COMMENTARY
Yes, but it’ll be hard to shake off the oil and gas shackles
Summer 2009
Implausible Trotskyist though he is, Fatih Birol is of course right to urge world revolution in energy. But getting us to arise and shake off the shackles of fossil fuels will be quite another matter.
To many people, fossil fuels feel less like shackles than a warm comfort blanket to which we have grown pleasantly accustomed. “The good news”, says Mr Birol, “is that we already know many of the policies and technologies that can deliver substantial savings in energy consumption and CO2 emissions”. Yes, we do know them, and unfortunately these policies and technologies, at least at the present stage of their development, often produce more expensive and less reliable or continuous energy than our old hydrocarbon standbys..
For we can only grasp the magnitude of the challenge of Mr Birol’s world revolution by reminding ourselves of the fantastic convenience of the established fossil fuel order that we tend to take for granted. Though to slightly varying degrees, oil, gas and coal are excellent stores of energy, flexible to use and relatively easy to transport when compared to wind and solar power (intermittent) and nuclear (expensive and inflexible) which must be converted into electricity that, for all its wonderful versatility, loses power in long-distant transmission and is hard to store.
Yet escape from fossil fuels we must. This is not only because hydrocarbons are fouling the atmosphere, and at a rate that may now have destroyed any plausibility of the IEA’s scenario of keeping CO2 in the air to 450 parts per million and the rise in temperature to 2°C. As one would expect from the IEA, an organisation founded to provide its members with energy security, Mr Birol reminds us that reliance on oil and gas carries increasing short-term risks of supply interruption, and long-term risks of scarcity leading to higher prices.
But Fatih Birol’s most important point is his call for the economic crisis to be “used as an opportunity rather than a barrier for launching” the necessary replacement of polluting and inefficient energy equipment. He says the energy sector has “a relatively slow rate of capital replacement”. Studies by his own agency show “relatively slow” to be an understatement.
According to the IEA, housing stock lasts anywhere between 40 to 400 years, industrial buildings 10-150 years, large hydropower plants 60-120 years, coal-fired plants 40-60 years, nuclear reactors over 40 years, power grids and gas pipelines around 40 years, and so on. Apart from children’s lost iPods, the only electrical item we replace very frequently is Thomas Edison’s incandescent (and energy inefficient) light bulb.
The “opportunity” Mr Birol speaks of is to respond to the current need for fiscal stimulus by replacing now some of the energy or energy-using plants that we know we will anyway have to replace in the future. Accelerated replacement investment would not be anticipating the future by very much in some sectors. In the power sector, a major emitter of carbon greenhouse gases, 40% of the generating plants – and 50% of coal-burning plants – in OECD countries are already over 30 years old. Most iron, steel and cement plants are of a younger vintage, and according to the IEA, plants less than 10 years old will by next year account for 59% of capacity in iron and steel, and 68 % in cement. But so far the only “scrappage” subsidy for energy-using capital equipment that governments have come up with is for cars. We need to be bolder in embracing the inevitable; that’s what world revolution is about.