The bridge from a fossil-energy present to an alternate-energy future will span many decades. As with the building of any bridge, a solid foundation is vital. A well-designed energy bridge will move the world ahead in a reasonable fashion. Accelerating an energy transition as the result of a poorly informed public, however, could — and likely would — lead to global energy, economic, and consequently, environmental instability.
Building the energy bridge will not be simple. Tough challenges rarely are. The process will involve the delicate interplay among energy, environment, economy and public energy policy, a necessary partnership among government, industry, academia and non-government organizations, parallel investments in and favorable policies towards fossil energy and alternatives, and compromise and wisdom from leadership.
The Three E Waltz
Energy, economy and the environment are inextricably linked. Oil price, as a historical proxy for energy price, has a known relationship to economic health. In the U.S., significant oil price increases are often followed by economic recession, as observed following the oil price spikes in 1973, 1979, 1990 and 2008. Global data show a strong positive correlation between per-capita energy consumption and per-capita income.
Energy price has a known impact on consumer behavior. This was most notable from 1973 through 1984, when global oil demand, which had been rising steadily in prior decades, was dampened considerably as a result of steep oil price increases driven by the OPEC supply cutoff to the United States. Although global demand for oil again increased from 1985 through 2005, the rate of increase was considerably lower than prior to 1973. In other words, the oil price shock of the early 1970s changed consumer behavior. Oil, as a percentage of global energy, peaked in 1979 at just below 50 percent and has been decreasing since that time.
The world went through another significant oil price increase from 2002 through 2008, and as expected, in 2007 and 2008 global demand for oil dampened. It is likely that the positive slope of the forward demand curve for oil, relative to the 1980s and 1990s, will again decrease, perhaps even plateau, as consumer behavior surrounding energy changes and oil continues to decline as a percentage of global energy.
Healthy energy systems are related to healthy economies, which in turn allow environmental investment. When the world is in recession, as it is today, less money is spent on environmental action. Unbalanced attention, positive or negative, on any of the three E’s, will throw the system out of balance.
The Energy Bridge
Fossil fuels today represent 87 percent of the global energy mix. Looking out to 2030, I call for the percentage of fossil fuels to decrease to 80 percent, with a greater proportion of natural gas and lower proportion of oil relative to today.
My simple forecast is underpinned by resource estimates and economics. We have the coal, oil, natural gas, water and uranium resources to support my forecast to 2030, and these sources of energy will likely remain the most affordable. As existing and new conventional reserves begin to decline, unconventional oil and natural gas resources will represent a growing part of the future fossil energy mix. Clean and economic extraction of these new reserves will be enhanced by industry-government-academic partnerships.
The fossil bridge must embrace energy efficiency, including cars and light trucks, insulation and lighting, appliances, industrial uses and beyond.
Diversification of the global energy portfolio is critical, particularly in the area of transportation. There will likely be a growing electrification of the vehicle fleet. Although it is difficult to know, thoughtful studies indicate that plug-in hybrid vehicles represent a reasonable transition path to a more efficient car and light-truck future.
Increased electricity diversity is also important. Nuclear technology has advanced significantly, thanks to progress in Europe and Japan, and nuclear energy will play an important global role. This will require policy that reduces the regulatory roadblocks in some geopolitical regions, real options for waste storage and the will to address the legal challenges designed simply to add costly delays.
My forecast accelerates the growth of non-nuclear, non-hydro renewable energy more quickly than any other source, doubling in output about every seven years, no simple task. Renewable energy is not limited by resource — there is plenty of wind and sun — but rather by energy density. Quite simply, wind, waves, tides, biomass and solar are low-density “fuels,” and they require a tremendous amount of infrastructure and earth surface area, given current technology.
Policy for Security
Alternate energies represent only a small percentage of the energy mix today, not because of lack of political will or subsidies, but because of the fundamentals of economics, kinetics, thermodynamics and technology. Policies and policy makers that attempt to overly accelerate these limiting fundamentals have fallen short, and will continue to do so.
In terms of energy policy, energy security should not be confused with energy independence, which hints of unhealthy nationalism. Secure energy is affordable, available, reliable and clean. A global international energy roadmap to achieve security will (1) address energy efficiency and infrastructure, (2) diversify fuel options, (3) integrate energy, economy and the environment into policy, (4) strengthen global energy trade and investment, (5) broaden dialogue between developing and developed nations and (6) enable global workforce balancing opportunities.
The challenges facing the world are great. Wise leaders will build technological, scientific, economic, political, cultural and social bridges, remove walls that inhibit progress, embrace scientific debate and create policy that is guided, but not dictated, by scientific forecasts. I am confident that visionaries will rise to meet these challenges. That thought motivates me daily.
Scott W. Tinker is the director of the Bureau of Economic Geology, and a professor and the Edwin Allday Endowed Chair in Subsurface Geology in the Department of Geological Sciences in the Jackson School of Geosciences.