Excerpt
Introduction: The Coming Energy Revolution
This book is about the future of our planet. The needlessly filthy and
inefficient way we use energy is the single most destructive thing we do to the environment. Whether it is the burning of coal in industrial power plants or the felling of tropical forests, our appetite for energy -- which is essential to modern life -- seems insatiable. With enough clean energy, most environmental problems -- not just air pollution or global warming but also chemical waste and recycling and water scarcity -- can be tackled, and future economic growth can be made much more sustainable.
The problem is that change comes slowly in the energy realm. Old ways of
thinking have encouraged monopolies, shielded polluters, and stifled innovation. That has burdened the rich world with an energy system locked into outmoded technologies -- such as America's many coal plants -- that are dirty and inefficient. That's bad enough, but now it seems that giants of the developing world, like China and India, may follow the same path as their economies surge over the next couple of decades. If they do, then many millions of unfortunates will die needlessly from the resultant pullution -- as will the world's hopes of curbing the carbon emissions that are fueling global warming. That is why this is the key question: Can we move beyond today's dirty energy system to one that is cleaner, smarter, and altogether more sustainable?
Absolutely. Though cries of shortage and crisis are often heard these days in the energy world, there is actually more reason for hope than there has been in decades. This book argues that there are three powerful trends going on below the radar that promise to rewrite the rules of the energy game: the global move toward the liberalization of energy markets, the growing popular appeal of environmentalism, and the recent surge of technological innovation in areas such as hydrogen fuel cells. Taken together, they could lead to an energy system that meets the needs and desires of future generations while still tackling serious problems like global warming and local air pollution. If this clean energy revolution is really going to take off, though, we must first be ready to think the unthinkable: we must end our addiction to oil. Ironically, it may happen for reasons entirely unrelated to concerns about the environment and human health.
The problem is economic and political as much as ecological. Consider a
simple question: How much is a barrel of oil worth? You might think that the price would be whatever the market will bear. Yet the price of oil is influenced less by the free interplay of supply and demand than by the whims of the Organization of Petroleum Exporting Countries (OPEC) -- the ill-disciplined cartel led by Saudi Arabia. Small wonder, then, that the oil price has yo-yoed, from around $20 a barrel for much of the 1990s down to $10 in 1998 to more than $30 a barrel in early 2003.
If you could ask Osama bin Laden that same question, though, you would get a very precise figure: $144. Several years ago, before the al Qaeda terrorist group carried out its attacks on America, bin Laden made some curious comments on energy economics. In that little-noticed diatribe, he accused the United States of "the biggest theft in history" for using its military presence in Saudi Arabia to keep oil prices down. He calculated that this hostile takeover of his country's patrimony added up to some $36 trillion in lost revenues -- and, he insisted, America now owes each and every Muslim in the world around $30,000. And counting.
That chilling calculation points to the nightmare scenario that keeps "energy security" experts up at night: a hostile regime seizes the oil fields of the Middle East and either raises prices sky-high or cuts off oil supplies altogether. Before September 11, scenario planners reassured themselves that if this ever happened, America would just send in its troops to quash the troublemakers and ensure safe passage for the oil supplies. After all, that was the main outcome of the Gulf War, when the coalition led by the elder George Bush booted Saddam Hussein out of the oil fields of Kuwait. And when George W. Bush began to prepare for an invasion of Iraq a decade later, even those who agreed that Saddam Hussein should be ousted took note of the fact that Iraq happens to have a bit of oil: the largest reserves in the world, in fact, after Saudi Arabia.
America's military supremacy is now unchallenged. Even so, the attacks of
September 11 revealed the limits of American power in at least one realm: they have exposed the vulnerability of the global energy system to a postmodern oil shock. Today we have to consider the possibility that revolutionaries or terrorists could possess nuclear weapons -- and might use them on American troops or the oil wells. Such an outcome could precipitate a global economic and political crisis of the sort never seen before. The good news is that such a scenario is extremely unlikely, even in light of recent events. The bad news is that it might still happen, and not even America's mighty military can prevent it. Even short of such an extreme outcome, though, the monopoly grip that petroleum has on the world's transport infrastructure might result in an energy crisis sometime over the next few decades.
Surprising as it may seem, the reason is not scarcity. Back in the 1970s, in the aftermath of the oil shocks of that decade, many people fretted that the energy was running out. With the arrival of the younger Bush in the White House, Americans once again heard talk of an energy crisis. Yet it's abundantly clear that there is enough oil to keep the world's motors humming for decades to come.
The real problem is not scarcity but concentration. The lion's share of that remaining oil -- and most of the oil that is cheap to extract -- lies under the desert sands of a small handful of countries in the Persian Gulf. Today, Saudi Arabia and its immediate neighbors sit atop nearly two-thirds of the world's proven oil reserves -- that's right, two-thirds. However, those countries are not producing oil nearly as fast as they can. As the world continues to deplete expensive, non-OPEC oil in places like the deep waters of the Gulf of Mexico and the frigid reaches of Siberia in coming years, OPEC's market share is set to increase dramatically -- and with it, the power of those Middle Eastern regimes. The potential for supply disruption by anti-Western terrorist bands like al Qaeda can therefore only grow. This threat is particularly acute for the United States, which is both the biggest oil guzzler and the de facto guarantor of oil supplies for its allies.
Unfortunately, there is no immediate solution, because there is no practical alternative to oil-fired transport. In the short term, all governments can do is buy some insurance against politically inspired supply disruptions and the panics that tend to accompany them. The way to do that is to expand dramatically their buffer stocks of petroleum, such as those stored in salt domes in Louisiana. To his credit, George Bush started to do this in 2001. Structural changes in the oil industry resulting from mega-mergers, cost-cutting, and a move to just-in-time inventories make the matter particularly urgent, because the private sector has greatly reduced its levels of stocks from the 1970s. Add to this the official neglect of government stockpiles, which are inadequate in the rich world and practically nonexistent in the developing world, and you get a world needlessly vulnerable to the next oil shock.
As for longer-term policy responses, three views typically dominate the
energy debate raging around the world post-September 11: Relax; Keep pumping; and Ride your bicycle. The first camp insists that the very premise of the argument is false and that "energy security" is a bogus notion not worth worrying about. The second camp sees the threat as real, but argues that it can be countered effectively through supply-side measures that boost non-OPEC sources of oil. The final camp argues that conservation is the only way forward. They tend to perpetuate a number of popular myths about energy:
--The oil's about to run out
--Without fossil fuels, we'd return to the Stone Age
--Windmills and warm sweaters will save the planet
--Rampant economic growth is the root cause of our environmental problems
--Clean technologies will emerge spontaneously, without the need for government action or difficult policy measures like energy taxes
--Sport-utility vehicles (SUVs) are the work of the devil
This book will explode these and other nonsensical notions, and explain why none of these three camps gets it quite right.
Copyright © 2003 Vijay V. Vaitheeswaran