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Climate security, energy security

By Jonathan J. Ariel - posted Monday, 28 July 2008


Watching the media trip over itself trying to echo - rather than question - Professor Ross Garnaut’s “diabolical policy problem”, has been a disappointing waste of a week or more. The doom merchants and their caravans have left the station. Where they’ll arrive, and what will be the price of their journey, is anyone’s guess.

And that’s the problem.

One thing seems to have escaped the media’s attention in its rehashing of the high octane Garnaut report. I speak of course of energy security.

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Put your hands up if you’re in favour of a green and pleasant future in which the world is saved from violent climatic extremes. Really? Hey, me too! A future from droughts and flooding rains? Really? You don’t say?

But, surely our priority must be cheap, plentiful and reliable supplies of coal and oil to guarantee our lights stay on, our homes stay cool in summer and warm in winter, our industries are fed, jobs stay onshore and in the case of the Third World, their billions (of people) are nourished.

David Howell and Carole Nakhle in their book Out of the Energy Labyrinth: Uniting Energy and the Environment to Avert Catastrophe argue that achieving both climate security and energy security is the only game in town worth playing. Focusing on global warming in general, and on the pay-now reap-the-benefits-later plan in particular, which is implicit in such a climate security (more commonly called “global warming policies”), is doomed to failure.

To head off a much promised United Nations established climate change catastrophe, the world needs a vast reduction in the burning of fossil fuels. But with the ascent of China and India, global consumption patterns - and consequent carbon emissions - are all going the wrong way.

Demand for oil shows no signs of abating. The petro-sheiks at OPEC - in between counting their billions, repressing their women and denying Christians the right to worship - claim there is no problem with supply, even though the price has quadrupled in one year. Alongside the rising price and demand for oil, coal and natural gas prices are also travelling north.

Despite European Union pronouncements in favour of a carbon-free future, billions of euros are being funnelled into pipes to transport and burn massive amounts of natural gas in Northern Europe. Europe’s unhealthy reliance on Russian natural gas and Arab crude makes its economies hostages-in-waiting. And while cleaner than oil natural gas isn’t exactly what one would call “greenhouse friendly”.

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Al Gore, former senator and environmental warrior du jour is cited in relation to three “inconvenient truths”.

  • First, and the most ambitious of which, is the struggle to control the climate. The effort to control greenhouse gases (GHG) must be global to have any effect;
  • Appeals to reduce carbon emissions may have support among policy analysts and the well-heeled white collar types. However, the vast majority of mankind’s behaviour will be dictated by financial considerations. The doom sayers may raise the global disaster megaphone, but that’s simply not enough to persuade most of mankind to make major sacrifices now for the sake of their grandchildren; and
  • Timescales for cutting GHG are badly out of kilter. Energy needs are immediate, as are the threats to its supply. Threats include al-Qaida attacks on Saudi oil refineries as well as routine Iranian financed bombings of Iraqi oil pipelines. Given the disconnect between acting on GHG and witnessing the fruit of those actions, it will take roughly 50 years before any meaningful change in our atmosphere is created.

Howell and Nakhle, both hard on the Americans and soft on OPEC, are clearly climate change supporters, yet simultaneously somewhat dismissive of both Senator Gore’s and Sir Nicholas Stern’s forecasts, which they claim, are predicated on subjective assumptions. The authors remind the reader that in the real world:

… price, cheapness and reliability will be the deciders of the world energy mix. Somehow the future has to be brought into the present and the motives and fears which move people and nations now harnessed to the longer term goals. Reducing the carbon in the atmosphere involves an intergenerational bargain and a huge leap of faith. But has anyone told the public the price of that bargain?

The authors point out that investment decisions required to transform the energy supply and demand patterns of the globe require long term commitment and therefore a high degree both of policy continuity and price predictability.

When oil prices plummet, everyone gives up on energy efficiency and ideas for energy saving go out the window, thus undermining the global warming struggle. The point is illustrated by recounting how when energy prices rose in the mid 1970s and then dived in the 1980s, most advanced societies, including Australia and the United States of America, rode the cheap oil wave and celebrated with gas guzzling V8s.

To further exacerbate its ill judged over reliance on Arabian crude, the development of nuclear power in the West (the notable exception being France) went on hold.

The singular over riding message of the book is to force us to combine the mind numbing technicalities and current dangers in the global energy supply pattern with the environmental concern about global warming. The harnessing of the two causes - of energy security and climate security - would create a unity of global purpose that is lacking at present.

Three reasons give hope that a repeat of the past is not inevitable.

First, after the oil price collapse in the 1980s, it all looked too easy. Oil was cheap and plentiful, yet that proved a dangerous delusion. This time it is hoped that governments and consumers are savvier. They may just realise that a pause in the relentless upward movement in prices is merely a temporary blip.

Second, the whole world wide energy situation remains precarious, especially the Middle East, which is sinking into even more turbulence. Other oil producing regions, such as Nigeria and Azerbaijan, are not exactly enveloped in rings of political stability either.

Third, the longer term concerns about climate change are at last getting through. The timescale may seem eternal, but the general worry about global warming combined with visible and dramatic current signs of climate change have gripped the public’s mind.

The authors dream of a scheme for pricing carbon which will present consumers with the true cost of the energy they consume. If such a scheme can be established worldwide, and sold well, then the process of real change can at last be triggered. But the “ifs” are very big, and carbon taxes and emission trading schemes, are created by humans, and are subject to the vagaries of politics.

Consumers who are eking out a living in order to pay their utility bills and petrol costs, do not take too kindly to further painful charges and taxes in the name of averting at best, or meeting at worst, a dubious future danger. And politicians who want to stay in office are nervous of adding to the tax burden, when the reasons for the extra taxes are not well understood by the electorate, if at all.

The book is pockmarked with several anecdotes to fortify the writers’ laser like focus on energy security. One of the more interesting stories reminds the reader that the biggest and most successful national endeavour to slash CO2 emissions in modern times had absolutely nothing to do with cleaning up the atmosphere. Rather, the huge French nuclear program - a complex of 58 power stations - was started in the 1970s to reduce French reliance on Arab crude oil and imported coal. The result is that today, French electricity generation is virtually carbon free.

Imagine that? Focusing on energy security and reaping the harvest of climate security as a by product in the process?

Who would have thought?

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Out of the Energy Labyrinth: Uniting Energy and the Environment to Avert Catastrophe by David Howell and Carole Nakhle. Published by I B Tauris & Co Ltd 224pp (Pb) $29.95.



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About the Author

Jonathan J. Ariel is an economist and financial analyst. He holds a MBA from the Australian Graduate School of Management. He can be contacted at jonathan@chinamail.com.

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