Course:ECON371/UBCO2010WT1/GROUP8/Article1

== Article 1: The Coming Energy Revolution == [1]

Summary

All of the world's current and future energy needs could be met by harnessing the power of our natural resources. Amazingly, only a small percentage of the world's power comes from renewable energy. Our system of acquiring energy through fossil fuels is inherently flawed. The environmental, economical, and social costs of such a system are such that we cannot afford them. Global oil production will begin to fall in one or two decades as we deplete our reserves, but the issue is not the eventual depletion. The planet cannot afford the accompanying climate change, the environmental damage, and the countless costs associated with burning these fuels. The economic costs of climate change are five to twenty times higher than the costs needed to prevent it. Global climate change is seen as an international threat, more prominent than terrorism, and a very likely factor contributing to future disputes and wars.

Any scaling down of emissions will not be possible unless we find a way to support our energy needs with clean, renewable sources. This is the only way out. Fortunately, investments in renewable resources are less risky, less expensive, and less vulnerable to future fluctuations in fuel prices than traditional energy sources. Their infrastructure is easier to establish and can be erected more rapidly, therefore proving more useful in emergency situations or remote locations. They create more jobs may aid developing countries with economic expansion more readily than other energies.

Wind power is the least expensive of renewable energies to harness, although these costs have been rising due to rising material costs such as concrete and steel. Uncertainty regarding government policies have also aided in driving up these costs. If harnessed properly, wind has the potential of meeting all the world's energy needs by itself. For now, the costs surrounding such an endeavour are still prohibitive, but technologies are always improving. Different countries may prefer to use different technologies for economical reasons. For example, Japan finds it cheaper to use solar power, importing panels from China, who has established itself as a low-cost producer of these. Solar power has become one of the fastest-growing industries today, being a versatile and portable system that is currently providing power to people in developing countries who otherwise could not have such luxury through other means. Solar thermal power is currently being used and developed around the world, most prominently in China, where about 40 million households use rooftop solar collectors to heat their water. Geothermal technology uses water that's been heated underground and the resulting steam to drive turbines and heat buildings. Underground water can also be used to heat or cool water and buildings, and these technologies are already being used in more than 30 countries. Agricultural wastes are being turned into biofuels, ethanol and biodiesel being the most common, but they come with certain disadvantages: Growing and cultivation of these diminish soil and water quality, promote destruction of forests in exchange for farmland, and contribute to greenhouse gas emissions. Alternative biofuels, derived from organic wastes and algae, are slowly becoming available and are expected to have lower environmental impacts than their predecessors. Small-scale hydropower projects have proven beneficial and minimize the impact on the environment, if managed responsibly. Finally, we have yet to efficiently tap into the immense power of the ocean's tides, currents, waves and temperature changes, but the technology will be emerging soon.

Analysis

Global energy consumption is continuously rising. This fact should be obvious, since the world's population is growing exponentially, cities are exploding in size, and we are forever searching for resources to fuel this growth. The emergence of an undeniable and horrifying threat of global climate change has finally sparked a movement towards the exploration and development of renewable energy systems. Stated in the opening paragraph of this article, the most astounding fact surrounding this topic is enough to make you laugh and cry at the same time: Renewable energies could supply us with all the power we could ever need.

As a result of climate change, high oil prices, and numerous other conflicts, people are turning towards other means of generating power. We are finally realizing that a change must be made, that we cannot continue down this unsustainable path. The demand curve that represents our desire for energy is shifting outwards, but our supply of energy remains the same. Renewable energy must eventually replace the old ways to which we are so accustomed. There are countless reasons why our systems are built on such unsustainable technologies, but a thorough examination of these is beyond the scope of this analysis. We've dug ourselves into this hole, now we have to find a way out. Sawin reminds us that sadly, we have been living well beyond our means for quite some time now. Our planet cannot afford to continue in such a fashion, even if we did have unlimited oil. There is no need to re-state the environmental impacts related to emissions and the burning of fossil fuels. The list stretches on and on, and scientists have concluded that a reduction of 50-60% of carbon dioxide emissions by 2050 is the only way to avoid a veritable "point-of-no-return" for our ailing planet. We can already measure the anticipated impacts of climate change, and Sawin uses the example of loss of land due to flooding and sea-level rise. The importance of such changes should strike fear in anyone's heart. Sawin only mentions this briefly through a quote from a certain UN official. The displacement of individuals, disputes over arable land, the desperation of entire populations forced into a corner are all outcomes that may eventually lead to much violence and bloodshed. The comparison is magnificient: An international threat more frightening than terrorism. Climate change should be viewed as such, evidently, the ultimate threat to our survival.

