Can We Rise To The Climate Change Challenge?
If international climate change objectives are to be achieved fossil fuel resources will need to remain in the ground or should only be extracted and used under certain conditions. Governments which rely heavily on oil revenues, for example Russia, the Gulf States and Nigeria, will need some strong incentives to evolve away from oil-based economies and it is not immediately clear how this can be achieved. The coal dependent economy of China faces similar challenges.
While electricity can be generated by diverse distributed renewable resources large loads will still require contributions from fossil fuel power plants – gas or coal – for the next 20 to 30 years. This approach would be acceptable if carbon capture and storage (CCS) on a global scale is feasible.
However, costs of CCS are high and carbon is not priced into the power. Retrofitting the world’s large scale gas and coal fired power plants is a mammoth task and so is finding suitable CO2 repositories.
Furthermore, CCS is still at the demonstration stage and the few high profile projects are subsidized by government. Shell is planning to install a commercial scale CCS project on one of three combined cycle gas turbines at a power plant in Scotland. If the UK government funding is confirmed the demonstration project will run from 2020 to 2030. About 1 million tonnes CO2 emissions will be avoided annually, a similar scale of reductions to the world’s first commercial scale CCS project at a coal-fired power plant at Boundary Dam in Canada where some of the CO2 is destined for EOR and hence further emissions.
To put the scale of these CCS demonstration projects into perspective, relatively small offset coal mine methane projects in China are delivering equivalent results at less than 6 per cent of the cost without any government support. It is questionable whether the CCS projects can be realistically scaled or merely represent cynical attempts by power producers and oil majors to justify business as usual.
Government has a duty to ensure energy security as well as achieve environmental protection aims. CCS won’t work so what other policies can government introduce to promote the necessary changes?
First, high taxation of fossil fuels would reduce investment in exploration and raise fossil fuel costs. Capital markets looking to the future would support alternative, cleaner energy but some investors, expecting push back on aggressive policies, will maintain a foothold in the hydrocarbon resources camp.
Second, we have the necessary clean energy technologies but improvements, efficiencies of scale and cost reductions are needed. Transport can be served by electricity and biofuels; although there is likelihood of conflict between biofuels and food growth. More needs to be spent on R&D on energy saving, energy storage and development of renewable resources including biomass, hydro, wind, solar, geothermal and wave power.
Third, carbon markets have proved effective in promoting emission reductions by attracting private finance and transferring new efficient energy technologies to the developing world. However, government stewardship of countries with trading schemes has been wanting; current markets are too fragmented and carbon prices are far below the true environmental costs associated with inaction on emission reductions. This needs to be fixed.
Fourth, middle class expectations are continually rising in consumer societies across the world driven by energy which is not priced to internalise true environmental costs. Whatever actions are proposed, governments will need the support of the people to deliver results – and this will not be easy because human nature ingrained in our DNA is to look after the family unit for the now and leave the future for others to worry about.
Slowing climate change will require intelligent government and coherent international effort for which there are no precedents other than the Kyoto Protocol which did not go far enough and was incompletely implemented. It is difficult not to be pessimistic and liken the human race to Lemmings. Certainly, without open, unfettered international debate followed by urgent, concerted action nothing will be achieved.
