The future of energy requires an understanding of past
Michael Rothman
Climate change has been pushed to the forefront in most political arenas, and there is broad agreement that an evolution of energy use is in the long-term interest of our planet’s inhabitants. Who can argue with that? The issue, though like most all human challenges, is less about the desired end-result and more about the doing.
Few observers are familiar with the underlying data about global energy use, so let us have a look. About 85 percent of the world’s current energy consumption is hydrocarbon-based. Coal, natural gas and petroleum constitute most of that. Coal is the dominant fuel used to generate electricity, which is arguably the largest commodity consumed in most economies.
The problem, as you assess the data, becomes one of scale. In the evolution of energy consumption, wood used to be the principal fuel consumed globally. It has since morphed to coal and then broadened to now include nuclear power, hydroelectric, solar, wind, petroleum and natural gas. Biofuels did become a small part of the picture, though where mandated for political reasons, which raises serious questions about the energy input/output benefit.
Petroleum is predominantly used for transportation purposes such as trains, planes and automobiles, with the next biggest piece — almost one-quarter of its use — being for petrochemicals that include agricultural applications needed to feed the world.
It is the transportation portion, particularly for automobiles, which has become a topic of intense debate centered around a potential displacement of internal combustion engines by electric vehicles.
Putting aside the irony of using a car that burns coal (remember what electricity is sourced to) instead of burning oil has become viewed by many as a “magic bullet” that can solve many of the world’s climate problems.
Forgetting critical issues tied to the source and impact of rare earth metals needed for such cars and even the toxicological hurdles tied to battery disposal (and even the electricity generation challenges to fuel such cars), there is a “mathematical” event horizon in trying to displace the 1.35 billion automobiles that constitute the current global fleet. And then there is the source of new vehicle availability for the global auto fleet’s expansion. Hence, we are back at the issue of scale which, we contend, is the defining issue.
Aside from the ability to love, one of the greatest attributes of our species is human ingenuity. Indeed, we would argue that one day we will push the evolution of energy consumption such that we maintain an acceptable standard of living while burning seawater and sunshine.
Even the notion of an energy source such as “fusion in a jar” that can power the transportation sector might, one day, become a reality. But until that threshold is crossed, it remains our contention that global energy consumption in the forecastable future will look very similar to what we see today.
We would further note that when it comes to petroleum, in particular, green energy initiatives being pushed by so many and foisted on the oil industry will result in a significant under-investment in needed supply. We see that trend as portending material bullish pressure on oil prices over the medium term.
The writer is the president and founder of Cornerstone Analytics, a US-based consultancy focusing on macro-energy research.
