Grupo de Economia da Energia

Fossil fuels and global warming in the complex energy policy game

In energy on 08/08/2011 at 00:30

By Renato Queiroz

By formulating and re-evaluating energy policies, countries face an issue: future energy matrixes should reflect the actions to decrease at an increasing rate the burning of oil, natural gas and coal, in order to stop the increasing concentration of (CO2) carbon dioxide emissions. This issue is followed by reports made by recognized organizations, such as those by Intergovernmental Panel on Climate Change (IPCC), warning that if such actions do not occur there will be rising of sea level, droughts in some regions, climate changes, etc.

Another example is the document published by the Asian Development Bank, on August 2, 2011, “Asia 2050″, whose findings were published recently by the press.  Established in 1966, such institution, whose objective is to promote economic growth for developing countries in Asia, warns in the document mentioned that the impact of climate change is among the main obstacles to the region to recover the dominant economic position before the Industrial Revolution.

But such warnings are not reverberating. Even in our homes, we found that plastics and synthetic fibers (e.g., polyester, acrylic and nylon), whose raw materials come from oil, live intimately with us, and they are even at affordable prices. Remember that the thermoplastic resins originate computer parts, electronics, children toys, food packaging, hygiene products and so on.

The questions are: are energy policies irrational because they have no solutions and effective actions to replace these “fossil fuels”?

People use to say that irrational decisions have a strong relationship with the rationality of power. And this would explain the issue for many people, and stop conversation. But some analyses must be performed.

There are statements and/or predictions about the end of an era for one of the “biggest polluters” in the world: the oil. There are expectations and evaluations that an era without oil in the next 40 or 50 years, depending upon the speed of consumption, is about to end.  And the coal and natural gas also play negative roles in this possible “conspiracy” against the climate.

Focusing initially on oil, the question arises whether that fuel is actually considered by companies as a villain. To mention that the origin of the word “villain” comes from the Middle Ages, referring to individuals who did not belong to the nobility.  So, is not a self-deception considering it as an actor, out of a noble world, when we know that oil is a major “business” in the world? After all, oil enriches many countries, develops and brings comfort to many individuals, and no mentioning the intricacies of geopolitics and domination conflicts. No wonder it is called “black gold”.  Moreover, the common-law marriage between oil and transport, forming a very strong economic power, further enriches those considerations.  This is enough to show the complexity for replacing oil.

The natural gas situation is similar as well. NG is already regarded as the currently energy rather than the energy of the future.  According to EIA (Energy Information Agency), global consumption of natural gas should grow by almost 2% pa by 2030, with a portion in industrial and power generation sectors of 75% in 2030. Another important fact is the current production capacity of shale gas in the United States that leads to new paradigms for the fossil fuel industry. This new reality came with new technologies (“horizontal drilling” and “hydraulic Fracturing”) that offer the world the opportunity to consume more fossil fuel. Furthermore, there are other indications that the fuel moves the energy market, for example, new liquefied natural gas terminal projects in several countries, Nabucco pipeline, which will connect Austria with large gas reserves in Azerbaijan, discoveries of huge gas deposits in Africa and Iran, etc. Finally, examples of discoveries and exploration of oil and gas in the Pre-salt layer in the Gulf of Mexico, Brazilian coast and West Africa also influence and strengthen the fossil fuel industries, and these industries seems to last for long time.

Coal, other fossil fuel mentioned here, has prospects to increase its consumption as well. The 2010 International Energy Outlook (2010 IEO), in its reference scenario, shows that world consumption of coal may increase by more than 50% from 2007 to 2035, excluding the potential to reduce greenhouse gases. The United States, a country that consumes power voraciously, has more coal reserves than any other country in the world. It is well known that China uses large quantities of mineral coal, mainly in power generation and industry.  The mineral coal thermoelectric generation now represents almost 40% of the global generation.

In this context, how should decarbonize future energy matrixes at the medium term?

Surely, another standard of development of societies, with technological breakthroughs and prices acceptable by agents and consumers.

In order to enhance these considerations, energy solutions must be interfaced with the individual. The consumer uses to use the energy to provide daily support in a simple manner. New technologies that change the standard of energy use constitute a long process, and climate experts know that.

Energy policy makers responsible for providing energy for current and future generations are facing many difficulties to combine their proposals to the mitigation of climate change.  In my point of view, the main barriers would be: the dissemination of new technologies that meet the needs perfectly executed by the current ones price and affordable prices.  One of the most critical barriers is the acceptance by individuals that changes in their standards for using new equipment, utensils, that is, new technologies within the context brought about by climate change.

Climate protection demands a new way of thinking and requires processes with a maturation period. Revolutionary changes, in a system that permeates the entire society, such as energy one, are not successful without complying with conditions of technical and economic feasibility, standardization, acceptability and interactivity with individuals.

Thus, energy technology solutions that avoid or reduce the impact caused by human activities on the environment should be introduced into periods, transition stages, even there is no reduction of CO2 desired. The goals of this transition should try a gradual decrease or a slower increase in the global warming rate.  The process of appropriation and acceptance (the price factor is essential) of these new technologies, by individuals, within their culture is a major factor.

An obvious example of a strategy that is already happening, in fact, is replacement of more polluting fuels by other sustainable fuels in the transportation sector. Diesel, with lower sulfur content, and ethanol have acceptance by consumers, for they keep using vehicle if prices are competitive.  Within context regarding no significant alteration of the interface citizen x technology, we can list: carbon sequestration technologies, more efficient industrial equipment and household appliances, new solar heating buildings, power generation based on clean coal technologies, biomass-based power plants, wind farms and architecture projects for new sustainable buildings, etc.

In another moment of higher rupture, technologies, such as wave power and tidal power, nuclear fusion, space solar power, etc., would be used, in order to have a future world with less harmful effects on human health, economy and environment.

But these steps or stages require the support of public funds, subsidies for companies to develop research on the introduction of new technologies. The State will certainly have a certain active role, depending upon the society. This fact should be made clearer and no misconception.  In crisis situations, however, with decisions on public spending cuts, the phases will be delayed. The conservative wing of American society has reasons to reject such subsidies. We have to remember that President Obama has abandoned the idea of a more aggressive policy in relation to climate change and reducing emissions.

It is known that the innovative technology has an unseeable finishing line.  The horizon is still far from the technical and economic feasibility. But this process requires that governments make plans, detailed goals for reducing emissions, inserted into a reality with monitoring and periodic updates to be followed by society. Expectations of “green” demands may be austere, but real so the process can progress. After all, the particulars that the subject demands and considerations in this article have to be recognized by the actors.

This is an extremely complex context with tens of several variables that dependent on each other.  It is a league with playoffs where “players” act under competitive pressures and partial results already affect all individuals on the planet. The final result is hard to be predicted.

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