Energy, environment, economy inextricably linked

Bridge to Energy Future Is Vital

American Association of Petroleum Geologists (AAPG)
The top graph depicts percentage of global energy and the bottom graph depicts actual units of energy consumption in quadrillion Btus. Colors represent energy types and are labeled in the top figure. Actual data (EIA, 2007) are to the left of the vertical line; to the right are my forecasts to 2030.
The top graph depicts percentage of global energy and the bottom graph depicts actual units of energy consumption in quadrillion Btus. Colors represent energy types and are labeled in the top figure. Actual data (EIA, 2007) are to the left of the vertical line; to the right are my forecasts to 2030.

The bridge from a fossil-energy present to an alternate-energy future will span many decades – and as with the building of any bridge, a solid foundation is vital.

A well-designed energy bridge will move the world ahead in a reasonable fashion; accelerating an energy transition as the result of a poorly informed public enabling politically naive policies could – likely would – lead to global energy, economic and consequently environmental instability.

Building the energy bridge will not be simple; tough challenges rarely are. The process will involve:

  • The delicate interplay among energy, environment, economy and public energy policy.
  • A necessary partnership among government, industry, academia and non-government organizations.
  • Parallel investments in and favorable policies toward fossil energy and alternatives.
  • Compromise and wisdom from leadership.
The Three E Waltz

Energy, economy and the environment are inextricably linked.

Oil price, as an historical proxy for energy price, has a known relationship to economic health. In the United States, significant oil price increases are often followed by economic recession, as observed following the oil price spikes in 1973, 1979, 1990 and 2008. Further, global data show a strong positive correlation between per capita energy consumption and per capita income.

Energy price has a known impact on consumer behavior. Using oil as an example, when the price of oil is high, demand for oil dampens.

This was most notable from 1973-84, when global oil demand, which had been rising steadily in prior decades, was dampened considerably as a result of steep oil price increases driven by the OPEC supply cutoff to the United States. Although global demand for oil again increased from 1985-2005, the rate of increase was considerably lower than prior to 1973.

In other words, the oil price shock of the early 1970s changed consumer behavior. Importantly, oil, as a percentage of global energy, peaked in 1979 at just under 50 percent and has been decreasing since that time.

The world went through another significant oil price increase from 2002-08, this time driven largely by investor speculation combined with increased demand from developing nations – and as expected, in 2007 and 2008 global demand for oil dampened. It is likely that the slope of the forward demand curve for oil, relative to the 1980s and 1990s, will again decrease, perhaps even plateau, as consumer behavior for energy changes and oil continues to decline as a percentage of global energy.

A lesser-known relationship is between energy and the environment – when the world is in recession, as it is today, less money is spent on environmental action.

Just read the newspaper. In various ways nations are saying, “We cannot afford environmental investments –especially those related to atmospheric reduction of anthropogenic carbon.”

Healthy energy systems are related to healthy economies, which in turn allow environmental investment. Unbalanced attention, positive or negative, on any of the three Es will throw the system out of balance.

The Energy Bridge

Fossil fuels represent 87 percent of today’s global energy mix. Under any stable scenario the foundation of an alternate, lower carbon energy future will be built with fossil fuels.

The irony should be very apparent. Those nations that do not understand – or choose to reject – this reality will be left behind.

Looking out to 2030, I call for the percentage of fossil fuels to decrease to 80 percent, with a greater proportion of natural gas and lower proportion of oil relative to today.

Forecasts, simple or elaborate, require fundamental underpinnings. My simple forecast is underpinned by resource estimates and economics; we have the coal, oil, natural gas, water and uranium resources to support my forecast to 2030, and these sources of energy likely will remain the most affordable.

New conventional oil and natural gas frontiers include ultra-deep water, the Arctic and other extreme operational environments.

As existing and new conventional reserves begin to decline, unconventional oil and natural gas resources – perhaps someday including natural gas hydrates – will represent a growing part of the future fossil energy mix. Clean and economic extraction of these new reserves will be enhanced by industry-government-academic partnerships.

