Local Action for a Sustainable Tomorrow

NATIONAL PETROLEUM COUNCIL
Draft Report
Facing the Hard Truths about Energy - A comprehensive view to 2030 of global oil and natural gas
July 18, 2007
http://downloadcenter.connectlive.com/events/npc071807/pdf-downloads/Fin...

Executive Summary
The American people are very concerned about energy—its availability, reliability,
cost, and environmental impact. Energy also has become a subject of urgent policy
discussions. But energy is a complex subject, touching every part of daily life and the
overall economy, involving a wide variety of technologies, and deeply affecting many
aspects of our foreign relations. The United States is the largest participant in the global
energy system—the largest consumer, the second largest producer of coal and natural
gas, and the largest importer and third largest producer of oil. Developing a framework
for considering America’s oil and natural gas position now and for the future requires a
broad view and a long-term perspective; both are provided in this study.
During the last quarter-century, world energy demand has increased about 60 percent,
supported by a global infrastructure that has expanded to a massive scale. Most forecasts
for the next quarter-century project a similar percentage increase in energy demand from
a much larger base. Oil and natural gas have played a significant role in supporting
economic activity in the past, and will likely continue to do so in combination with other
energy types. Over the coming decades, the world will need better energy efficiency and
all economic, environmentally responsible energy sources available to support and
sustain future growth.
Fortunately, the world is not running out of energy resources. But many complex
challenges could keep these diverse energy resources from becoming the sufficient,
reliable, and economic energy supplies upon which people depend. These challenges are
compounded by emerging uncertainties: geopolitical influences on energy development,
trade, and security; and increasing constraints on carbon dioxide (CO2) emissions that
could impose changes in future energy use. While risks have always typified the energy
business, they are now accumulating and converging in new ways.
The National Petroleum Council (NPC) examined a broad range of global energy
supply, demand, and technology projections through 2030. The Council identified risks
and challenges to a reliable and secure energy future, and developed strategies and
recommendations aimed at balancing future economic, security, and environmental goals.
The United States and the world face hard truths about the global energy future over
the next 25 years:
• Coal, oil, and natural gas will remain indispensable to meeting total projected
energy demand growth.
• The world is not running out of energy resources, but there are accumulating risks
to continuing expansion of oil and natural gas production from the conventional
sources relied upon historically. These risks create significant challenges to
meeting projected energy demand.
• To mitigate these risks, expansion of all economic energy sources will be
required, including coal, nuclear, renewables, and unconventional oil and natural
gas. Each of these sources faces significant challenges—including safety,
environmental, political, or economic hurdles—and imposes infrastructure
requirements for development and delivery.
• “Energy Independence” should not be confused with strengthening energy
security. The concept of energy independence is not realistic in the foreseeable
future, whereas U.S. energy security can be enhanced by moderating demand,
expanding and diversifying domestic energy supplies, and strengthening global
energy trade and investment. There can be no U.S. energy security without global
energy security.
• A majority of the U.S. energy sector workforce, including skilled scientists and
engineers, is eligible to retire within the next decade. The workforce must be
replenished and trained.
• Policies aimed at curbing CO2 emissions will alter the energy mix, increase
energy-related costs, and require reductions in demand growth.
Free and open markets should be relied upon wherever possible to produce efficient
solutions. Where markets need to be bolstered, policies should be implemented with care
and consideration of possible unintended consequences. The Council proposes five core
strategies to assist markets in meeting the energy challenges to 2030 and beyond. All
five strategies are essential—there is no single, easy solution to the multiple challenges
we face. However, the Council is confident that the prompt adoption of these strategies,
along with a sustained commitment to implementation, will promote U.S.
competitiveness by balancing economic, security, and environmental goals. The United
States must:
• Moderate the growing demand for energy by increasing efficiency of
transportation, residential, commercial, and industrial uses.
• Expand and diversify production from clean coal, nuclear, biomass, other
renewables, and unconventional oil and natural gas; moderate the decline of
conventional domestic oil and natural gas production; and increase access for
development of new resources.
• Integrate energy policy into trade, economic, environmental, security, and foreign
policies; strengthen global energy trade and investment; and broaden dialogue
with both producing and consuming nations to improve global energy security.
• Enhance science and engineering capabilities and create long-term opportunities
for research and development in all phases of the energy supply and demand
system.
• Develop the legal and regulatory framework to enable carbon capture and
sequestration (CCS). In addition, as policymakers consider options to reduce
CO2 emissions, provide an effective global framework for carbon management,
including establishment of a transparent, predictable, economy-wide cost for
CO2 emissions.
The Council identified these strategies by drawing upon more than 350 expert
participants with wide-ranging backgrounds to provide analysis, information, and insight.
Additionally, extensive outreach efforts involved more than 1,000 people actively
involved in energy. Task Groups for this study reviewed a broad range of public and
aggregated proprietary studies in order to understand and evaluate the many assumptions
and forces behind recent global energy projections.
Given the massive scale of the global energy system and the long lead times
necessary to make significant changes, concerted actions must be taken now, and
sustained over the long term, to promote U.S. competitiveness by balancing economic,
security, and environmental goals. The Council’s findings and recommendations are
summarized below and explained in detail in the report chapters.