Oil threat prompts call for green industrial revolution

Soaring oil prices may drive politicians to take tough action to create a low-carbon economy while sceptics are still arguing the toss over climate change.

The era of cheap oil is ending and, unless we take urgent measures to reduce our dependence on it, Britain – and by extension other oil-importing countries – faces a crisis as early as 2015, according to the UK Industry Taskforce on Peak Oil and Energy Security.

Its latest report, which calls for a “green industrial revolution” was launched a few weeks ago by a panel of high-profile business leaders: Richard Branson, founder of Virgin Group, Phllip Dilley, chairman of Arup, Ian Marchant, CEO of Scottish and Southern Energy, Brian Souter, CEO of Stagecoach Group, Jeremy Leggett, chairman of Solarcentury, and Will Whitehorn, president of Virgin Galactic.

We’re used to hearing this call from environmentalists and climate change campaigners, but these leaders come to the same conclusion based purely on the availability of oil. The message: regardless of whether or not you believe in man-made climate change, we still have to decarbonise our economy.

The taskforce claims that within the next decade, possibly as early as 2015, we will have reached peak oil - the maximum rate at which we can pump oil out of the ground. It forecasts that prices will soar because demand from developing countries is still growing and because new oil reserves are increasingly expensive to exploit.

Developed world economies have been built on the premise of cheap and plentiful oil, so shortages and high prices are likely to affect vast areas of our lives, causing social, economic and political disruption. We use oil for transport, heating, fertilisers and plastics - so high prices will feed through into more expensive food, travel, utility bills and goods in our shops. The poorest people are likely to be worst hit.

Countries which rely on oil imports will be badly hit. Although North Sea oil is still flowing, the UK has been a net importer since 2006, and the Taskforce warns that it could face a balance of payments crisis by the middle of the decade.

No wonder then that the report is called: ‘The oil crunch – a wake-up call for the UK economy’. It makes an explicit link with the credit crunch and warns that the UK must not be caught out again and needs to take action now.

The report calls for the new UK government, after the election, to work with local authorities, business and consumers to put in place policies to deal with the threat of peak oil. Key recommendations include support for low-carbon transport technology and sustainable bio-fuels; a focus on energy efficiency and the development of alternative sources of energy, including renewables and nuclear; and incentives to encourage the public to adopt greener behaviour.

The danger of framing the argument for a low-carbon economy solely in terms of climate change is that many people remain determined sceptics. The science is complex, scandals like the University of East Anglia emails shake public faith, and many feel they are being asked to take painful action now to avert a distant and nebulous threat.

In contrast, peak oil offers a clear and present danger. Oil is part of our daily life, we’ve all experienced the pain of petrol price spikes and it’s easy to understand the damaging consequences of a sustained increase in prices. Peak oil could just be the unambiguous threat we need to galvanise the green industrial revolution.