Current energy patterns are risky

Current energy patterns are risky

Jeffrey D. Sachs, Project Syndicate

Where energy is concerned, everything seemed simple before the
Iraq War. The U.S. would topple Saddam, Iraq's vast oil reserves
would be unleashed after a short period of reconstruction, and
world petroleum prices would drop to under US$20 per barrel.
Instead, world oil prices have soared to $35 per barrel. No
surprise, then, that new attention is being focused on energy
supplies. But the basic message is clear: Current energy patterns
are risky and must change.

Two interconnected energy issues will shape our economic and
geopolitical future for decades to come. The first is that
dependence on Middle East oil is increasingly risky. Nobody knows
how much oil is left and how much it will cost to extract, but
the peak of global oil production will probably be reached
sometime in the next quarter century, perhaps even in the next
few years. Remaining oil supplies will be concentrated in the
volatile Middle East.

Meanwhile, global demand for energy will soar as the economies
of China, India, Brazil, and other countries grow. If the Middle
East is already at a breaking point, imagine what could happen if
competition for Middle East oil intensifies among America,
Europe, China, India, Japan, and others.

The second great challenge is that our modern energy system is
destabilizing the global climate. Petroleum and other fossil
fuels (coal and natural gas) are causing long-term changes in the
global climate, but few people appreciate the risks.

There are three largely unrecognized problems:

o climate change will shift every aspect, such as temperature,
rainfall, and storm patterns, as well as bringing fundamental
changes in the physical environment, such as rising sea levels
and changes in ocean chemistry. The effects are unpredictable but
likely to be huge, in terms of crop production, diseases, costs
and availability of irrigation and drinking water, coastal
erosion, and so forth;

o climate change may not be gradual. The long history of
climate change shows the risks of dramatic and abrupt changes
over the course of but a few decades;

o humans might react badly to such changes, because changes in
monsoon patterns or sea levels and the ensuing economic distress
could provoke massive political unrest, refugee movements, and
violent conflict.

These challenges -- petroleum scarcity, growing instability in
the Middle East, and climate change -- require clear thinking.
Some alarmists declare that we need to drastically reduce energy
use on a global scale, undermining the global economy.
Efficiencies in energy use are possible, but they cannot solve
either the problem of long-run oil supplies or climate change.

Others declare that we must kick the fossil fuel habit and
make a mad dash for renewable energy sources such as solar or
wind power. Yet these alternatives are expensive, and cannot
realistically replace fossil fuels.

Fortunately, if we plan for the long term on a global scale,
we can find our way through these challenges. Our goals should be
reliable supplies of energy that are environmentally safe at
affordable prices.

There are two key ideas here. First, we should recognize that
even as oil becomes scarce, other fossil fuels such as coal, gas,
and unconventional sources such as shale and tar sands, will
remain plentiful for centuries. We should aim to develop
technologies and infrastructure so that these other fossil fuels
can be used efficiently and safely.

Chemical processes already exist, for example, to convert coal
into gasoline. Coal can also be converted into hydrogen if we
choose to go down the road of a hydrogen-based economy, in which
hydrogen-powered fuel cells replace the internal combustion
engine in automobiles. The jury is still out on whether the
hydrogen economy will be cost effective.

Second, as these other fossil fuels take up the slack when oil
production reaches a plateau or starts to decline, the effects of
fossil fuels on the climate must be brought under control. The
environmentally sound manner for using fossil fuels in the future
will involve capturing the carbon dioxide at the power plant
before it is emitted into the atmosphere, and then disposing of
it by somehow burying it in the ground. This process, called
"carbon capture and disposal," is being pursued by some of the
world's leading engineers.

Our energy future will depend not on one solution, but on a
variety of steps: Exploration and development of new petroleum
sources, especially outside the Middle East; increased energy
efficiency; long-term development and adoption of affordable
renewable sources; and the environmentally safe use of
alternative fossil fuels such as coal. Today's course of action
-- in which we neglect the coming squeeze in global oil supplies,
rely too heavily on Middle East oil, and ignore the environmental
consequences of fossil fuels -- is reaching a dead end. Reality
will catch up with us.

How then to think ahead? The world's largest energy users,
starting with the U.S., Europe, China, Japan, and India, need to
agree on collective actions to develop new technologies for
carbon capture and storage, and for the affordable development
and use of alternative energy supplies. We need to make certain
that market prices for energy use reflect the true social costs
of using energy, so that energy users and energy suppliers make
better choices regarding energy efficiency, the development of
alternative energy sources, and the adoption of environmentally
safe technologies.

The writer is Professor of Economics and Director of the Earth
Institute at Columbia University.