Today’s huge global energy problems in no small measure reflect the essentially nineteenth-century business plans that three of the world’s largest industries – electric utilities, oil companies, and automobile manufacturers – are still pursuing. But the reality of climate change and mounting security risks point to the demise of their business models.
PALO ALTO – Today’s huge global energy problems in no small measure reflect the essentially nineteenth-century business plans that three of the world’s largest industries are still pursuing.
Electric utilities still largely burn fossil fuels and sell the power to homes and businesses. Oil companies still drill for and refine petroleum, and principally sell gasoline and diesel fuel. Automobile manufacturers still bend steel into vehicles that generally must be powered by petroleum-based fuels.
Until recently, each of these giant industries was comfortable continuing on its familiar and comfortable nineteenth-century path into the twenty-first century. Each had also succeeded in getting government to insulate it against any need to make fundamental changes.
But recent developments are beginning to create increasingly heavy seas for these industries. Indeed, many observers detect approaching storms of epic proportions. What has happened?
First, evidence of climate change has begun to convince almost all climatologists and many other informed observers that our current approach to producing and using energy is very dangerous to the biosphere. Because changes in carbon dioxide emissions, unlike pollutants such as sulfur dioxide and nitrogen dioxide, cannot be easily detected, and because of the multi-century persistence of CO2 in the atmosphere, the problem of reducing its level in the atmosphere is much harder to solve than are other environmental problems.
Nor are we accustomed to dealing with potential exponential climate change, as phenomena such as warming lead to the release of carbon from the tundra, thereby accelerating warming. Public debate is also confused by an “all-or-nothing” mind-set, with skeptics contending that if any portion of climate change is naturally caused (say, by the earth’s axis tilting over a period of millennia) then none of it can be anthropogenic.
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Yet there is every reason for us to try to mitigate at least the anthropogenic portion of the climate change caused by CO 2 emissions and other dangerous practices, such as deforestation.
Moreover, there is deepening concern about two types of energy-related security problems: the increasing risk of violence stemming from the nature of our energy use, and the high cost of that energy.
The main risk of violence created by the nature of the electricity system itself is the danger of serious power outages due to physical or cyber-attacks on the increasingly fragile transmission and distribution grid.
Regarding oil, which dominates transportation, the high concentration of deposits in the Middle East, especially those that can be most cheaply exploited, makes oil-importing countries hostage both to terrorist attacks on the oil infrastructure and to monopoly-determined prices. OPEC uses output cuts whenever possible to keep prices at levels that are at least an order of magnitude above the cost of production plus a reasonable return.
As Paul Collier of Oxford University has pointed out, the preponderance of dictatorships and autocratic kingdoms in the ranks of the largest oil exporters indicates that where these huge economic rents exist, pressures are created against economic diversification and democratization. Most terrorism, ultimately, is oil-funded.
What Collier calls the “Bottom Billion,” the poorest one-sixth of the world, suffers the most from high oil prices. Heavy national debt and expensive power are problems for relatively wealthy countries, but they are disasters for sub-Saharan Africa and the rest of the world’s poor.
So what may be the solutions? First, as the energy campaigner Anne Korin puts it, we need to do to oil what was done to salt just over a century ago. Salt had been a strategic commodity for millennia – countries fought wars over salt mines – because it was the only way to preserve meat. But the advent of electricity, refrigeration, and freezing ended salt’s monopoly relatively quickly. It is still a useful commodity, but no one regards salt mines any more as instruments of national power and influence. Oil urgently needs to suffer a similar fate.
Oil’s monopoly over transportation can in part be destroyed by electrification (via plug-in hybrid electric vehicles, for example), and also by second-generation biofuels, such as butanol from cellulosic feedstocks, and by algae- and waste-based biofuels.
Studies show clearly that, with time-of-day pricing, electrification of vehicles creates little need for new electricity-generating plants, and also that even with today’s coal-heavy electric grids, electrified vehicles emit less CO2 than gasoline- and diesel-powered vehicles. And, as the grid’s CO2 emissions are cleaned up, the vehicles’ role as a source of emissions will decline.
It is crucial to improve the efficiency of electricity use, especially in lighting, which accounts for a very large share of demand. LED’s are beginning to lead the way. Many nations can also learn a great deal from Denmark’s creative use of waste heat for cogeneration.
Solar power is beginning to gain substantially greater prominence, especially for smaller factories and rooftops. Germany, with its feed-in tariff, has led the way in encouraging such solar deployments, and this approach is beginning to be adopted at the state level in America.
Reductions in the cost of solar power, efficiency improvements, and sharply improved batteries and other means of electricity storage are helping to make possible a world of increasingly distributed energy generation, based on renewable sources. That, in turn, promises increasing freedom from the dangers created by our vulnerable electric grids and our reliance on oil.
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Many countries’ recent experiences show that boosting manufacturing employment is like chasing a fast-receding target. Automation and skill-biased technology have made it extremely unlikely that manufacturing can be the labor-absorbing activity it once was, which means that the future of “good jobs” must be created in services.
shows why policies to boost employment in the twenty-first century ultimately must focus on services.
