Exploring Hydrocarbon Depletion
realistic medium to longterm price
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
pup55 wrote:realistic medium to longterm price
If you would care to be more specific about what you mean by "medium" and "long term" we might be able to take a stab at it.
pup55 wrote: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
These characters have a real potential to double dip: grow palm trees, and sequester at least some of the CO2, while simultaneously producing the palm oil. A serious threat to natural forests if there ever was one.
Well, it would be interesting to have the projected price at the "peak" and then 10 and 20 years later. We need a sufficiently large time horizon, because the plans for avoided deforestation as they're being envisioned today, work with periods of 10, 20 and 30 years time (actually longer, but the controls against the original baseline would be carried out at decadal intervals).
Bioman wrote: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.
Bioman wrote: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'.
Bioman wrote:So does anyone know where I can find realistic medium to longterm price projections for oil, preferrably written by Peak Oil advocates?
MrBill wrote:Therefore, price is not the deciding factor. Availability of supply is. The world economy will not grind to a halt because of high prices because they are a net wealth transfer from the users to the producers of oil. However, many industries would quickly collapse if petroleum or a suitable alternatative was not available.
MrBill wrote:I would run any simulations using $60, $120 and $240 per barrel, and assume they are realistic price projections in nominal terms. Keep in mind that Europeans for example already pay the equivalent of $5-6 per gallon of gasoline compared to $2-3 in America and keep driving and their economy running. Therefore, $120 per barrel is just forcing America, for example, to pay what Europeans are already paying. Then with actual shortages, whether they are post peak oil depletion related or due to physical disruptions stemming from a war in the ME and the closing of the Strait of Hormuz, those prices become all of a sudden realistic assumptions.
MrBill wrote:However, those are nominal prices. If crude climbs that high then many other prices will also have to increase. There has been a pretty strong correlation between higher oil prices and higher base and precious metal as well as commodity prices. Because it takes energy to produce these commodities as well. Eventually, higher input costs will lead to higher output costs. This cuts both ways driving up the cost of exploration and extraction as well.
MrBill wrote:CO2 emisson prices may also have to increase dramatically from their current paltry levels of around 15-30 euros in Europe as the price of crude increases from $60 to $120 or $240 in nominal terms making coal irresistable as a source of energy. Whether it is in coal to liquids or in whatever form. An increase in coal use will mean more CO2 certs to offset higher emissions. This will make set aside carbon sinks that much more valuable for emerging markets.
MrBill wrote:However, I am interested about something else as well. I know countries like Indonesia and Brazil are keen to get paid as caretakers of these forests, but if and when they are illegally logged or wildfires destroy them, for example, do they then reimburse those monies paid for them as carbon sinks? Compliance must be strict and verifiable to avoid double-dipping (as mentioned above) with regards to dual-use forests. Just curious? Thanks.
These are just two of the many fundamental problems with compensated reduction:
1. the issue of "permanence" and of the risks of natural disasters (wildfires; in the tropics, lightning often causes huge forest fires); against natural disasters, you can get insurance.
But permanence is a problem from an investment point of view; you need to keep the forest intact (or the agreed deforestation rates low) for years and years on end; this requires huge up-front investments in institutional capacity building (monitoring against illegal loggers, investments in new and highly accurate remote sensing, even investments in good governance will be required, etc...) and in compensation (only a mix between paying up front and paying after an agreed period would work).
Not many investors are willing to put up so much money up front; the return is guaranteed but risky and can turn out to be lower than expected (nobody knows how effective investments in capacity building will be; nobody knows where carbon-markets will be in 10 years time).
2. the issue of "carbon-leaking" and of "social leaking"; put simply: if you keep a forest intact, this means communities cannot convert it into agriculture, so you'd have to import/transport fuel, food, fiber, etc... over long distances to these communities; this brings CO2 with it (carbon-leaking); many of this type of side-effects will occur.
Same story with "social leaking": communities might have to be physically moved, some fear, because it will take a long time to actually pay them for not cutting down trees; this can turn out to become a very repressive, even anti-poor type of scheme (they could basically be kicked off their lands or lose their traditional forest-based livelihoods); also, like you say, it's a top-down scheme, and you know what that means in developing countries, especially in Africa; lots of the cash never reaches those who should receive it.
The biofuel option is entirely different, at least in principle. It would be producer-driven, it's bottom-up, and you get the cash instantly. It's also a much more flexible option.
seldom_seen wrote:Bioman wrote: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.
Indonesia has not 'set-aside' any land. They have been burning the rainforests of Borneo and Sumatra to the ground to raise a mono crop of palm. Endangered Orangutans are literally being burnt alive in their rainforest homes. There is no 'set-aside' going on here. This is a wholesale assault on what remains of the lungs of the planet. The smoke from the fires can be seen from space.
seldom_seen wrote:Bioman wrote: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'.
This is a dumb idea created by someone who spends too much time inside, at a desk. Most of the deforestation in the Amazon is not taking place through any sort of legal framework. Illegal cattle operations are slashing and burning and disappearing. The forest fires in indonesia are mammoth and not controlled or managed.
seldom_seen wrote:Furthermore, the west is not going to pay the developed world to keep their forests intact. Even if they wanted to, they soon won't be able to afford it.
seldom_seen wrote:Bioman wrote:So does anyone know where I can find realistic medium to longterm price projections for oil, preferrably written by Peak Oil advocates?
realistic? you may want to toss some dice, or find a dartboard. We've entered uncharted territory when it comes to oil prices. One thing you can bet on though is volatility.
MrBill wrote:I think any price prediction is completely arbitrary. The world economy has successfully adopted to $15, $30, $45, $60 and even $75 per barrel oil even as global GDP continued to expand by 4-5% p.a. of uninterupted growth.
I beg to differ here. I believe that we only barely scratched the surface concerning what we "adapted to". I would submit to you that official claims and numbers concerning GDP and economic indicators are flawed when it comes to energy costs. Hell, here in the state they dont take into account the price per gallon at the pump.
We are in a grand experiment once we go above right about where we are now. Anything above 60 is going to be detrimental over the long haul. We only touched the mid 70's for a short period, hardly what i would call "adapting". Its obvious that this did put a dent in things and would have caused far worse problems if we hadnt seen the price come down as quickly as it did.
Bioman wrote:We've ran several simulations with a max of $120pb. But we now wanted some "sources", names, just to make sure the report's bibliography shows a diversity of views (Peak Oil authors differ radically from the more conservative estimates of the energy establishment).
HEARING BEFORE THE SUBCOMMITTEE ON ENERGY AND AIR QUALITY OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED NINTH CONGRESS FIRST SESSION DECEMBER 7, 2005 Serial No. 109-41
Users browsing this forum: shortonoil and 4 guests