Matt Ridley: Fossil Fuels Will Save the World (Really)

These days, not one of the three arguments is looking very healthy. In fact, a more realistic assessment of our energy and environmental situation suggests that, for decades to come, we will continue to rely overwhelmingly on the fossil fuels that have contributed so dramatically to the world’s prosperity and progress.

“Wind power, for all the public money spent on its expansion, has inched up to—wait for it—1% of world energy consumption in 2013. Solar, for all the hype, has not even managed that: If we round to the nearest whole number, it accounts for 0% of world energy consumption.”

In 2013, about 87% of the energy that the world consumed came from fossil fuels, a figure that—remarkably—was unchanged from 10 years before. This roughly divides into three categories of fuel and three categories of use: oil used mainly for transport, gas used mainly for heating, and coal used mainly for electricity.

Over this period, the overall volume of fossil-fuel consumption has increased dramatically, but with an encouraging environmental trend: a diminishing amount of carbon-dioxide emissions per unit of energy produced. The biggest contribution to decarbonizing the energy system has been the switch from high-carbon coal to lower-carbon gas in electricity generation.

“Both wind and solar are entirely reliant on subsidies for such economic viability as they have. World-wide, the subsidies given to renewable energy currently amount to roughly $10 per gigajoule.”

On a global level, renewable energy sources such as wind and solar have contributed hardly at all to the drop in carbon emissions, and their modest growth has merely made up for a decline in the fortunes of zero-carbon nuclear energy. (The reader should know that I have an indirect interest in coal through the ownership of land in Northern England on which it is mined, but I nonetheless applaud the displacement of coal by gas in recent years.)

The argument that fossil fuels will soon run out is dead, at least for a while. The collapse of the price of oil over the past six months is the result of abundance: an inevitable consequence of the high oil prices of recent years, which stimulated innovation in hydraulic fracturing, horizontal drilling, seismology and information technology. The U.S.—the country with the oldest and most developed hydrocarbon fields—has found itself once again, surprisingly, at the top of the energy-producing league, rivaling Saudi Arabia in oil and Russia in gas.

“The second argument for giving up fossil fuels is that new rivals will shortly price them out of the market. But it is not happening. The great hope has long been nuclear energy, but even if there is a rush to build new nuclear power stations over the next few years, most will simply replace old ones due to close.”

The shale genie is now out of the bottle. Even if the current low price drives out some high-cost oil producers—in the North Sea, Canada, Russia, Iran and offshore, as well as in America—shale drillers can step back in whenever the price rebounds. As Mark Hill of Allegro Development Corporation argued last week, the frackers are currently experiencing their own version of Moore’s law: a rapid fall in the cost and time it takes to drill a well, along with a rapid rise in the volume of hydrocarbons they are able to extract.

And the shale revolution has yet to go global. When it does, oil and gas in tight rock formations will give the world ample supplies of hydrocarbons for decades, if not centuries. Lurking in the wings for later technological breakthroughs is methane hydrate, a seafloor source of gas that exceeds in quantity all the world’s coal, oil and gas put together.

“The world’s nuclear output is down from 6% of world energy consumption in 2003 to 4% today. It is forecast to inch back up to just 6.7% by 2035, according the Energy Information Administration.”

So those who predict the imminent exhaustion of fossil fuels are merely repeating the mistakes of the U.S. presidential commission that opined in 1922 that “already the output of gas has begun to wane. Production of oil cannot long maintain its present rate.” Or President Jimmy Carter when he announced on television in 1977 that “we could use up all the proven reserves of oil in the entire world by the end of the next decade.”

That fossil fuels are finite is a red herring. The Atlantic Ocean is finite, but that does not mean that you risk bumping into France if you row out of a harbor in Maine. The buffalo of the American West were infinite, in the sense that they could breed, yet they came close to extinction. It is an ironic truth that no nonrenewable resource has ever run dry, while renewable resources—whales, cod, forests, passenger pigeons—have frequently done so. Read the rest of this entry »