How the Looming Food and Energy Crises are Intertwined

A new report finds warns that the world is undergoing a period of intensified resource stress.

Without mincing words, the recently released white paper from esteemed British independent research group Chatham House begins with a sobering warning:

“The spectre of resource insecurity has come back with a vengeance. The world is undergoing a period of intensified resource stress, driven in part by the scale and speed of demand growth from emerging economies and a decade of tight commodity markets. Poorly designed and short-sighted policies are also making things worse, not better. Whether or not resources are actually running out, the outlook is one of supply disruptions, volatile prices, accelerated environmental degradation and rising political tensions over resource access.”

The 235 page report touches on environmental risks and inter-dependencies, the coming resource crunch, emerging issues in agriculture and energy, volatility as the new normal, and the emergent risk landscape we're now in and will be in the future.

Some of the most prescient findings from the executive summary:

In Agriculture
• Average prices for agricultural commodities are set to rise. By 2050, global demand for food is expected to have increased by 70–100 percent. Global cereal demand is increasing at 1.3 percent per year; average yields are growing at 0.9 percent.

• Volatility in agricultural commodities markets will persist. Global cereal stock-to-use ratios are at crisis levels below 20 percent, and will struggle to recover as demand continues to outstrip productivity growth.

• Climate change and extreme weather will become a growing problem for global food security, triggering regional food crises and global price spikes whenever they hit key production centers. Agriculture accounts for 70 percent of freshwater withdrawals worldwide, and up to 90 percent in developing countries.

• New trade flows are creating new inter-dependencies and new risks. Cereal imports for the Middle East and North Africa region from Russia and Ukraine have overtaken those from either the E.U. or the U.S., growing from 750,000 tons to more than 24 million tons – the risks of which became clear in 2011. Booming Chinese meat consumption has seen global soybean trade reorganize itself between China and South America.

• Concentration of production increases the risks of unilateral actions. During the 2008 crisis over 30 governments imposed export controls, bringing agricultural markets to the edge. In 2011, Russia’s export ban on wheat drove up international prices and led to the initial protests in North Africa that became the Arab Spring. Emerging regional production centers for key commodities such as wheat, rice and soybeans also raise the prospect of cartels.

• The sheer scale of China’s strategic food reserves and its levels of production and consumption mean that tight agricultural markets are highly sensitive to changes in China’s net trade position. A critical uncertainty is how long China’s policy of self-sufficiency in grains can be maintained, given the rising demand and environmental constraints it faces, and how any such retreat from this policy would be implemented.

In Energy
• The last decade saw the share of global fossil fuel trade going to China and India more than doubling in value terms (from 4.4 percent to 10.8 percent) and tripling in weight terms (from 4.5 percent to 14.3 percent).

• Some of the traditional exporters of energy have also emerged as the fastest-growing consumers of energy over the last decade: e.g. Saudi Arabia for oil (6 percent), Indonesia and Vietnam for coal (9 percent and 12 percent respectively), and Egypt and Thailand for gas (10 percent and 8 percent respectively). This may affect the ability of some to maintain export volumes in the future.

• With the dramatic growth of shale gas in the United States, global energy projections have been redrawn. China rather than Europe will be the next test case for unconventional gas development, with state companies directed to produce 30 bcm of gas from coal bed methane and shale by 2015 – more than double China’s 2008 natural gas import volume.

• The global coal market is being reshaped by the import profiles of China and India – the world’s largest and third largest coal producers respectively. With its expected increases in coal-fired power generation, India’s demand is projected to be 20 percent of today’s world coal trade and could overtake China’s volume of imports after 2020.

• Heavier volumes of energy trade together with a changing climate, extreme weather events and water stress will increase the vulnerability of the global energy production and transportation systems. Much of existing and planned infrastructure will be at risk from storm damage, rising sea levels and the effects of melting permafrost.

• Current mechanisms are inadequate to deal with oil supply shocks, particularly with the rise of new consumers not included in the IEA’s emergency sharing mechanism.

The findings in this report underscore the importance of our mission at Sustainable America. We are dedicated to the goal of untangling the unsustainable interdependence of food and fuel in America. We aim for 50 percent reduction of oil used in America by 2030 through a combination of energy efficiency measures, increased use of natural gas and electric powered vehicles and development of advanced biofuels.

Even simple daily measures like hypermiling (super efficient driving techniques) can help to reduce the amount of oil we're using in America. On the food front, we aim to increase food production in America through more diverse and energy efficient food systems while simultaneously reducing the amount of food waste in our country. Diverse and energy efficient food systems include locally grown and in season foods and urban farms, all of which help to shorten the distance from farm to plate. As the Chatham House report makes clear, we have some important challenges in the years ahead, but with concerted efforts and focused energy, we can make this a more sustainable America.

A link to the full white paper is available here.

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