Sawin describes global climate change as the “costliest impact”. The graph below will demonstrate the impacts on the environment per year in relation to the costs reflecting on Gross World Product (GWP). Damages to the environment are represented by the marginal damage curve (MD). Sawin presents findings from a report in which the economic costs of climate change, if no actions are taken to curb it, would range from the equivalent of 5-20% of GWP. On the other hand, the costs associated with abatement of these impacts would equal only about 1% of GWP (Area C). The MAC curve is mostly flat, and as we move from right to left, a small change in investment of GWP represents a huge reduction in environmental impacts per year (Area B). If no investment was made, the damages would include everything under the MD curve, namely the areas A, B, C, and the triangles with no letters to the left of C.

Climate change is not the only reason why we must undertake such an immense restructuring of our energy systems. Oil prices are forever climbing, and our dependence upon this resource makes us extremely vulnerable. Sawin touches a little on this vulnerability, but does not proceed any further. This vulnerability should be highlighted as an important factor in our decision to restructure our systems. We are basically forced to pay whatever price the suppliers want to charge, and it doesn't seem that they will be going anywhere else but up. The money we spend on a fuel that will - and must - eventually be abandoned, could be spent on the restructuring and development of renewable energy sources. It is not economically sound to continue investing in this dying technology. Furthermore, the North American infrastructures are built around this concept of transportation. Cities rely on the fact that its citizens are able to commute freely from work to home and everywhere else they need to go. If the fuel that makes this possible is unattainable, the economy cannot function. The country itself cannot function. With the amount of oil that we import, our basic functionality rests in the hands of those who supply us with this commodity. For countries like the U.S., who are obsessed with the concept of national security, it seems foolish that the life force of their economy, and their military, rests significantly in the hands of a few countries in the middle east.

The graphs in the article clearly demonstrate that wind and solar power development are the fastest-growing energy sources today, with oil being second-to-last. There are many reasons for this, but most significant to those living in a market-based economy is that the invisible hand of the market is playing a more important role. Renewable energies are, by definition, (almost) infinite. If they require only investment in its establishment and maintenance, the break-even point for such an investment is amazingly short in comparison with a venture where you must maintain and re-invest in your supply. Supply is relatively constant; there is no fear that the sun won't make an appearance or that the wind will stop blowing for any significant length of time. There is no need for substantial investment in infrastructure like there are in power plants and major extraction projects. The risk is minimal, with little fluctuations in prices. The profit potential is staggering, being able to capitalize on the energy needs of the population that is expanding exponentially. Clearly, the economic benefits alone outweigh any costs, not to mention the social, environmental, and health benefits that follow.

There is an undeniable similarity in what Sawin describes as an "explosion of invention" between the years of 1890 and 1910, when technologies that have been perfected over centuries were so readily dismissed within this short period, and the era in which we find ourselves now. We are poised to experience a second wave of global technological revolution in the way we harness and utilize the energy around us. Sawin describes this as an opportunity, but unlike the events that took place almost a century ago, these changes will be motivated by necessity. The potential profits to be made from this transition to renewable technologies are attracting venture capitalists and large multinational companies. New markets are emerging all around the world in hopes of capturing some of the $100 billion a year invested in these technologies worldwide. Economies of scale and research and development will drive down prices, rendering renewable energies much more affordable. Government policies are going to be drivers of such changes, and mandated targets will reduce uncertainty in the markets involved with renewable resources. This demonstrates that a social, economic, and cultural change is guaranteed to accompany the global transition to renewable energies. The biggest challenge we face now is in executing such a revolution, or evolution, in harnessing our energy.

Prof's Comments

A very long article with lots of interesting facts. In this context, abatement consists of switching from fossil fuels to renewables. The switch reduces environmental damages, but does come with some cost. Nice way of thinking about it. So what of the future green energy revolution? It is still pointed out that fossil fuels will account for over 80% of energy supply in the future. Why are we not taking advantage of the renewable options?