Fossil fuels are not finished, not obsolete, not a bad thing

This essay appeared in the Wall Street Journal and later in shorter form
in the Sunday Times

The environmental movement has advanced three arguments in
recent years for giving up fossil fuels: (1) that we will soon run
out of them anyway; (2) that alternative sources of energy will
price them out of the marketplace; and (3) that we cannot afford
the climate consequences of burning them.

These days, not one of the three arguments is looking very
healthy. In fact, a more realistic assessment of our energy and
environmental situation suggests that, for decades to come, we will
continue to rely overwhelmingly on the fossil fuels that have
contributed so dramatically to the world’s prosperity and
progress.

In 2013, about 87% of the energy that
the world consumed came from fossil fuels, a figure
that—remarkably—was unchanged from 10 years before. This roughly
divides into three categories of fuel and three categories of use:
oil used mainly for transport, gas used mainly for heating, and
coal used mainly for electricity.

Over this period, the overall volume of fossil-fuel consumption
has increased dramatically, but with an encouraging environmental
trend: a diminishing amount of carbon-dioxide emissions per unit of
energy produced. The biggest contribution to decarbonizing the
energy system has been the switch from high-carbon coal to
lower-carbon gas in electricity generation.

On a global level, renewable energy sources such as wind and
solar have contributed hardly at all to the drop in carbon
emissions, and their modest growth has merely made up for a decline
in the fortunes of zero-carbon nuclear energy. (The reader should
know that I have an indirect interest in coal through the ownership
of land in Northern England on which it is mined, but I nonetheless
applaud the displacement of coal by gas in recent years.)

The argument that fossil fuels will soon run out is dead, at
least for a while. The collapse of the price of oil
over the past six months is the result of abundance: an
inevitable consequence of the high oil prices of recent years,
which stimulated innovation in hydraulic fracturing, horizontal
drilling, seismology and information technology. The U.S.—the
country with the oldest and most developed hydrocarbon fields—has
found itself once again, surprisingly, at the top of the
energy-producing league, rivaling Saudi Arabia in oil and Russia in
gas.

The shale genie is now out of the bottle. Even if the current
low price drives out some high-cost oil producers—in the North Sea,
Canada, Russia, Iran and offshore, as well as in America—shale
drillers can step back in whenever the price rebounds. As Mark Hill
of Allegro Development Corporation argued last week, the
frackers are currently experiencing their own version of Moore’s
law: a rapid fall in the cost and time it takes to drill a well,
along with a rapid rise in the volume of hydrocarbons they are able
to extract.

And the shale revolution has yet to go global. When it does, oil
and gas in tight rock formations will give the world ample supplies
of hydrocarbons for decades, if not centuries. Lurking in the wings
for later technological breakthroughs is methane hydrate, a
seafloor source of gas that exceeds in quantity all the world’s
coal, oil and gas put together.

So those who predict the imminent exhaustion of fossil fuels are
merely repeating the mistakes of the U.S. presidential commission
that opined in 1922 that “already the output of gas has begun to
wane. Production of oil cannot long maintain its present rate.” Or
President Jimmy Carter when he announced on television in 1977 that
“we could use up all the proven reserves of oil in the entire world
by the end of the next decade.”

That fossil fuels are finite is a red herring. The Atlantic
Ocean is finite, but that does not mean that you risk bumping into
France if you row out of a harbor in Maine. The buffalo of the
American West were infinite, in the sense that they could breed,
yet they came close to extinction. It is an ironic truth that no
nonrenewable resource has ever run dry, while renewable
resources—whales, cod, forests, passenger pigeons—have frequently
done so.

The second argument for giving up fossil fuels is that new
rivals will shortly price them out of the market. But it is not
happening. The great hope has long been nuclear energy, but even if
there is a rush to build new nuclear power stations over the next
few years, most will simply replace old ones due to close. The
world’s nuclear output is down from 6% of world energy consumption
in 2003 to 4% today. It is forecast to inch back up to just 6.7% by
2035, according the Energy Information Administration.