The fossil bridge must embrace energy efficiency, including cars and light trucks, insulation and lighting, appliances, industrial uses and beyond. Net energy savings is not one-for-one with efficiency owing to the rebound effect –we tend to use more units as each unit becomes more efficient – but that effect diminishes with scale and time.

Diversification of the global energy portfolio is critical, particularly for transportation. Options to conventional oil include unconventional oil, coal and natural gas converted to liquids, and certain biofuels. There likely also will be a growing electrification of the vehicle fleet. Although it is difficult to know, thoughtful studies indicate that plug-in hybrid vehicles represent a reasonable transition path to a more efficient car and light truck future.

Increased electricity diversity is important. Cleaner baseload generation options include coal and natural gas with sequestration (CCS), offering the greatest promise for large-scale removal of carbon from carbon-fueled, stationary sources of CO2.

Nuclear technology has advanced significantly, thanks to progress in Europe and Japan, and nuclear energy will play an important global role. This will require existing and new uranium feedstocks; policy that reduces the regulatory and permitting roadblocks in some geopolitical regions; real options for waste storage; and the will to address the legal posturing designed simply to add costly delays.

My forecast accelerates the growth of non-nuclear, non-hydro renewable energy more quickly than any other source, doubling in output approximately every seven years; no simple task. Renewable energy is not limited by resource – there is plenty of wind and sun – but rather by energy density. Quite simply, wind, waves, tides, biomass and solar are low-density “fuels,” and they require a tremendous amount of infrastructure and earth surface area, given current technology.

A grand challenge in energy involves step changes in energy (electricity) storage and transmission. Battery technology has advanced, but batteries are still relatively inefficient, expensive and chemically intensive, and thus represent an environmental challenge, both in terms of manufacturing and ultimate disposal.

Other renewables, such as large scale solar PV (photovoltaic), face environmental challenges related to the chemical manufacturing processes and large scale disposal challenges. Large, non-chemical “batteries” such as pumped water and compressed air offer interesting promise and opportunity for geological input, but are still regionally constrained in terms of access to subsurface caverns or adequate water supplies.

Technology advancements required to scale-up alternative energy sources to meet massive and growing global electricity demand will most certainly continue to develop.

Many great ideas are being considered, and nanotechnology research offers new frontiers – but it is vital to recognize that large-scale advances will require invention, new materials, substantial investment and well-considered policy to foster private sector, cost-competitive solutions.

Markets have and will continue to weigh heavily on commercial deployment.

Policy for Security

Alternate energies represent only a small percentage of today’s energy mix, not because of lack of political will or subsidies, but instead because of the fundamentals of economics, kinetics, thermodynamics and technology. Policies (and policy makers) that attempt to overly accelerate these limiting fundamentals have fallen, and will continue to fall short.

In terms of energy policy, energy security should not be confused with energy independence, which hints of unhealthy nationalism. Secure energy is affordable, available, reliable and clean.

A global international energy roadmap to achieve security will:

  • Address energy efficiency and infrastructure.
  • Diversify fuel options.
  • Integrate energy, economy and the environment into policy.
  • Strengthen global energy trade and investment.
  • Broaden dialogue between developing and developed nations.
  • Enable global work force balancing opportunities.

If a price is to be set on carbon, it must be transparent, predictable, reasonably stable and coordinated among major developing and developed nations, especially in terms of wise use of carbon-derived revenues. Cap-and-trade schemes struggle to meet any of these criteria; a carbon tax comes closer.

The challenges facing the world are great. Wise leaders will build technological, scientific, economic, political, cultural and social bridges, remove walls that inhibit progress, embrace scientific debate and create policy that is guided, but not dictated, by scientific forecasts.

I am confident that visionaries will rise to meet these challenges – and among these will be geoscientists! That thought motivates me daily.

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