Climate change: why the shift to clean energy will be more painful than you think
- A renewed focus on energy security, the sheer scale involved, the rich-poor gap and dependence on mineral mining are all major challenges that policymakers have to recognise and address
The “energy transition” from hydrocarbons to renewables and electrification is at the forefront of policy debates nowadays. But the past 18 months have shown this undertaking to be more challenging and complex than one would think just from studying the graphs that appear in many scenarios.
The term “energy transition” suggests that we are simply taking one more step in the journey that began centuries ago with the Industrial Revolution. But whereas technology and economic advantage drove earlier transitions, public policy is now the most important factor.
Moreover, previous energy transitions unfolded over the course of a century or more, and they did not wholly displace the incumbent technologies. Oil overtook coal as the world’s top energy source in the 1960s, yet we now use three times more coal than we did back then, with global consumption hitting a record high in 2022.
By contrast, today’s transition is intended to unfold in little more than a quarter of a century and not be additive. Given the scale of what is envisioned, some worry that macroeconomic analysis has been given insufficient attention in the policy-planning process.
Developments since energy markets began to tighten in the late summer of 2021 point to four big challenges. First, owing largely to the disruptions caused by Russia’s war in Ukraine, energy security has become a top priority again.
For the most part, keeping the lights on and factories operating still requires hydrocarbons, so energy security means ensuring adequate and reasonably priced supplies and insulation from geopolitical risk and economic hardship.
The second challenge concerns scale. Today’s US$100 trillion world economy depends on hydrocarbons for over 80 per cent of its energy, and nothing as massive and complex as the global energy system can be transformed easily.
In an important new book, How The World Really Works, energy scholar Vaclav Smil argues that the four essential “pillars of modern civilisation” are cement, steel, plastics and ammonia (for fertiliser), each of which is heavily dependent on the existing energy system.
Given these starting conditions, will solutions like veganism help? Smil points out that five tablespoons of petroleum are embodied in the system that gets a single tomato from cultivation in Spain to a dinner table in London.
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Yes, energy efficiency could be improved. But the main effects will show up in developed countries, rather than in the developing world.
That points to the third challenge: the new North-South divide. In the Global North – primarily Western Europe and North America – climate change is at the top of the policy agenda. But in the Global South, that priority coexists with other critical priorities, such as boosting economic growth, reducing poverty, and improving health by targeting indoor air pollution from burning wood and waste.
Hence, for many in the developing world, “energy transition” means moving from wood and waste to liquefied petroleum gas.
Yet they cast their votes from a body located in France and Belgium, where per capita income (in current dollars) is, respectively, 50 times and 60 times greater than in Uganda, where the pipeline is seen as a foundation for economic development.
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The fourth challenge concerns the material requirements of the energy transition. I see this as the shift from “Big Oil” to “Big Shovels” – that is, from drilling for oil and gas to mining the minerals for which demand will increase enormously in a world that becomes more electrified.
So, while the direction of the energy transition is clear, policymakers and the public must recognise the challenges it entails. A deeper and more realistic understanding of the complex issues that need to be addressed is essential as the effort to achieve the transition’s goals proceeds.