Nov 09, 2010 | |
Oil will run dry before substitutes roll out |
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(Nanowerk News) At the current pace of research and development, global oil will run out 90 years before replacement technologies are ready, says a new University of California, Davis, study based on stock market expectations. | |
The forecast was published online Monday (Nov. 8) in the journal Environmental Science & Technology "Future Sustainability Forecasting by Exchange Markets: Basic Theory and an Application"). It is based on the theory that long-term investors are good predictors of whether and when new energy technologies will become commonplace. | |
"Our results suggest it will take a long time before renewable replacement fuels can be self-sustaining, at least from a market perspective," said study author Debbie Niemeier, a UC Davis professor of civil and environmental engineering. | |
Niemeier and co-author Nataliya Malyshkina, a UC Davis postdoctoral researcher, set out to create a new tool that would help policymakers set realistic targets for environmental sustainability and evaluate the progress made toward those goals. | |
Two key elements of the new theory are market capitalizations (based on stock share prices) and dividends of publicly owned oil companies and alternative-energy companies. Other analysts have previously used similar equations to predict events in finance, politics and sports. | |
"Sophisticated investors tend to put considerable effort into collecting, processing and understanding information relevant to the future cash flows paid by securities," said Malyshkina. "As a result, market forecasts of future events, representing consensus predictions of a large number of investors, tend to be relatively accurate." | |
Niemeier said the new study's findings are a warning that current renewable-fuel targets are not ambitious enough to prevent harm to society, economic development and natural ecosystems. | |
"We need stronger policy impetus to push the development of these alternative replacement technologies along," she said. |
Source: University of California - Davis |
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