Our Energy Future

Where energy is concerned, everything seemed simple before the Iraq War. The US 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 $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:

· 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;

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· 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;

· 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 US, 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.

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