by George A. Seielstad Monday, June 8, 2015
Transformations of resources into products and movements of products through the economic system require energy. Throughout the 20th century, energy was abundant and cheap in the developed world, at least if the accompanying cost of environmental impacts is ignored. The primary sources of energy driving our society are and have been fossil fuels. In 2013, petroleum, natural gas and coal accounted for 82 percent of U.S. energy use. Burning these fossil fuels emitted 5.39 billion metric tons of carbon into an atmosphere that today contains more carbon dioxide than at any time in the last 800,000 years. Still, signs are all around us that our energy consumption habits may be becoming more benign to the environment.
Oil has been the foundation of global civilization for a century, but its dominance is waning. Oil prices have plunged recently, placing the industry in a bind. If prices remain low, extracting oil from difficult places — in the Arctic, deep seabeds or tar sands, for example — is uneconomical. Divesting from oil companies, it seems, is becoming an increasingly attractive option to investing, in part just based on economics.
But a better indicator of the value of an energy resource than stock prices is Energy Return on Investment (EROI), a measure of how much energy is consumed relative to energy produced. Globally, EROI has dropped by nearly half in the last two decades, meaning it takes almost twice as much energy to extract a barrel of oil now as it did in 1995. In the U.S., EROI for oil is now about 10-to-1 (versus 25-to-1 in the 1970s) and falling (according to an article in Energy Policy in January 2014). Tar sands are especially marginal in this regard: One barrel’s energy is needed to extract only four new barrels of oil (an EROI of 4-to-1). Thus, either we can divert an ever-greater share of our economy to oil production, leaving a smaller share for goods and services, or we can move on from oil to other sources of energy.
The case to abandon coal has seemingly already been decided. Despite its abundance in the U.S. and its favorable EROI (80-to-1), coal has been surpassed by natural gas, which is now the U.S.’s second-largest energy fuel. Combustion of natural gas emits about half the carbon dioxide that coal does in producing the same amount of energy. Coal also releases mercury, sulfur and nitrogen oxides — pollutants that natural gas does not release. Finally, natural gas costs less than coal. Coal therefore loses on every count, as the numbers prove. In 2013, U.S. coal production fell to 985 million short tons, the first time it dropped below 1 billion tons since 1993. Even China, the world’s largest user of coal, dropped its consumption 1.6 percent in 2014 — the first decline this century — even while its economy grew 7.3 percent. This is surprising perhaps, but it’s also a concession to reality. Chinese pollution due to coal burning has reached intolerable levels, and energy production from coal is requiring too much scarce water.
Another indication that we are nearing a major turning point is that, in 2014, the world added more wind-power production than coal-power production. Renewables are the fastest-growing energy sources. In the U.S., both solar- and wind-energy capacities more than tripled between 2008 and 2013. Although such sources still only generate tiny fractions of U.S. energy, they are the path forward.
Large companies with enormous revenues and immense political power are already switching to renewable energy. The Environmental Protection Agency’s list of the largest green-power users include forward-looking companies that led the world through the digital revolution and are now leading a green-power revolution: Intel, Microsoft, Google, Cisco and others. The necessity now is to feed the momentum.
What are the rewards? For one, emissions are down. U.S. carbon dioxide emissions, which rose to 5.99 billion metric tons in 2007, began declining the next year and stood at 5.39 billion metric tons in 2013. Cutting greenhouse gas emissions reduces future warming, which in turn could lessen sea-level rise, glacial retreat, frequency of extreme weather events, and all the consequences that attend these changes. Public health could also improve, especially among pulmonary disease sufferers escaping coal’s particulate pollutants.
The signs of change surround us, and a sensible future is in sight. But the first steps down a new path are often tentative and in need of reinforcement. Our choice now is clear: We either continue investing to perpetuate a flagging strategy of the past, or we put our effort and capital into creating an energy future rich with growth opportunities.
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