Despite its triumphal denouement, the Paris Climate Change Summit is unlikely to result in a fundamental shift in fossil fuel consumption patterns. The commitments made are mostly aspirational and non-binding, as they must be to avoid outright rejection by the Republican-controlled U.S. Senate and the Communist-controlled Chinese dictatorship. More importantly, energy consumption patterns change slowly, reflecting the large investments in existing infrastructure of energy production and consumption, and the efficiency of fossil fuels which make them dominant in areas such as transportation. Given the critical role fossil fuels play in economic growth, gradual change is probably the best outcome.
The history of economic development is the history of the amount of energy brought under human control. Economic historians have observed the close relationship between economic growth and energy consumption as we put more energy to work for us. American economist Deirdre McCloskey called the surge in energy use that began around 1800 “the Great Enrichment.” The benefits to mankind have been enormous, extending life expectancy, increasing food output to sustain burgeoning populations, and lifting the standard of living for most people to levels not even royalty could aspire to just a few centuries ago.
The late Italian economic historian Carlo Cipolla attributed both the Agricultural Revolution thousands of years ago and the Industrial Revolution starting in the late 18th century to people harnessing energy power. In the Agricultural Revolution, humans evolved from hunters and gatherers to cultivate and tame the energy in plants and animals, even if most plants and animals are not very efficient converters of energy. Fire, wind and water also increased the energy at the disposal of humans. Over time, people became more efficient at using all these energy sources, through rudimentary farm tools, irrigation, fireplaces, water-powered mills and sailing boats.
Fossil fuelled industrialization
Fossil fuels played a negligible role in supplying energy until the Industrial Revolution. While everything on the planet is a possible source of energy, fossil fuels proved especially efficient and convenient in meeting the energy demands of industrialization. In Cipolla’s words, the Industrial Revolution “can be regarded as the process whereby the large scale exploitation of new sources of energy by means of inanimate converters was set on foot.” Coal was the first widespread source of inanimate energy, rising from 10 percent of Britain’s energy supply in 1560 to 60 percent by 1750, in the process ending Britain’s deforestation. This began a cumulative process, where a rising supply of energy stimulated more economic growth, which boosted education that led to the discovery of new sources of energy, notably other fossil fuels.
The first commercial use of fossil fuels was kerosene to generate light and end our perpetual plunge into darkness after sundown. (This stopped the widespread slaughter of whales, whose oil until then was the main source of indoor light.) The U.S.pioneered the exploitation of oil in the 19th century, a mantle it is reclaiming today thanks to innovative technologies to develop shale deposits. By 1860, the oil age had begun in earnest due to the development of drilling technology in Pennsylvania.
Alternative sources of energy besides fossil fuels have been developed. Hydro electricity production took off in the late 19th century after Edison invented the incandescent lamp. By the middle of the 20th century, man had mastered nuclear fission. But most renewable energy sources, notably solar and wind power, remain a negligible source of energy, reflecting their high cost and intermittent nature which limits them to mostly a back-up role in energy production. Biofuels and biomass appear even less promising alternative energy sources, since they require valuable farmland that will be needed to feed the projected 10 billion human inhabitants of earth.
Fossil fuels remain the main source of our greater command of energy power. In 1850, they accounted for only five percent of energy. Today they represent 87 percent of global energy supply, the same as a decade ago. In his 2014 book The Moral Case for Fossil Fuels, Alex Epstein defines energy as “the capacity to do work.” Today that capacity is enormous. The average American’s machine energy use is 186,000 calories per day, the equivalent to having 93 human beings at your service for transportation, cooking or doing chores around the home. The International Energy Agency foresees fossil fuels continuing to supply 75 percent of all our energy in 2040. Although the Paris Climate Agreement was hailed as the beginning of the end of fossil fuels, the end will likely be a long time coming.
From coal to oil to gas
Our overall dependence on fossil fuels has changed little in recent decades. What has shifted is the mix of fossil fuels North Americans consume. First, oil gradually displaced coal in home heating. Once flared off as an unwanted by-product of oil production, natural gas is rapidly replacing coal in electricity generating plants. These trends will continue as regulations in both the U.S. and Canada shut down power plants fuelled by coal. Ontario has closed all its coal-burning power plants, while Alberta recently announced it will accelerate the phase out coal power generation to allow oilsands production to survive even as carbon emissions are curtailed. Exporting liquefied natural gas from British Columbia to China would help China reduce its dependence on coal-fired plants.
Oil is the dominant energy source today because it is a cheap, reliable and portable source of energy. The portability of oil means you can ship it long distances by pipeline, and then carry it around in an aircraft or in your vehicle. Its portability explains why it remains the dominant source for transportation, supplying 93 percent of the fuel used by automobiles, planes, boats, and railcars.
