Oil and Gas in the Crystal Ball

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Oil Drilling

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Huffington Post
13 December 2012
For those of us concerned about the future of the United States in an era of global climate change and international competition over diminishing natural resources, the new report from the National Intelligence Council (NIC) contains goods news and bad news.
 
The good news: The NIC predicts that in a “likely tectonic shift” the United States could become energy independent in the next 10 years. That’s a goal we’ve been trying to achieve since the oil embargoes of the 1970s.
The bad news: The NIC predicts we’ll get there by increasing our addiction to fossil fuels. In other words, we’ll stop importing oil but we’ll export more greenhouse gases and make ourselves more vulnerable to rising seas and weather disasters. Surprisingly, the nation’s top intelligence agency doesn’t directly acknowledge this rather important trade-off.
It’s surprising because the NIC was established to build a bridge between the intelligence and policy worlds. The analysis of global trends it issued earlier this month was produced with what the NIC describes as in-depth research, detailed modeling and a variety of analytic tools. Experts from think tanks, banks, government agencies and business groups in nearly 20 countries reviewed its report.
And it still got the future wrong. Missing from the “black swans” the NIC considered are the unexpected technology breakthroughs, the underestimated environmental traumas and the more intelligent public policies that are likely to prod us into a different energy economy than the NIC describes.
The NIC acknowledges that it can’t predict the future. But its best guess is that shale oil production in the United States, along with a continuing explosion in shale gas production made possible by horizontal drilling and fracking, means that “energy independence is not unrealistic for the U.S. in as short a period as 10-20 years.” The undesirable environmental impacts of oil and gas production can be mitigated, the NIC says. It predicts that the benefits of more oil and gas production will include lower energy prices, more companies choosing to expand in the U.S., an increase in gross domestic product, an improved energy trade balance, as many as 3 million new jobs by 2030 and fewer carbon emissions than if we continued using coal.
All of this could be bad news for cleaner renewable energy resources. Cheap natural gas might result in “the lack of a major push on alternative fuels such as hydropower, wind, and solar energy,” the NIC says. “Under most scenarios, alternative fuels continue to provide a relatively small increase in the share of overall energy requirements.”
What’s wrong with this picture? Here are a few problems:
• We will redefine “cheap” in the years ahead. The idea that natural gas is cheap is based on the old math of the carbon era. If we want an effective energy marketplace — a goal on which both political parties agree — we will begin counting the indirect as well as direct costs of our energy options. We will internalize externalities, and use full-cost life-cycle counting. The more accurate new math of the clean energy economy will find that many renewable resources are cheaper than fossil fuels.
• Achieving energy independence by producing more domestic fossil fuels is a classic case of problem switching rather than problem solving. We’d have self-sufficiency at great cost. For example, oil shale production requires a lot of water — five units of water for every unit of oil — in places where water resources are scarce. It requires substantial energy consumption — the equivalent of four coal-fired power plants to produce the relatively low amount of 200,000 barrels of oil per day. It produces five times more carbon dioxide emissions than conventional petroleum. Most renewable resources don’t have those problems.
• The NIC’s scenario ignores the demand side of America’s energy equation. The U.S. economy today wastes 86 percent of the energy we burn, a lack of productivity and a level of waste that cannot continue without undermining our global competitiveness. In any realistic energy future, greater efficiency is Job Number One. It is a readily available way to cut consumption, save money at every level of society, and reduce pollution. Yet, the NIC’s analysis mentions “energy conservation” in passing, only once in its 137-page report. It mentions “energy efficiency” only in reference to better efficiency in fossil energy production and the vehicles used in mining.
• While natural gas is the star of the NIC’s energy scenario for the next 20 years and while it is much cleaner than coal, it is still a finite fuel that emits carbon when it’s produced and consumed. If we’re smart, we’ll deal with the environmental problems of natural gas production and use it as a transition fuel while we move aggressively to ultra high energy efficiency and ultra low-carbon renewable energy resources.
• At the same time the NIC predicts big benefits from an ongoing dependence on fossil energy, there is a disconnect between that scenario and the report’s recognition of climate impacts, including the fact that we are reaching a point of no return. The NCI notes:

Empirical evidence alone — without reference to climate models — indicates that a general warming trend is affecting weather and ecosystems, causing increasing impacts on humans. Recent weather has been characterized by an increase in the frequency of extreme weather events — floods, droughts, tornadoes, glacial lake outbreaks, extreme coastal high-water levels, heat waves, etc. — and this pattern almost certainly will continue during the next 20 years… The present emissions pathway is leading to a doubling of greenhouse gases by mid-century… By 2030 the emissions trajectory will be cast, determining this century’s climate outcome.

• The NIC ignores the economic benefits of a clean energy economy. An analysis released last month by the Center for Climate Strategies estimates that 20 specific public policies to promote the use of clean energy would create 1.24 million net new full-time jobs by 2020, on track to produce the number of jobs the NIC estimates by 2030 from oil and gas production. By 2030, the CCS estimates, the 20 policies would produce $1 trillion in new GDP, create $1.4 trillion in net societal savings, give us greater energy security, and cut 13.5 billion metric tons of carbon-equivalent greenhouse gas emissions.
• The NIC analysis contains other passages that seem out of synch with its prediction of a robust fossil energy economy. For example:

Governments around the world, especially in developing countries, could spend as much as $35 trillion in public-works projects in the next two decades. To do so in a manner that maximizes sustainability, quality of life, and economic competitiveness they will need a mix of novel approaches to security, energy and water conservation, resource distribution, waste management, disaster management, construction, and transportation. These areas represent massive market opportunities for information technology, systems-integration, and sustainable-technology providers and integrators.

(Emphases mine)
I have two suggestions for the NIC as it continues assessing global trends and alternative futures. First, it should recognize that while energy independence is important, it is not an end in itself. Whether it’s beneficial depends on what fuels we use to achieve it.
Insofar as we make a Faustian bargain with fossil fuels in return for energy independence, we will kick our inevitable transition to renewable resources down the road for our grandchildren to handle. In the meantime, we will produce out-of-control, irreversible damage to climate stability.
Second, while the NIC lists an impressive array of experts who were involved in its analysis, some undoubtedly with an understanding of sustainable energy, the next report would benefit from a review that includes organizations such as the National Renewable Energy Laboratory, the American Council for an Energy Efficient Economy, the Alliance to Save Energy and the American Council on Renewable Energy.
They can help ensure that when our top intelligence experts gaze into their crystal ball, it will reveal a secure and sustainable energy economy rather than a world in which tomorrow is much like today, except on steroids.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

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