Since the Kyoto Protocol was signed more than 15 years ago to limit greenhouse gas emissions, around $2 trillion has been invested in renewable energy. Governments have provided incentives, increased efficiency standards, and adopted cap-and-trade or carbon taxes. Despite it all, the International Energy Agency (IEA) last week released a report finding that the carbon content of the world’s energy supply hasn’t changed at all in 20 years because coal use in places like China and India is growing so fast it offsets any gains from renewables and efficiency.
It’s time to get serious. We need an honest discussion about what an economically viable pathway looks like to begin reducing carbon emissions. That means more renewable energy and efficiency. It also means more natural gas—which is half as carbon-intensive as coal—and technology to capture fossil fuel emissions and store them underground.
In the United States, energy-related carbon emissions are down more than 12% since 2007, largely because the shale gas revolution has allowed cheap natural gas to crowd out coal. That trend needs to be replicated elsewhere, but is heading in the opposite direction in Europe. China consumed almost half of the global coal demand in 2011, and its coal use is rising sharply. The United States can facilitate this shift by allowing gas exports, which can increase global gas competition and thus push down prices. We can bring U.S. technology and services to other nations rich in shale potential and provide regulatory assistance to other nations to promote safe production.
Even with increased gas use, there is simply too much cheap coal in the world to believe that it is going to stay in the ground given the economic growth rates of emerging economies. As IEA points out, this means carbon capture and storage technologies must be part of the solution if we are to meet global climate targets. Achieving that goal will require government policies to finance research and deployment, and to send price signals that create appropriate incentives to reduce emissions.
There are surprisingly few calls for such a balanced approach these days. With new technologies unlocking vast hydrocarbon resources, too often the policy debate is dominated by easy answers and blinkered slogans. In this simplified world, you either see hydrocarbon-based energy as the solution to all the world’s energy ills or you view them as having no role or value whatsoever. You either dismiss climate science or you believe that climate change is the only concern public officials should consider. You either believe that renewable energy sources are uniquely valuable or you dismiss them entirely as impractical and irrelevant. Public dialogue over the future of energy that is structured around extremes does little to advance the public interest.
The rapid changes in our energy system and the climate outlook must be matched by changes in our energy policy. Decision makers will increasingly be required to consider new policy questions that were difficult to imagine just a few years ago. As the U.S. becomes more self-sufficient, they must consider new geopolitical questions about the future of OPEC, Russia, and other major traditional producers. They must also balance the economic and security benefits of increased oil and gas resources with the need to drive the development, cost reduction, and deployment of emerging clean energy technologies.
The choices we make in the coming years, both domestically and globally, will be of profound importance in balancing these multiple objectives. Smart policies will be key to meeting the defining challenge of the next generation—how to sustainably provide billions of people with reliable, affordable, secure access to energy. The new global energy landscape requires decisions informed by the kind of independent and balanced analysis that all-too-often is missing in public debate.
The new Center on Global Energy Policy at Columbia University being launched this week aims to do just that. The Center will approach the analysis of energy as a complex and multifaceted pursuit, in which policymakers must balance between competing economic, security, and environmental concerns. And it will maximize the real-world impact of its analysis with concrete, specific, and practical policy recommendations.
Meeting the energy challenges ahead requires an understanding of how to balance competing priorities so that we can unlock the door to an energy future that is more prosperous and secure. By providing a platform for cutting-edge research informed by real-world experience and needs, we will help policy makers navigate the increasingly complex world of energy, and allow us to realize the vast potential of this unique moment for energy.
Jason Bordoff