How the
world uses energy is a hot topic for a warming planet, and fears of pollution
and resource strain have produced a virtual arms race of energy-efficiency
strategies. From the European Union to China, economies are vowing to reduce
their energy intensity with the help of technological innovations and
legislative changes. Yet, despite these promises, consumer demand for energy is
forecast by the International Energy Agency to rise until at least 2040. With
the world’s energy needs growing, how can policymakers guarantee supply?
To put it
bluntly, the world has nothing to worry about when it comes to reserves. After
40 years of fearing energy shortages, we have entered an era of abundance. We
need to guard against false narratives, not scarce resources.
The culprit
of this storyline is the Club of Rome, a global think-tank that, in the 1970s,
spurred energy anxiety with its absurd prophecies derived from questionable
models. As devoted followers of Thomas Malthus and Paul Ehrlich, the club argued
that bad things come from exponential growth, and good things from linear
growth. This idea fueled the prediction that the world would run out of oil by
2000.
By adopting
this nonsense dogma, developed countries enabled resource-rich authoritarian leaders
like Muammar el-Qaddafi in Libya, and Ayatollah Ruhollah Khomeini in Iran, to
use their oil reserves as tools to oppose the West – and particularly its
support for Israel. This contributed to the oil shocks of the 1970s, and
reinforced the erroneous perception that hydrocarbon reserves were even more
limited, and largely confined to the Middle East.
Rapid
advances in technology, particularly in the field of exploration and the
ability to extract hydrocarbons in new places, eventually upended such narratives.
Today’s energy “crisis” stems not from shortages, but from anxiety over
pollution.
But this
anxiety has not slowed our exploration habits. On the contrary, politics and
international law, like the United Nations Convention on the Law of the Sea, have
been adapted to enable discovery. Consider, for example, the Rovuma gas field
off the coast of Mozambique. Today, a consortium of international companies
from countries including Italy and China is preparing production, and one of
Africa’s poorest countries is set to reap huge rewards.
Similarly,
Israel, once thought to be the only place in the Middle East without
hydrocarbons, is sitting on 800 billion cubic meters of offshore gas reserves,
more than 130 years of the country’s current annual gas consumption. Once a net
energy importer, Israel today faces the very real challenge of exporting its
gas bonanza. But perhaps the biggest technology-driven upheaval for global
energy markets in recent years has come from shale gas and shale oil production
in the United States. At 8.8 million barrels per day, US oil production is now
higher than that of Iraq and Iran combined. US shale gas is being delivered to
Asia, Latin America, and parts of Europe. These markets were long locked up by
Qatar, Russia, and Australia, but now the global liquefied natural gas (LNG)
industry, like the oil market, has entered a period of overproduction.
Taken
together, these developments have contributed to lower energy prices, and
reduced the strength of OPEC. Furthermore, because LNG is favored by the
transport sector (particularly freight and maritime shippers) for environmental
reasons, the ability to use oil as a geopolitical weapon has disappeared.
Iran was so
desperate to ramp up its oil exports that it agreed to abandon its nuclear
program (strikingly, the Iran nuclear deal mentions the word “oil” 65 times).
Wind and
solar are often presented as alternatives to oil and gas, but they cannot
compete with traditional sources for electricity generation. If they could,
there would be no reason for the EU to support renewable energy production
through legislation. Moreover, while wind and solar technologies generate
electricity, the biggest energy demand comes from heating. In the EU, for
example, electricity represents only 22% of final energy demand, while heating
and cooling represents 45%; transportation accounts for the remaining 33%.
All of
these factors help explain why fossil fuels, which currently meet more than 80%
of the world’s energy needs, will remain the backbone of global energy
production for the foreseeable future. This may not come as welcome news to
those pushing for an immediate phase-out of hydrocarbons. But perhaps some
solace can be gained from the fact that technological innovation will also play
a key role in reducing the negative impacts on air and water quality.
Amid the
global conversation about climate change, it is understandable that developed
economies would promise significant gains in energy efficiency. But while the
EU may be committed to reducing CO2 emissions, other signatories of the 2015
Paris climate agreement do not seem as resolute. It would not be surprising if
most of the signatories actually raised their energy consumption in coming
years, turning to fossil fuels because they cannot afford any other option.
Energy
policy will remain on the agenda for advanced economies for many years to come.
But as countries work to balance security of supply with environmental goals,
they must also commit to getting their facts straight.
https://www.neweurope.eu/article/myth-fossil-fuel-phase/