Peak oil and climate must be tackled in tandem  

The SMH has a rare mainstream media article on peak oil (which has dropped off the charts since the oil price fell off its highs) - Peak oil and climate must be tackled in tandem.

PEAK oil and climate change are on parallel paths. Both are inextricably linked and can only be solved together, requiring a shift away from a reliance on fossil fuels into what is now called the "post-carbon economy". For Prime Minister Julia Gillard's climate change committee, peak oil is an inconvenient truth, and BHP Billiton chief executive Marius Kloppers's call for a carbon price and tax tells us something needs to be done soon.

As with climate change, the peak oil debate has been going on for years. The fundamental argument: how close are we to peak levels? International Energy Agency chief economist Faith Birol warns that the output of conventional oil will peak in 2020 if demand continues. Other specialists say oil will not so much peak as plateau, giving countries time to deal with the problem. It's all a question of timing.

These debates are a distraction from the real issues. Whether climate change is man-made or naturally occurring, we are seeing a change in weather patterns around the world. Similarly, governments, insurers and think tanks acknowledge that we face an energy supply crunch, suggesting peak oil is no longer the stuff of conspiracy theorists.

According to an article published in Der Spiegel magazine this month, a German military think tank report strategically leaked online warns that peak oil will occur soon "and that the impact on security is expected to be felt 15 to 30 years later". Peak oil, according to the report, could threaten democracy, creating "room for ideological and extremist alternatives to existing forms of government". It says this could "in extreme cases lead to open conflict".

It also warns of market failures, huge tax rises, food shortages and widespread rationing. Oil is used in producing 95 per cent of industrial goods, so the report predicts price shocks right through the supply chain. "In the medium term, the global economic system and every market-oriented national economy would collapse,'' it says.

The Germans also warn of a shift away from a market economy. It's back to central planning.

"A conceivable alternative would be government rationing and the allocation of important goods or the setting of production schedules and other short-term coercive measures to replace market-based mechanisms in times of crisis,'' the report says.

The climate change-peak oil link is also made in a new Australia Institute study, Running on Empty? The peak oil debate. It says tackling climate change and peak oil together is necessary but complicated. On the demand side, for example, China and India have turned global energy markets on their heads and will account for 70 per cent of new oil demand between now and 2030. More complications are added with technically feasible solutions that are climatically disastrous.

The first step is a carbon price. More to the point, we need a carbon tax. A trading system would not work as well because permit prices fluctuate, creating uncertainty and making it impossible to build a business case for investment in energy alternatives.