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Monday 21 Aug 2017 | 03:17 | SYDNEY
Monday 21 Aug 2017 | 03:17 | SYDNEY

Is the fossil-fuel industry really in trouble?



14 August 2015 14:58

Herewith a few more data points on the global energy picture.

I post about this topic semi-regularly, and loyal readers might have noted that I swerve wildly from pessimism (we're going to need huge amounts of fossil fuels for a long time) to optimism (the green energy revolution is just around the corner!). I would just caution that none of these missives represent my finished views; in the best traditions of blogging, you are watching me make up my mind as I write.

My latest pessimistic note was on India's energy needs; I said India would be heavily coal-dependent for some time. On Twitter someone kindly pointed me to this Guardian piece putting the contrary view. Interesting piece, particularly the argument that the coal which might be dug up from Queensland will not in fact raise living standards for the poorest Indians, as Prime Minister Abbott argued, but will go to the already energy-rich. I note, though, that the piece ends with the plea that 'What Indians need is affordable, locally-generated renewable energy, not coal.' True, and in fact affordable renewable energy is what the entire world needs. But if wishes were horses....

Anyway, to a couple of other pieces I have stumbled on in recent days. First, Bill Gates on energy innovation:

If we create the right environment for innovation, we can accelerate the pace of progress, develop and deploy new solutions, and eventually provide everyone with reliable, affordable energy that is carbon free. We can avoid the worst climate-change scenarios while also lifting people out of poverty, growing food more efficiently, and saving lives by reducing pollution.  

To create this future we need to take several steps...One step is to lay the foundation for innovation by drastically increasing government funding for research on clean energy solutions. Right now, the world spends only a few billion dollars a year on researching early-stage ideas for zero-carbon energy. It should be investing two or three times that much. Why should governments fund basic research? For the same reason that companies tend not to: because it is a public good.

And here's Amory Lovins, head of the Rocky Mountains Institute, a research institution focused on the efficient use of resources, on the troubled future of the oil industry

Having advised oil companies for 42 years, I’m worried that many don’t yet grasp how their competitive landscape is being transformed far faster than their cultures can comprehend or cope with.

Most importantly, their demand is going away?—?not incrementally but fundamentally. Like whale oil in the 1850s, oil is becoming uncompetitive even at low prices before it becomes unavailable even at high prices. U.S. gasoline (and electricity) demand has been falling since 2007 as more people drive thriftier vehicles fewer miles; the same is true in rich countries as a whole. Now major developing countries like China are shifting their energy strategy so quickly toward efficiency and renewables that global “peak oil”?—?in demand, not supply?—?could occur in this decade, not many decades in the future as the industry assumes.

Over decades, oil reserves unburnable for climate reasons could well be smaller than reserves unsellable for competitive reasons...

There's a tension in these two articles: if market forces are working so dramatically against fossil fuels, as Lovins argues, is the kind of government investment in renewables that Gates advocates really necessary? We'll have a piece for you next week from one of Bloomberg's top energy analysts which explores that tension.

Photo by Flickr user nate2b.

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