How fast can a big economy decarbonize?
April 8th, 2009Posted by: Roger Pielke, Jr.
Remarkably, with all of the talk of targets and timetables for emissions reduction and expansion of renewable energy technologies, only a few analysts have worked the problem from the other direction, which is to ask, how fast can a big economy decarbonize?
The answer to this question has more to do with the simple math of energy, technological possibilities, and economic and political realities, and less with aspirational goals, over-the-top rhetoric, and wishful thinking. Today’s New York Times provides the perspective of major fossil fuel companies on the time scale of decarbonization.
“In my view, nothing has really changed,” Rex W. Tillerson, the chief executive of Exxon Mobil, said after the election of President Obama.
“We don’t oppose alternative energy sources and the development of those. But to hang the future of the country’s energy on those alternatives alone belies reality of their size and scale.”
The administration wants to spend $150 billion over the next decade to create what it calls “a clean energy future.” Its plan would aim to diversify the nation’s energy sources by encouraging more renewables, and it would reduce oil consumption and cut carbon emissions from fossil fuels.
The oil companies have frequently run advertisements expressing their interest in new forms of energy, but their actual investments have belied the marketing claims. The great bulk of their investments goes to traditional petroleum resources, including carbon-intensive energy sources like tar sands and natural gas from shale, while alternative investments account for a tiny fraction of their spending. So far, that has changed little under the Obama administration.
“The scale of their alternative investments is so mind-numbingly small that it’s hard to find them,” said Nathanael Greene, a senior policy analyst at the Natural Resources Defense Council. “These companies don’t feel they have to be on the leading edge of this stuff.”
Perhaps not surprisingly, most investments in alternative sources of energy are coming from pockets other than those of the oil companies.
In the last 15 years, the top five oil companies have spent around $5 billion to develop sources of renewable energy, according to Michael Eckhart, president of the American Council on Renewable Energy, an industry trade group. This represents only 10 percent of the roughly $50 billion funneled into the clean-energy sector by venture capital funds and corporate investors during that period, he said.
“Big Oil does not consider renewable energy to be a mainstream business,” Mr. Eckhart said. “It’s a side business for them.”
Shell, for example, said it spent $1.7 billion since 2004 on alternative projects. That amount is dwarfed by the $87 billion it spent over the same period on its oil and gas projects around the world. This year, the company’s overall capital spending is set at $31 billion, most of it for the development of fossil fuels.
Industry executives contend that comparing investments in oil and gas projects with their research efforts in the renewable field is misleading. They say that while renewable fuels are needed, they are still at an early stage of development, and petroleum will remain the dominant source of energy for decades.
I’d welcome pointers to analyses and literature focused on how fast a big economy can decarbonize. Are the energy companies wrong?
April 8th, 2009 at 7:19 am
With huge profits still available in the petroleum business, it seems unlikely that anyone at ExxonMobil, et al. have much of a motivation to move away from extremely profitable ventures to ones with a great deal more uncertainty.
There does appear to be evidence that they are slow (very slowly) making some shifts in their investments, as you note they are spending some money on renewables, but at their core they are petroleum/hydrocarbon companies.
April 8th, 2009 at 7:44 am
-1-byclark
Yes, it is true the big energy companies have interests. However,this post is focused not on their motives, but their analyses. How fast can a big economy decarbonize?
April 8th, 2009 at 8:04 am
Roger asks “How fast can a big economy decarbonize?”
This is a false question since big economies can’t decarbonize. The planet is going to have much higher atmospheric CO2 in the future and it will be a net positive for life on planet earth. Even Khmer Rouge anti-carbon tactics could not remotely decarbonize the economy but it would kill billions trying.
April 8th, 2009 at 8:18 am
-3-Reid
“big economies can’t decarbonize”
This statement is wrong. Big economies, and indeed the global as a whole, have been decarbonizing for man, many decades. The question is how fast can this process be managed, or whether in can be managed.
Also,, please stick to the analysis, Khmer Rouge allusions are vivid but not so informative. Thanks!
April 8th, 2009 at 9:18 am
What does any economy gain by decarbonizing and does a big economy have to remain big after decarbonization is complete?
I apologize for the snarky questions, but they were the first ones that came to mind after reading the post.
April 8th, 2009 at 10:34 am
Roger, I don’t understand the question (how fast can a big economy decarbonize). We need to be a bit clearer about what is being asked. We know how quickly various economies have recently done it, and you’ve published some very interesting numbers.
How fast could any particular one, absent any constraints of political possibility, surely there is no real limit, and one has to turn the question around, and simply ask how much savings certain measures, politically possible or not, would generate. You would simply ban some activities (like the private car) and if there was not enough passenger train capacity, well, travel would shrink as well.
Surely if you are prepared to take a large poltical and GDP hit, you can get it down very fast indeed?
Or is your question, how fast can you lower units of carbon per unit of GDP? How fast can you lower carbon intensity? Again it surely depends what you are prepared to simply stop doing, how much you are prepared to change the way we live. If you are prepared simply to stop doing energy intensive things, and change the carbon intensity of the economy that way, there is surely little real limit to the speed of decarb?
Where would the limits come from?
April 8th, 2009 at 10:45 am
There have been a number analyses published on what it takes to de-carbonize the global energy. Including on this blog. There is no point to isolating the discussion to just the USA. That can’t solve the problem. My recollection is the equivalent of 10,000 nuclear plants globally over the next 50 years is what needed. Given the implausibilty of that scenario modest targets for decarbonization combine with air capture, geo engineriing and adaption make more sense. By modest no growth in CO2 emissions within ten years. Developed economies could do it faster and developing slower. Looking past that a gradual reduction in emissions. R&D dollars should be focused on on geo engineering and air capture for the next 20 years. Later if needed the development of adaption strategies. lastly the press, science and politicians need to start informing the public of the realties and move away from the outrageous rhetoric. MIKE MCHENRY
April 8th, 2009 at 1:02 pm
Looking at my comment #7 it appears not to directly answer Roger’s question. What I’m saying is that decarbonizing any large economy in a short time frame isn’t practical. By short I mean anything less than 50 years. Also you need to decarbonize many economies at the same time to have any real effect. The latter is so disruptive it shouldn’t be tried.
MIKE MCHENRY
April 8th, 2009 at 2:13 pm
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April 8th, 2009 at 2:21 pm
Hi Roger,
I’ll leave this one to you (you obviously have time on your hands
).
Take Jesse Ausubel’s Exhibit 2 from this webpage:
http://phe.rockefeller.edu/future_business/
Get a linear regression for each of those 5 countries. Then extend the regression all the way to 2100.
Also get the data for the energy consumed by those 5 countries (in tons of oil equivalent…from some other website), and extend those energy consumption trends all the way to 2100.
What do the projected carbon emissions curves look like for those 5 countries?
Mark
P.S. Or you could have some convenient slave labor do the analysis…
April 8th, 2009 at 2:48 pm
“What does any economy gain by decarbonizing and does a big economy have to remain big after decarbonization is complete?”
Historically, the entire world has decarbonized, from coal, to oil, to natural gas…to nuclear fission, though fission’s contribution seems to have plateaued. (Unfortunately…liquid fluoride thorium reactors look spectacular, from what I’ve seen.)
The gain has been fewer other air pollutants: coal is much more polluting than oil, which is somewhat more polluting than natural gas.
And of course, nuclear fission doesn’t emit any air pollution at all, except during Chernobyl-like events.