By Paolo von Schirach
September 29, 2013
WASHINGTON – A recent (and rare) TIME magazine piece on energy, (Power Surge, October 7, 2013), provides a good overview of America’s vastly improved energy outlook. What is most remarkable is that in just a few years we have moved from very negative predictions of energy scarcity and high prices to a brand new scenario of real abundance provided by multiple sources now economically viable thanks to technological advances. Hydraulic fracturing and horizontal drilling now allow energy companies to extract shale oil and gas. Just a few years ago this was considered impossible. But there has also been considerable progress in solar and wind. In the meantime, as a nation we have learnt how to consume less energy. Therefore, even with a growing economy, the energy content of whatever we produce is shrinking. Furthermore, our gigantic fleets of cars and trucks have become more fuel efficient and they are projected to be even more so in the next years, on account of federal CAFE mandates.
Burn more carbon, cook the planet
However, as the TIME story points out, there is a huge fly in the ointment. Much of the US new energy supply comes from hydrocarbons: “non conventional” shale oil and most of all very inexpensive natural gas extracted from shale formations. And that is of course a problem if we subscribe to the prevailing consensus whereby global warming is the result of billions of people burning way too much fossil fuel, (with America in the lead regarding per capita use). Abundant and cheap carbon energy is great news. But if the resulting emissions will cook the planet, with catastrophic climate change consequences for humanity, then it is not such a good idea. From this perspective, the danger represented by cheap shale gas is that it is indeed so cheap that it will make it nearly impossible to move away from carbon based energy.
How do you give up cheap carbon energy?
Assuming that this is indeed the case, we have a huge public policy problem. It is very hard to give up an immediately available, inexpensive source of energy on account of the high probability that by using it today we shall cause irreparable environmental damage that will become visible in a few years. Are we willing to give up an immediate economic benefit (cheap and readily available oil and natural gas) for fear of consequences that are not yet apparent? Very, very hard to do.
Of course, if dramatic technological progress in renewable energy would make wind or solar much cheaper than coal, oil or natural gas, then there would be no issue. We would switch over to zero emission renewables as fast as we could. Super abundant shale oil or gas would mean nothing if we could get cheaper energy from clean sources. But, while there has been tremendous progress in renewables, we are not there yet.
And this means burning more fossil fuels for a long time. Short of a forced switch, (via heavy carbon taxes, combined with even bigger subsidies for solar and wind that are likely to be extremely costly and unpopular), a middle ground can be found in conservation.
Conservation would reduce emissions
As indicated above, there has already been progress in reducing consumption in a smart way. But much, much more could be done. Much of America’s energy is consumed at the individual household level. However, most people are unaware of the cost-effective investments they can make in order to make their homes far more energy-efficient. And the calculation here does not have to include any desire to “save the planet”. It is pure economics. You invest in a state of the art heating system plus insulation of your exterior walls, and in just few years you have net savings because much lower utility bills will allow you to quickly recover your initial investment and then save money because of reduced consumption.
Not glamorous but effective
The conservation approach may not appear glamorous enough; but it works. For instance, major corporations, from Google to Walmart, are now engaged in efforts aimed at making their facilities more energy-efficient, not because they want to be “green”, but simply because they want to save money — up to hundreds of millions in the case of companies that run multiple large facilities.
Conservation is not a solution to global warming. However, if seriously adopted on a large scale, it could really make a huge difference by significantly reducing total emissions. Imagine the average US household reducing energy consumption by 10%. That translates into less coal or natural gas burnt to produce electricity. And this means an immediate drop in green house gases. In the meantime, solar and wind will get more cost-effective and eventually we will be able to ramp up the switch over .
Cheap shale gas is great. However, cheaper zero emission solar would be a lot better.