The race for a low carbon economy: A form guide
If, as I think is now possible, the Copenhagen summit leads to an agreement to reduce CO2 emissions substantially in the next decade and to very low levels by 2050, we will need to replace, or do without, a lot of energy currently derived from carbon-based fuels. It’s probably a good time to take a look at the main contenders for achieving this. Here’s my form guide. (I’m not going to give lots of links – Wikipedia is, as usual, a good place to start).
Efficiency: Often ignored or left until last, but improvements in energy efficiency will probably be the most important single response to the imposition of a price on carbon. Across a wide range of activities there are 50 per cent gains to be had at low cost, as can be seen by comparing the average energy-intensity of most activities (cars, lightbulbs, industrial processes) with the most energy-efficient commercial option. For example, the average fuel efficiency of the existing Australian car fleet is estimated here at 11litres/100km, but there are a wide range of vehicles that use half that, and plenty of options that use even less. Given some mixture of price incentives and regulation it should not be hard to achieve similar savings in most activities. In the transition to low or zero emissions, we can also make some big efficiency gains in the way in which we use carbon-based fuels, most obviously by shifting from the worst such sources (brown coal, oil from tar sands) to the best (gas and other hydrocarbons)
Substitution: Even less commonly mentioned, but again a favorite if we get a serious carbon price. For most energy-using activities there are easily available low-energy substitutes: warm clothes for home heating, cold beer (or iced coffee) for air conditioning, public transport for cars, communications for transport in general. People don’t like talking much about this because the debate is dominated by two polar opposite viewpoints: that we should consume less of everything, or that we must never reduce consumption of anything. In fact, though, over the last century we’ve consumed more of most things, but not of everything. To give just one example, although we consume more of most kinds of health services, house calls by doctors have disappeared and lengthy stays in hospital have become so expensive that they aren’t offered except to those who absolutely need them. As relative prices change, we consume more of things that are cheaper and less of things that are dearer.
Offsets: There are a bunch of these, but reforestation is the big one, probably big enough to reduce atmospheric CO2 concentrations by 50-60 ppm over a century or so.
Zero carbon energy sources: These are usually discussed first, but I’ve left them until (second) last to make the point that we shouldn’t think about replacing all existing energy use with new sources. There are a lot of options and a fair bit of uncertainty about all of them, but it seems reasonable to expect that, if we give a general price incentive and put a bit of money into each of them, at least some will pay off. Here’s my list.
Hydro: Well established but not much capacity for growth
Geothermal: Exists on a small scale already and this could be expanded with modest technical progress. But the contribution will still be relatively modest. The big obstacle is the need for transmission lines from locations to markets: we need technical innovations to reduce costs and changes in market institutions that tend to discourage investment
Carbon capture and sequestration: The horse Australia would most like to see win, since a cheap and effective CCS technology would mean that we could declare the problem solved and go back to mining and burning all the coal we have. The capture part seems feasible, but there’s not much to suggest that the difficulties of underground sequestration are going to be resolved any time soon. If CCS is going to be an option, my guess is that its going to have rely on something like using the captured CO2 to grow algae. This is probably also the most promising route to biofuels. I haven’t seen much on the economics of this – any good sources
Biofuels: Technically feasible, but since most biofuels either use food crops as inputs or compete with food crops for land, they can be economically and ethically justified on a large scale only if we can achieve increases in productivity big enough to feed a growing population and have a surplus output large enough to use for fuel. I’m less optimistic about this than I once was, but it’s important not to over-react to the brief upsurge in food and fuel prices a year or so ago. Commodity markets are highly volatile and short-run movements are not a good guide to the long term.
Nuclear: In the Australian context, talk of nuclear power (for and against) is mainly political pointscoring. Even with a big government push behind it, it would take decades for Australia to build up the kind of regulatory, technical and educational infrastructure we would need for a substantial nuclear industry. And realistically speaking, we aren’t going to move until some other developed country shows that it’s possible to start a nuclear program from scratch or at least, restart a stalled program. The leading candidate is the US, which has been pushing a ‘nuclear renaissance’ since the Energy Act of 1992 and particularly since the Bush II administration came in nearly a decade ago. So far, all they have to show for it is a dozen or so proposals, mostly at existing sites. From what I’ve seen it’s unlikely that more than a handful will be in operation by 2020, which puts a large scale resurgence of nuclear power off until 2030 or later. Of course, as has long been true, nuclear plants will continue to be built in countries with a military or national pride motive, but that kind of thing is a dead end as far as any real contribution to global energy needs is concerned.
Wind: already commercially viable or nearly so in lots of places, and bound to become even more significant once carbon prices start rising to $50/t or higher. The big issue raised by critics is variability of supply. That hasn’t proved to be a problem in jurisdictions with up to 20 per cent wind. Given smart metering (and automatic processes capable of responding to higher prices by lowering energy use) this proportion could probably be raised to 40 or 50 per cent, and with storage, even further.
Solar (photovoltaics and thermal): I used to think this technology was a long way off being a serious contender, but recent progress has been striking. As long predicted, the shift from small-scale specialty production to large scale industrial processes has produced big cost reductions with no obvious end in sight. In particular, the industry has ended its reliance on the semiconductor industry as a source of cheap offcuts for silicon, and has been forced to develop low-cost processes specifically designed for solar cells. Assuming a good outcome from Copenhagen (and no breakthroughs on CCS), I predict that by 2020 most new electricity generating capacity will be either solar or wind, while more coal plants will be closing than opening.
Last of all, there are a variety of geoengineering solutions to remove CO2 from the atmosphere. As I said recently, these are a long way off, but could be important after 2050.