Hi, I'm new to Peak Oil and I have a question about oil price projections and scenarios.
Allow me to sketch the context in which I would use these projections (it's for a report).
Large investments are being made in the bioenergy sector in the developing world. For example Indonesia has set-aside 5 million hectares of land, and the EU is looking into 86 million hectares in Africa and Brazil for the production of biomass feedstocks. The feedstocks would be used for the production of pyrolysis oil and/or solid biofuels (which will then be shipped to Europe). China and India are also investing massively in Africa, South East Asia and Latin America.
With this in mind, a coalition of 13 developing countries has asked the UNFCCC to include a mechanism to protect forests. The idea is called 'compensated reduction' or 'avoided deforestation'. The scheme is easy to understand: developing countries would be paid by the West to conserve their forests (which store vast amounts of CO2). The compensation would consist of 'carbon credits' which can be traded on the carbon market (such as the European carbon exchange).
The World Bank recently wrote a large report about the viability of the scheme and agreed that it would make technical and economic sense to implement it, even though a lot of uncertainties remain.
However, recently, both Brazil and Indonesia have sharpened their stance and said that the scheme - as it is being defended by international organisations - does not take into account the 'real opportunity costs' of avoided deforestation.
Obviously, these two countries want to squeeze more money out of the system. Just putting a price tag on a hectare of forest, based on how much CO2 it stores, is not nearly enough, given 'peak oil' and the potential for bioenergy production - that's what they're saying.
Now this is where I need your help. As some of you may know, the price of carbon mildly correlates to the price of fossil fuels, but not nearly as strongly as biofuels do. In other words, when oil prices are high, a hectare of forest would bring in much more money if converted into biomass plantations than if it were to be valued merely as a carbon sink (carbon prices are at a historic low and have never crossed the €35/MT line).
Moreover, Brazil and Indonesia say agriculture is a 'dynamic' and technology-driven sector that allows for efficiency increases and innovation, over time. If a forest is kept as a carbon sink, it just stands there, and nobody can increase its efficiency as a carbon sequestration machine. In that sense, a forest is 'static' and not up for the creation of more value. Brazil always gives the example of its own ethanol producers to prove its point: through biotech, agronomical and technological innovation they cut cost by up to 75% and increased the efficiency of their production process by up to 100% in 25 years time. Avoided deforestation projects have similar time-horizons, but can not enjoy the same efficiency evolution.
This critique by Brazil and Indonesia is only beginning to permeate the debate about avoided deforestation/compensated reduction. Peak oil is becoming a critical factor here, because obviously, the 'real' opportunity costs of avoided deforestation are biofuels that can be produced at US$ 35 per barrel of oil equivalent or at €60/MT of coal equivalent.
So does anyone know where I can find realistic medium to longterm price projections for oil, preferrably written by Peak Oil advocates? We want to calculate the opportunity costs using these numbers. We have run several simulations using other, more official price projections, and they show interesting results. But I'm sure the scenarios would look quite different were they based on PeakOil data. I understand there are several Peak Oil authors, but whose medium to longterm price projections are most pessimistic?
Thanks for your help.