Nuclear’s problem is cost. In meeting the safety concerns of
environmentalists, politicians and regulators added requirements
for extra concrete, steel and pipework, and even more for extra
lawyers, paperwork and time. The effect was to make nuclear plants
into huge and lengthy boondoggles with no competition or
experimentation to drive down costs. Nuclear is now able to compete
with fossil fuels only when it is subsidized.

As for renewable energy, hydroelectric is the biggest and
cheapest supplier, but it has the least capacity for expansion.
Technologies that tap the energy of waves and tides remain
unaffordable and impractical, and most experts think that this
won’t change in a hurry. Geothermal is a minor player for now. And
bioenergy—that is, wood, ethanol made from corn or sugar cane, or
diesel made from palm oil—is proving an ecological disaster: It
encourages deforestation and food-price hikes that cause
devastation among the world’s poor, and per unit of energy
produced, it creates even more carbon dioxide than coal.

Wind power, for all the public money spent on its expansion, has
inched up to—wait for it—1% of world energy consumption in 2013.
Solar, for all the hype, has not even managed that: If we round to
the nearest whole number, it accounts for 0% of world energy
consumption.

Both wind and solar are entirely reliant on subsidies for such
economic viability as they have. World-wide, the subsidies given to
renewable energy currently amount to roughly $10 per gigajoule:
These sums are paid by consumers to producers, so they tend to go
from the poor to the rich, often to landowners (I am a landowner
and can testify that I receive and refuse many offers of risk-free
wind and solar subsidies).

It is true that some countries subsidize the use of fossil
fuels, but they do so at a much lower rate—the world average is
about $1.20 per gigajoule—and these are mostly subsidies for
consumers (not producers), so they tend to help the poor, for whom
energy costs are a disproportionate share of spending.

The costs of renewable energy are coming down, especially in the
case of solar. But even if solar panels were free, the power they
produce would still struggle to compete with fossil fuel—except in
some very sunny locations—because of all the capital equipment
required to concentrate and deliver the energy. This is to say
nothing of the great expanses of land on which solar facilities
must be built and the cost of retaining sufficient conventional
generator capacity to guarantee supply on a dark, cold, windless
evening.

The two fundamental problems that renewables face are that they
take up too much space and produce too little energy. Consider
Solar Impulse, the solar-powered airplane now flying around the
world. Despite its huge wingspan (similar to a 747), slow speed and
frequent stops, the only cargo that it can carry is the pilots
themselves. That is a good metaphor for the limitations of
renewables.

To run the U.S. economy entirely on wind would require a wind
farm the size of Texas, California and New Mexico combined—backed
up by gas on windless days. To power it on wood would require a
forest covering two-thirds of the U.S., heavily and continually
harvested.

John Constable, who will head a new Energy Institute at the
University of Buckingham in Britain, points out that the trickle of
energy that human beings managed to extract from wind, water and
wood before the Industrial Revolution placed a great limit on
development and progress. The incessant toil of farm laborers
generated so little surplus energy in the form of food for men and
draft animals that the accumulation of capital, such as machinery,
was painfully slow. Even as late as the 18th century, this
energy-deprived economy was sufficient to enrich daily life for
only a fraction of the population.

Our old enemy, the second law of thermodynamics, is the problem
here. As a teenager’s bedroom generally illustrates, left to its
own devices, everything in the world becomes less ordered, more
chaotic, tending toward “entropy,” or thermodynamic equilibrium. To
reverse this tendency and make something complex, ordered and
functional requires work. It requires energy.

The more energy you have, the more intricate, powerful and
complex you can make a system. Just as human bodies need energy to
be ordered and functional, so do societies. In that sense, fossil
fuels were a unique advance because they allowed human beings to
create extraordinary patterns of order and complexity—machines and
buildings—with which to improve their lives.

The result of this great boost in energy is what the economic
historian and philosopher Deirdre McCloskey calls the
Great Enrichment. In the case of the U.S., there has been a
roughly 9,000% increase in the value of goods and services
available to the average American since 1800, almost all of which
are made with, made of, powered by or propelled by fossil
fuels.

