Fossil fuels (coal, oil and gas) are finite — consume them for long enough and global resources will eventually run out. Concerns surrounding this risk have persisted for decades. Arguably the most well-known example of this was Hubbert’s Peak Theory — also known as the Hubbert curve.
M. King Hubbert, in 1956, published his hypothesis that for any given region, a fossil fuel production curve would follow a bell-shaped curve, with production first increasing following discovery of new resources and improved extraction methods, peaking, then ultimately declining as resources became depleted.1
His prediction that the United States would peak in oil production in 1970 actually came true (although it peaked 17 percent higher than he projected, and its pathway since has not followed the bell-shaped curve he predicted). This is shown in the chart with Hubbert’s hypothesized peak shown alongside actual US production data reported by the Energy Information Administration (EIA); both are measured in barrels produced per year.2
Many have attempted to apply Hubbert’s theory at not only a regional, but also a global level to answer the question: When will we run out of fossil fuels?3
Most attempts have, however, been proven wrong. During the 1979 oil crisis, Hubbert himself incorrectly predicted the world would reach ‘peak oil’ around the year 2000; and in the decades since, this prediction has been followed by a succession of premature forecasts by analysts.4
Meanwhile, actual global oil production and consumption continues to rise.
The difficulty in attempting to construct these curves is that our discovery of reserves and technological potential to extract these reserves economically evolves with time. If we look at trends in proven fuel reserves, we see that our reported oil reserves have not decreased but increased by more than 50 percent, and natural gas by more than 55 percent, since 1995. This fact, combined with changes in rates of consumption means that predicting ‘peak fossil fuel’ is highly uncertain.5
To give a static indicative estimate of how long we could feasibly consume fossil fuels for, we have plotted the Reserves-to-Production (R/P) ratio for coal, oil and gas based on 2015 figures. The R/P ratio essentially divides the quantity of known fuel reserves by the current rate of production to estimate how long we could continue if this level of production remained constant. Based on BP’s Statistical Review of World Energy 2016, we’d have about 115 years of coal production, and roughly 50 years of both oil and natural gas remaining.6
Again, these figures are only useful as a static measure; they will continue to vary with time as our capacity to economically source and extract fossil fuels changes, and our levels of consumption rise or fall.
However, whilst depleting reserves could become a pressing issue 50-100 years from now, there is another important limit to fossil fuel production: climate change. Carbon dioxide emissions remain trapped in the atmosphere for long periods of time, building up an atmospheric stock that leads temperatures to rise. To keep average global temperature increase below two degrees celsius (as has been agreed in the UN Paris Agreement), we can thus calculate the cumulative amount of carbon dioxide we can emit while maintaining a probability of remaining below this target temperature. This is what we define as a ‘carbon budget’. In the latest Intergovernmental Panel on Climate Change (IPCC) report, the budget for having a 50 percent chance of keeping average warming below two degrees celsius was estimated to be approximately 275 billion tonnes of carbon (as shown in the chart).7
Note that with each year that passes, the remaining carbon budget continues to decline—by the end of 2017, this figure will have further decreased from the IPCC’s estimates.
Here’s the crucial factor: if the world burned all of its currently known reserves (without the use of carbon capture and storage technology), we would emit a total of nearly 750 billion tonnes of carbon. This means that we have to leave around two-thirds of known reserves in the ground if we want to meet our global climate targets. However, it is important to keep in mind that this in itself is a simplification of the global ‘carbon budget’. As discussed in detail by CICERO’s Glen Peters, there is actually a variety of possible carbon budgets, and their size depends on a number of factors such as: the probability of staying below our two-degree warming target, the rates of decarbonization, and the contribution of non-CO2 greenhouse gases. For example, if we wanted to increase the probability of keeping warming below two degrees celsius to 80 percent, we would need stricter carbon limits, and would have to leave 75-80 percent of fossil fuels untouched.8
The quantity of fossil fuels which we would have to abandon is often referred to as ‘unburnable carbon’. According to a widely-quoted study by Carbon Tracker, there is significant potential for this unburnable carbon to result in major economic losses.9
If capital investment in carbon-emitting infrastructure continues at recent rates, it estimates that up to 6.74 trillion US$ (nearly twice the GDP of Germany in 2016) would be wasted over the next decade in the development of reserves that will eventually be unburnable. The study defines this as ‘stranded assets’.
So whilst many worry about the possibility of fossil fuels running out, it is instead expected that we will have to leave between 65 to 80 percent of current known reserves untouched if we are to stand a chance of keeping average global temperature rise below our two-degrees global target.