Minxin Pei
doubts China’s government is willing to do what is needed to restore growth, describes the low-tech approaches taken by the country’s vast security apparatus, considers the Chinese social-credit system’s repressive potential, and more.
For the last several years, world leaders have made big promises and laid out bold plans to mitigate the climate crisis and help the neediest countries adapt. At this year's World Bank/IMF Spring Meetings, they must demonstrate that they can fulfill these promises, rather than simply touting new ones.
think policymakers need to get four things right to shore up the credibility of the international system.
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PALO ALTO – Today’s huge global energy problems in no small measure reflect the essentially nineteenth-century business plans that three of the world’s largest industries are still pursuing.
Electric utilities still largely burn fossil fuels and sell the power to homes and businesses. Oil companies still drill for and refine petroleum, and principally sell gasoline and diesel fuel. Automobile manufacturers still bend steel into vehicles that generally must be powered by petroleum-based fuels.
Until recently, each of these giant industries was comfortable continuing on its familiar and comfortable nineteenth-century path into the twenty-first century. Each had also succeeded in getting government to insulate it against any need to make fundamental changes.
But recent developments are beginning to create increasingly heavy seas for these industries. Indeed, many observers detect approaching storms of epic proportions. What has happened?
First, evidence of climate change has begun to convince almost all climatologists and many other informed observers that our current approach to producing and using energy is very dangerous to the biosphere. Because changes in carbon dioxide emissions, unlike pollutants such as sulfur dioxide and nitrogen dioxide, cannot be easily detected, and because of the multi-century persistence of CO2 in the atmosphere, the problem of reducing its level in the atmosphere is much harder to solve than are other environmental problems.
Nor are we accustomed to dealing with potential exponential climate change, as phenomena such as warming lead to the release of carbon from the tundra, thereby accelerating warming. Public debate is also confused by an “all-or-nothing” mind-set, with skeptics contending that if any portion of climate change is naturally caused (say, by the earth’s axis tilting over a period of millennia) then none of it can be anthropogenic.
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Access every new PS commentary, our entire On Point suite of subscriber-exclusive content – including Longer Reads, Insider Interviews, Big Picture/Big Question, and Say More – and the full PS archive.
Subscribe Now
Yet there is every reason for us to try to mitigate at least the anthropogenic portion of the climate change caused by CO 2 emissions and other dangerous practices, such as deforestation.
Moreover, there is deepening concern about two types of energy-related security problems: the increasing risk of violence stemming from the nature of our energy use, and the high cost of that energy.
The main risk of violence created by the nature of the electricity system itself is the danger of serious power outages due to physical or cyber-attacks on the increasingly fragile transmission and distribution grid.
Regarding oil, which dominates transportation, the high concentration of deposits in the Middle East, especially those that can be most cheaply exploited, makes oil-importing countries hostage both to terrorist attacks on the oil infrastructure and to monopoly-determined prices. OPEC uses output cuts whenever possible to keep prices at levels that are at least an order of magnitude above the cost of production plus a reasonable return.
As Paul Collier of Oxford University has pointed out, the preponderance of dictatorships and autocratic kingdoms in the ranks of the largest oil exporters indicates that where these huge economic rents exist, pressures are created against economic diversification and democratization. Most terrorism, ultimately, is oil-funded.
What Collier calls the “Bottom Billion,” the poorest one-sixth of the world, suffers the most from high oil prices. Heavy national debt and expensive power are problems for relatively wealthy countries, but they are disasters for sub-Saharan Africa and the rest of the world’s poor.
So what may be the solutions? First, as the energy campaigner Anne Korin puts it, we need to do to oil what was done to salt just over a century ago. Salt had been a strategic commodity for millennia – countries fought wars over salt mines – because it was the only way to preserve meat. But the advent of electricity, refrigeration, and freezing ended salt’s monopoly relatively quickly. It is still a useful commodity, but no one regards salt mines any more as instruments of national power and influence. Oil urgently needs to suffer a similar fate.
Oil’s monopoly over transportation can in part be destroyed by electrification (via plug-in hybrid electric vehicles, for example), and also by second-generation biofuels, such as butanol from cellulosic feedstocks, and by algae- and waste-based biofuels.
Studies show clearly that, with time-of-day pricing, electrification of vehicles creates little need for new electricity-generating plants, and also that even with today’s coal-heavy electric grids, electrified vehicles emit less CO2 than gasoline- and diesel-powered vehicles. And, as the grid’s CO2 emissions are cleaned up, the vehicles’ role as a source of emissions will decline.
It is crucial to improve the efficiency of electricity use, especially in lighting, which accounts for a very large share of demand. LED’s are beginning to lead the way. Many nations can also learn a great deal from Denmark’s creative use of waste heat for cogeneration.
Solar power is beginning to gain substantially greater prominence, especially for smaller factories and rooftops. Germany, with its feed-in tariff, has led the way in encouraging such solar deployments, and this approach is beginning to be adopted at the state level in America.
Reductions in the cost of solar power, efficiency improvements, and sharply improved batteries and other means of electricity storage are helping to make possible a world of increasingly distributed energy generation, based on renewable sources. That, in turn, promises increasing freedom from the dangers created by our vulnerable electric grids and our reliance on oil.