Dale conceded to the Society of Business Economists annual conference in London he addressed this week that existing reserves of fossil fuels – oil, gas and coal – if used in their entirety would generate somewhere in excess of 2.8 trillion tonnes of CO2.
This is well over the 1 trillion tonnes or so the scientific community considers is consistent with limiting the rise in global mean temperatures to no more than 2C – and this takes no account of the new discoveries which are being made all the time or of the vast resources of fossil fuels not yet booked as reserves.
In saying this, though, he was quick to differentiate oil and gas from coal, which he said was the highest-carbon fuel, noting that burning current reserves of coal would account for 60% of those emissions.
“It follows that coal is likely to be more affected by future climate policies than either oil or gas,” Dale said.
He added that emerging technologies like carbon capture and storage mean industry can find new ways of using fossil fuels for power generation which significantly reduce greenhouse gas emissions.
Ironically, CCS has been a major push from the World Coal Association as evidence that coal can be used in an environmentally-friendly – or at least more emissions-friendly – way.
Total proved reserves of oil – reserves of oil which, with reasonable certainty, can be economically recovered from known reservoirs – are almost 2.5 times greater today than in 1980.
While increases in available oil resources are nothing new, Dale said, “what has changed in recent years is the growing recognition that concerns about carbon emissions and climate change mean that it is increasingly unlikely that the world’s reserves of oil will ever be exhausted”
Dale said the pace at which estimates of recoverable oil resources are increasing, together with growing concerns about the environment, means that “it seems unlikely that all of the world’s oil will be consumed”.
This impacts industry’s understanding of the oil market, he said, as it suggests that there is no longer a strong reason to expect the relative price of oil to increase over time.
“As with other goods and services, the price of oil will depend on movements in demand and supply,” Dale said.
“The emergence of shale oil, together with growing concerns about climate change and the environment, means that the beliefs that many of us have used in the past to analyse the oil market are out of date.”
