest of the world they will have strong incentives to pledge compliance (if not to actually implement it).

Between the various industrialized nations, there should be enough leverage to accomplish this if everyone agrees to it.  The problem is that it's going to require changes to or withdrawal from treaties like NAFTA and WTO.  Can you say "non-trivial"?  Sure.


Posted by: Engineer-Poet on 4 Aug 05

OK, Engineer-Poet, we are in total agreement, as usual, after only small persuasion.
PS- Thanks for your great web site The Ergosphere and I hope you will not expend valuable neurons disproportionately on the kw/hr folks- may they rest in peace.


Posted by: wimbi on 5 Aug 05



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