Still, more than a billion people on the planet have yet to get
access to electricity and to experience the leap in living
standards that abundant energy brings. This is not just an
inconvenience for them: Indoor air pollution from wood fires kills
four million people a year. The next time that somebody at a rally
against fossil fuels lectures you about her concern for the fate of
her grandchildren, show her a picture of an African child dying
today from inhaling the dense muck of a smoky fire.

Notice, too, the ways in which fossil fuels have contributed to
preserving the planet. As the American author and fossil-fuels
advocate Alex Epstein points out in a bravely unfashionable book,
“The Moral Case for Fossil Fuels,” the use of coal halted and then
reversed the deforestation of Europe and North America. The turn to
oil halted the slaughter of the world’s whales and seals for their
blubber. Fertilizer manufactured with gas halved the amount of land
needed to produce a given amount of food, thus feeding a growing
population while sparing land for wild nature.

To throw away these immense economic, environmental and moral
benefits, you would have to have a very good reason. The one most
often invoked today is that we are wrecking the planet’s climate.
But are we?

Although the world has certainly warmed since the 19th century,
the rate of warming has been slow and erratic. There has been no
increase in the frequency or severity of storms or droughts, no
acceleration of sea-level rise. Arctic sea ice has decreased, but
Antarctic sea ice has increased. At the same time, scientists are
agreed that the extra carbon dioxide in the air has contributed to
an improvement in crop yields and a roughly 14% increase in the
amount of all types of green vegetation on the planet since
1980.

That carbon-dioxide emissions should cause warming is not a new
idea. In 1938, the British scientist Guy Callender thought that he
could already detect warming as a result of carbon-dioxide
emissions. He reckoned, however, that this was “likely to prove
beneficial to mankind” by shifting northward the climate where
cultivation was possible.

Only in the 1970s and 1980s did scientists begin to say that the
mild warming expected as a direct result of burning fossil
fuels—roughly a degree Celsius per doubling of carbon-dioxide
concentrations in the atmosphere—might be greatly amplified by
water vapor and result in dangerous warming of two to four degrees
a century or more. That “feedback” assumption of high “sensitivity”
remains in virtually all of the mathematical models used to this
day by the U.N. Intergovernmental Panel on Climate Change, or
IPCC.

And yet it is increasingly possible that it is wrong. As Patrick
Michaels of the libertarian Cato Institute has written, since 2000, 14
peer-reviewed papers, published by 42 authors, many of whom are key
contributors to the reports of the IPCC, have concluded that
climate sensitivity is low because net feedbacks are modest. They
arrive at this conclusion based on observed temperature changes,
ocean-heat uptake and the balance between warming and cooling
emissions (mainly sulfate aerosols). On average, they find
sensitivity to be 40% lower than the models on which the IPCC
relies.

If these conclusions are right, they would explain the failure
of the Earth’s surface to warm nearly as fast as predicted over the
past 35 years, a time when—despite carbon-dioxide levels rising
faster than expected—the warming rate has never reached even
two-tenths of a degree per decade and has slowed down to virtually
nothing in the past 15 to 20 years. This is one reason the latest
IPCC report did not give a “best estimate” of sensitivity and why
it lowered its estimate of near-term warming.

Most climate scientists remain reluctant to abandon the models
and take the view that the current “hiatus” has merely delayed
rapid warming. A turning point to dangerously rapid warming could
be around the corner, even though it should have shown up by now.
So it would be wise to do something to cut our emissions, so long
as that something does not hurt the poor and those struggling to
reach a modern standard of living.

We should encourage the switch from coal to gas in the
generation of electricity, provide incentives for energy
efficiency, get nuclear power back on track and keep developing
solar power and electricity storage. We should also invest in
research on ways to absorb carbon dioxide from the air, by
fertilizing the ocean or fixing it through carbon capture and
storage. Those measures all make sense. And there is every reason
to promote open-ended research to find some unexpected new energy
technology.

The one thing that will not work is the one thing that the
environmental movement insists upon: subsidizing wealthy crony
capitalists to build low-density, low-output, capital-intensive,
land-hungry renewable energy schemes, while telling the poor to
give up the dream of getting richer through fossil fuels.