Stephen Chu, President Barack Obama’s secretary of energy and a Nobel physicist, conceded in 2010 that oil would remain the world’s dominant fuel “because oil is an ideal transportation fuel.” A gallon of gasoline has the energy content of 31,000 calories. Gasoline is very efficient, delivering 85 percent of its energy to the engine. Chu pointed out that to match the energy in a gasoline tank, a car would have to have a battery with eight times more the space and weight of gasoline. Gas engines are the inefficient process in vehicle transport, converting only about 15 percent of their energy to propulsion (the rest is lost as heat). As with agriculture, we have and will continue to sharply increase the efficiency in using inanimate energy. Just as the technical efficiency of steam rose from five percent for the Watt steam engine in the 18th century to 40 percent for steam turbines after the Second World War, the efficiency of other fossil fuel applications has and continues to grow. That should be our objective, rather than to abandon them.
While oil dominates transportation use, it is also widely used in industry and home heating, the other two major sources of energy demand in our society. Coal and manufacturing have always been closely linked; in ancient times, coal was used in furnaces to make metal ores. Large power plants were built in the late 19th century to fuel the growing manufacturing sector. Having power generated outside the factory allowed factories to be reconfigured for moving assembly lines, substantially raising manufacturing productivity.
However, the impact of oil on manufacturing goes well beyond a source of power. Oil pervades our manufactured goods; your car has more oil embedded in its materials than in its gas tank, including materials in the paint, plastic, seats, and tires. More generally, oil is a key ingredient in everything from our clothes to our furniture and technological goods. Oil is pervasive because it can be transformed into so many other materials and because it is abundant and relatively cheap.
The myth of peak oil
The public debate about fossil fuels for many years has been based on the implicit assumption that we were running out. According to this line of thought, we need carbon taxes and renewable energy sources to wean ourselves off a diminishing resource. In places like Alberta, it was the justification for creating public trust funds with energy revenues as a hedge against depletion. This narrative based on assumed shortages has not adjusted to the reality of the growing supply of oil and gas resulting mostly from technical advances in extraction. It is reflected in the sharp drop in prices starting in late 2014 that shows every sign of being ‘lower for longer.’ Epstein celebrates the abundance of fossil fuels, and likens a carbon tax on the resource that has done the most to improve our standard of living to “taxing fruit and vegetables. Why would you do it?”
Of course there are environmental objections to fossil fuels. Some, like major spills and blowouts and petroleum train derailments and high-density local automotive and industrial air pollution, are legitimate. Some are trivial, like a few dead ducks in an oilsands tailing pond. And some are hypothetical, such as global concerns about climate change. None of them justify limiting fossil fuels at all costs. As Epstein notes, human development is not making a safe climate more dangerous, but is making a dangerous climate safer for humans. Today’s poor are the most vulnerable to environmental disasters; their best protection is economic growth to increase the resources they can deploy to counter severe weather events. So-called “global prioritizer” Bjorn Lomborg estimates that cutting carbon emissions significantly would cost the global economy $1 trillion a year, money that could be better spent improving lives in myriad other ways.
There are two ways of thinking about the dominance of fossil fuels since the Industrial Revolution. One is Cipolla’s idea that this era was a short-term expedient after we found a one-time source of cheap ‘stored sunlight’ and used it profligately: “For millions and millions of years wealth was stored and cumulated. Then, someone in the family discovered the hoard – and started to dissipate it. We are now living through this fabulous dissipation.” In this view, the current generation adds little to fossil fuel production via better technology, such as the shale drilling revolution, but is simply squandering a rich inheritance from our ancestors.
A more optimistic view is that the supply of fossil fuels is virtually inexhaustible. After all, the current slump in oil prices has been driven by technological innovation, the very opposite of the shortage envisioned by proponents of ‘peak oil.’ Emissions from fossil fuels will diminish as we learn to use them more efficiently, instead of the great waste currently embedded in the technology of car engines, power generation and home heating. As the renowned energy economist Daniel Yergin concludes in The Quest, the most important resource in the energy field is human creativity, “and that resource base is growing.” It is impossible to predict the energy sources technology will allow us to develop in the future or how they will boost the efficient use of energy, any more than it was possible a few years ago to predict the shale revolution in oil and gas.
Yergin also promulgates the “law of long lead times”, which holds that weaning ourselves off fossil fuels would be a much more difficult process than many pretend. Long lead times reflect the considerable capital embedded in the existing energy infrastructure built upon fossil fuels. Commercial buildings, industrial plants and homes are constructed with a 60-year planning horizon. Power plants are also planned for a life span of several decades, while a new oil field may require a decade between exploration and first production. Even the automobile fleet changes only slowly; at the current rate of 1.8 million new vehicle purchases a year in Canada, it will take 18.3 years to replace the existing stock of 33 million vehicles on the road. Yergin concludes that “history demonstrates that energy transition takes a long time. It took almost a century before oil overtook coal as the number one energy source.”
Complex issues like long-term trends in energy use do not fit easily into modern political soundbites. But the reality is that fossil fuels will be part of our economy for decades to come, no matter how many wands are waved in Paris. Our economic, energy and environmental policies should be grounded in this reality. Attempts at revolutionary breaks with our fossil fuel-based civilization are doomed to fail; only gradual disengagement is possible, building on the successes of fossil fuels and not a blanket condemnation of their shortcomings.
Ottawa-based commentator and consultant Philip Cross maintains an economics website called InsidetheNumbers.org.