02.12.2012 Jakob Schoof

Energy Turnaround American Style: Oil Glut to Swamp Architecture?

The USA wants to become the world's largest producer of oil by 2020. Could this mean that we have to expect a flood of cheap petroleum that will make passive houses, renewable energies and energy efficiency renovation uneconomical? There is still time for policy-makers do their homework.
Every year, the International Energy Agency (IEA) in Paris publishes the 'World Energy Outlook’. This bible for energy experts provides information about pressing questions like: How long will our oil reserves last? Where are new nuclear power plants being realised at the moment? How fast is the proportion of renewable energies growing and where are the largest efficiency potentials slumbering?

The dramatic changes in the global energy landscape predicted by IEA experts in this year's World Energy Outlook published last week have certainly caused a stir. According to these predictions, something that US president Obama has been propagating for months could in fact become reality. America wants and will be able to be completely self-sufficient in terms of energy requirements from 2020 onwards. It will then no longer be dependent on petroleum imported from the Arab countries.

So far so good. But Obama's energy autonomy is not based on renewable energy sources, but on so-called 'unconventional' oil and gas reserves. These are mainly located in porous shale formations predominantly found in the north of the USA and have to be released from the rock with an energy-intensive (and poisonous) process called fracking. With the help of these resources, the country – as well as its neighbour Canada – wants to become a net oil exporter in the coming years.

Will the turnaround in energy policy fall by the wayside?
An interesting question arising from this is: What does this mean for the German energy policy of the future, the EU's efforts to promote energy-efficient building, and the economic efficiency calculations by individuals planning a building project? Should anyone about to embark on an ambitious energy efficiency renovation think twice and keep the oil tank in the cellar after all?
It is likely that the Americans will consume the bulk of their abundance in petroleum oil (and gas) themselves. That would in fact even result in a short-term improvement of their climate footprint, because of the replacement of extremely climate-unfriendly coal with less harmful natural gas. Most of the then available Arabian Gulf oil reserves will probably go to emerging threshold countries like China and India. It is therefore unlikely that Europe will be flooded with cheap oil and gas in the near future, although the increase in energy prices could be slowed down. In the long term, experts expect the price of oil to settle between 90 and 120 US dollars per barrel.

This means: what's economical today, won't be uneconomical tomorrow. The EU may however have to rethink its energy roadmap for new buildings in the future. It is generally known that these are to fulfil the lowest energy standard (i.e. have a primary energy consumption of approximately zero) by 2021 – but only of course, if this is still economical by then. History has however taught us that cheap oil usually makes ambitious energy standards uneconomical, except if politicians intervene with corresponding subsidy programmes and tax increases (for fossil fuels). This is where the EU and its member states will have to be active in the future.

A further political focus will have to be the promotion of energy efficiency. This is also demanded by the IEA experts: if governments do not increase their efforts in this area, then only about one third of the currently economically effective energy savings will be realised worldwide by 2035.

Incidentally: the new oil glut would naturally also have a price. In 2011, the worldwide subsidies for fossil energies amounted to 523 billion dollars according to the IEA – a 30% increase compared to the previous year. For comparison: subsidies for renewable energies were only about 88 billion dollars in 2011.
... and the climate change continues
It remains to be seen whether the USA will actually be able to realise its development goals with regard to oil and gas production – and if yes, for how long the newly tapped sources will deliver. Experience has shown that unconventional oil and gas reserves have the tendency to run dry faster than conventional ones.

The progress of climate change will moreover not be halted by developments of this kind. If we continue as before and on top of that burn the US oil and gas reserves now expected to become available, then the average global temperature will increase by 3.6 degrees in the long term according to the IEA. Alone for this reason, a 'carry on as before' policy cannot be a motto for Europe's construction industry. A consideration of how future building standards could meet the already foreseeable rise in temperature would be an obvious and urgent item on the agenda to start with.
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