Friday, October 12, 2012

Toward a Post-Fossil Fuel Era: A Note

In 1998 oil prices dropped to their post-energy crisis low of $10 a barrel, and soon enough began their upward climb, especially apparent after 2003. In the half-decade that followed the price of oil increased from that twenty year high by a factor of five, touching $150 a barrel in July 2008 before dropping again. However, it never got anywhere near its 1998 price, generally staying well above even their 2003 price, despite the downward pressure that the worst economic crisis since the Great Depression of the 1930s placed on demand. (The current figure is $92 a barrel, more than six times the 1998 price in real terms, and more than twice the 2003 price.)

Along with the mounting evidence of climate change (receding Arctic ice and glaciers, etc.), other forms of ecological catastrophe (the Deepwater Horizon explosion, etc.), and the heating of international conflict zones by the geopolitics of energy (the U.S.'s relationship with the Middle East, Moscow's relations with its provinces and neighbors in the Caucasus, the ongoing political theater surrounding the Diaoyu/Senkaku/Tiaoyutai Islands, etc.), that price rise reinforced the lesson made clear in the 1970s, but generally unheeded in the 1980s and 1990s: the necessity of shifting the world's energy base away from finite, depleted and dirty fossil fuels. Alas, dismayingly little was done about the matter in the 2000s.

Germany's case merits examination, as it has been demonstrably more ambitious in this area than the other major industrial economies.1 As the situation stands it gets about 25 percent of its electricity from renewables, a number all the more impressive because only a fifth of that comes from long-established hydroelectric power - elsewhere, by far the predominant source of non-fossil fuel, non-nuclear energy (as is certainly the case in China and the U.S.). Germany's recent expansion of its photovoltaic-based electricity production (accounting for 5 percent of German electricity now) has been especially striking, the total output of its solar energy installations exceeding that of the whole rest of Europe, despite the country's northerly location. One result is that, unlike most other countries (like the United States and Britain), the drop in the carbon intensity of the German economy has exceeded the drop in its energy intensity.2

Nonetheless, the picture is not untroubled. Germany's electricity production is particularly coal-reliant, with that reliance actually increased in the wake of the shutdown of several nuclear reactors - and being locked in for decades by the construction of new coal-fired plants. Additionally, Germany's development of a "smart grid" has not kept pace with the expansion of renewable energy with its more variable output, causing issues with grid reliability which media opponents of "green" initiatives like Der Spiegel are using to bolster specious arguments against renewable energy generally. (Simply put, they play up the headaches, which they treat not as technical teething issues in many cases resolvable today, but as somehow unavoidable problems of of these forms of energy production, while totally ignoring the problems raised by the fossil fuels and nuclear power plants they replace - making this a common approach with climate change "skeptics."3)

What emerges is a picture of progress which is slower and less comprehensive than it should be in even the best cases, while most other countries are doing far less than that - and there seems plenty of reason to worry that advances in this area might stagnate, or even be reversed. The European Union is struggling with an economic crisis, and responding to it with austerity, which bodes poorly for major infrastructural programs. Recent hype over Canadian tar sands and the prospects for the extraction of massive amounts of oil and gas from shale are creating the illusion that the market has eliminated the problems of supply and, in the case of the United States, national independence, while the denial of the ecological side of the issue remains a major force in American politics, with the political right increasingly uncompromising on the issue. Japan's abrupt shift away from nuclear power has, at least in the short term, meant more fossil fuel use to keep the lights on, which may give that lobby a wedge to increase its presence in that market on a longer-term basis. Meanwhile, energy in fast-growing China and India remains tied to traditional sources, with the output of their installations of wind and solar dwarfed by their growing overall consumption.

In short, even while the feasibility of, and need for, a much more comprehensive and sustained shift away from fossil fuels and Generation III nuclear power to alternatives (with renewables the most attractive and feasible of these at the moment), is increasingly difficult to dispute, political realities continue to make it highly uncertain that even the wealthiest and most developed nations will travel this road swiftly, safely and successfully.

1. Where the movement past oil specifically is concerned, however, it is Japan that has been the leader, having reduced its oil consumption by an impressive 22 percent between its recent peak in 1996 and 2011. By contrast, Germany achieved a 14-15 percent drop after the peaking of its consumption in 1998. On the other hand, Germany extracts more GDP per unit of oil consumed - consuming one barrel for every $3500, compared with $2800 for Japan (and under $2200 for the U.S.) when Purchasing Power Parity is taken into account. (At market exchange rates, however, Japan is competitve with Germany, making this an issue of which indicator one regards as more appropriate.)
2. According to EIA statistics, the energy-intensity of the German economy dropped 19 percent between 1996 and 2009, while its carbon-intensity fell 26 percent. The comparable figures for the U.S. are 26 and 28 percent respectively, 8 and 7 percent for Japan, 19 and 20 for France, 32 and 32 for Britain. Only Italy, which has followed something closer to the German path, has done similarly well (its figures 6 and 13 percent, respectively).
3. Similarly, there is a tendency to point to subsidies for "green" energy and completely ignore the long history of massive subsidy for the fossil fuel and nuclear sectors (described by John Kenneth Galbraith as "fantastic favoritism") while complaining about market distortions.

Canada's Tar Sands: A Closer Look
The Way Forward on Energy
The Falling Price of Oil

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