Peak oil highlights need for a unified policy

The focus of this week's Catalyst program (both videos and transcripts are now available online) on peak oil has resulted in another mention in the mainstream press, with Paddy Manning from Fairfax writing a column on the topic in this weekend's papers - Peak oil highlights need for a unified policy.

Peak oil is forcing its way to the top of the agenda with stark warnings from the International Energy Agency and others repeated on ABC radio and television this week, after an investigation by the Catalyst program. ...

In the lucky country, of course, we'll be fine. Rising income from coal and gas exports will help us pay higher oil prices, even as our oil trade deficit blows out and oil hits $US200 ($A183) a barrel, as is forecast often enough. Can we go back to sleep now?

Not when the climate implications are taken into account, says Ian Dunlop, a former Shell executive and deputy convenor of the Association for the Study of Peak Oil.

Dunlop says the manifestations of peak oil were temporarily masked by the financial crisis - itself partly triggered by high oil prices which hurt struggling homeowners in the US subprime mortgage belts - but are now confronting us as the developed world increases consumption. The world faces a 20-30 per cent reduction in oil availability by 2020, he says.

The problem with future oil production, Dunlop says, is the amount of energy you get out for the energy you expend - your return on investment - is dropping.

''Cheap oil is disappearing. A lot of major exporting countries in the Middle East are now finding they need more for domestic markets, and there's not as much available for export.''

While Australia must keep drilling for oil, Dunlop says standards for deep-water exploration will have to be rethought following the Gulf of Mexico and the Timor Sea spills, adding delay and cost to production, just as the Piper Alpha oil rig explosion in the 1980s, which killed 167 workers, led to a complete revamp of safety practices in the North Sea.

Alternatives such as conversion of gas or coal to liquids carry a huge penalty in terms of carbon emissions. Electrification of transport only works if there is a switch to clean energy.

Desperately needed, of course, is a policy to tackle both peak oil and climate change at the same time.

Last year, think tank Beyond Zero Emissions, with Melbourne University's Energy Research Institute, published its Zero Carbon Australia Stationary Energy Plan, which shook things up by calling for investment of $37 billion a year to switch the whole country over to 100 per cent renewable energy within a decade. The plan included enough installed energy capacity to power all our transport needs.

Beyond Zero has assembled a team of scientists, engineers and planners working pro-bono on a fully costed, national transport plan that will take in three streams: city passenger and public transport, freight, and intercity transport and high-speed rail. The report is due out by the end of the year.

Executive director Matthew Wright says the opportunity is there for Australia to invest in new, climate-friendly transport infrastructure and avoid spending on high-priced oil imports, which Beyond Zero estimates could exceed $50 billion a year by 2015. ''That's what I call a great big tax,'' says Wright.

The thrust of the plan is to electrify the country's road and rail transport systems as much as possible with a renewable-powered grid, and the use of liquid biofuels to replace oil for range-extending and some off-road and agricultural uses. Thousands of kilometres of new light and heavy rail would be laid across major cities. Auto manufacturers would retool to make electric cars locally.

Very fast trains would link the capital cities, excluding Darwin, and the major regional centres.

It's the infrastructure we're going to need. Unfortunately it's not the infrastructure we're building, which is heavily skewed towards roads and against rail.

And if it all sounds expensive consider that we are still subsidising oil at a rate of billions of dollars a year, whether through diesel fuel tax rebates or a fringe benefits tax regime that encourages private company car use. As peak oil bites, that's crazy.