Saturday, May 26, 2007

Just how far from reality is the "ideal" energy strategy?

The Sierra Club defines sustainable consumption as the use of goods and services that satisfy basic needs and improve quality of life while minimizing the use of irreplaceable natural resources and the byproducts of toxic materials, waste, and pollution. According to the Stratfor Report that follows, some environmental groups are pulling back on their advocacy for the development of renewable energy technologies in favor of focusing on energy efficiency and conservation.

This hardly seems like an "either/or" issue to me. True, U.S. consumption is clearly a problem. We represent 4% of the global population yet consume more than 25% of the world's energy. But have we achieved a sustainable solution if we eliminate the need for new power plants with aggressive conservation and efficiency initiatives, but rely upon nuclear fission and "clean" coal to produce the electricity we do need to light our homes and run our laptops?

For the record, I think the author's assessment of China's attitude toward renewable energy is inaccurate. China is making significant investments in renewable energy technologies as reported in several prior posts here. (GW)

Sustainable Consumption: The Evolution of a Concept

Editor's Note: This is the first installment of a two-part report on the emergence of sustainable consumption as a major policy debate and how it will affect consumers, businesses and policymakers.

By Bart Mongoven
Stratfor Public Policy Intelligence Report
May 24, 2007

Energy planners in China, the United Kingdom, Finland and elsewhere recently announced they either are embarking on a major nuclear initiative or are beginning the process of major policy changes that could lead to the construction of new power reactors. Even the United States is clearly turning toward a new energy policy that addresses both oil consumption and climate change -- and also includes nuclear power generation. At the center of this new policy, which will evolve over the coming years, will be a cap-and-trade system that encourages conservation and the development of new energy technologies.

With oil consumption and climate change seriously being addressed -- and nuclear power poised to make a major comeback -- the near-term future of energy policy is becoming increasingly clear. In the longer term, the key phrase will be "sustainable consumption."

For most climate change activists, this means their life's work of making the world care about greenhouse gas emissions is giving way to a technical fight over how best to cut those emissions. Meanwhile, the activists who successfully kept nuclear reactor construction at bay will be forced to regroup and look for new strategies to achieve their goals.

As the United States, Europe and China come to recognize, to varying degrees, the growing strategic importance of finding new energy systems, the issue has moved from the domain of small fringe groups to the mainstream. The question, then, is: If climate change and oil use really are being addressed by the major energy consumers (including the United States, of all countries), will so many people and organizations remain intently focused on "saving" the climate?

The activists who first brought the current slate of energy issues to the fore are largely responsible for developing the structural remedies that industrialized countries are now turning to in response to strategic economic, national security and environmental concerns. As new players are now discussing these issues, however, the activists see themselves increasingly outside the decision-making process. The most idealistic of the lot, those who see their position eroding and their goals being co-opted, are about to launch the next major public crusade on energy policy -- one that focuses squarely on consumption and pays little attention to issues of power generation. The result will be a global energy conservation movement that could be bigger than the movement behind climate change. It could also offer tremendous financial rewards to innovators.

Successes and Failures

Realists and idealists in the environmental movement have long been on record calling for reductions in greenhouse gas emissions that would slow and then stop global warming. They portrayed a rise of 2 degrees Celsius in the Earth's temperature to mean the possible end of the humanity, or at least large portions of it. Activist groups stoked fears of the Chinese south coast, U.S. East Coast and much of Northern Europe under water. Former U.S. Vice President Al Gore spoke of the beginning of a new ice age.

Faced with this dire rhetoric, industry has offered a series of compromises that would achieve the preliminary goal of modestly cutting greenhouse gas emissions and that point toward dramatic future emission reductions. Industry's decision that it can address climate change, however, is the primary cause of the divide between those who defined the terms of the debate on energy policy, the realists and the idealists. When industry began to take the issue seriously, the ideals that made easy slogans met the institutions that knew the full depth of the challenges behind the slogans. How many windmills does it take to replace a single coal-fired power plant?

The current debate, then, can represent either a massive victory or abject defeat, depending on the activists' point of view.

On one hand are the idealists who have pressed for energy policies that dramatically reduce greenhouse gas emissions, that work only toward renewable energy sources and that do not include either nuclear power or coal. They did not come all this way to see the revival of nuclear power, the perfection of "clean coal" technology or drastic subsidies for ethanol producers. Their activism was driven by a desire to spur a new economy. However, they are the ones who simultaneously say that climate change represents the possible end of the world, but that the situation is not so dire that we need to turn to proven solutions that happen to be very troublesome. For them, the current debate is a defeat. Industry's entry means the end of the game because it forces them to deal with the reality of what they are demanding.

On the other hand are the realists, those who work within the existing system to make attainable policies. For them, even those concerned by nuclear power, the current debate is a significant victory. For the first time since the 1970s, all of the major Western countries are working on policies that dramatically reduce their consumption of oil, and most are looking for alternatives to coal. Industry's entry into the issue is a dream come true for the realists because it is industry that has the knowledge and technology to make the changes the environmentalists demand.

And the realists are having a pretty good time of it. Innovative technology companies like Honeywell and Johnson Controls are in a pitched battle to develop the most efficient building environment control systems. Automakers are again advertising the fuel economy of their cars. Oil companies are lobbying parliaments for stricter caps on greenhouse gas emissions. In other words, the institutions with the wherewithal to solve complex problems are working to achieve the realists' long-standing objectives.

Europe Moving to Immediacy

What industry is not doing for the realists -- supporting their sense of urgency -- the Russians are doing through their energy blackmail of Europe. As idealistic as Europeans consider themselves, having their economies held hostage by Moscow is forcing the European public to look for swift, realistic answers to its energy problems.

In the months since Russia's move against Belarus, many European governments have embarked on energy paths that environmentalists do not consider perfect solutions -- but that would solve pressing problems. British Prime Minister Tony Blair's government called May 23 for a revival of the United Kingdom's nuclear industry, including the construction of five nuclear reactors by 2020. Finland has begun construction on a new nuclear plant, and Central European EU members are clamoring to get out from under their commitments to abandon nuclear energy as a condition of joining the union. Norway, for its part, continues to battle the Russians over the gas-rich Outer Continental Shelf in the Arctic (even while it imposes dramatic motor vehicle regulations on its drivers).

As with the U.S. move toward embracing climate change, Europeans have stopped looking for ideal or nearly ideal solutions. Like the United States, they are increasingly looking for secure energy sources as much as they are looking for carbon-reducing technologies. They are behaving as if the crisis is immediate.

China is largely in the same position as Europe vis-a-vis Russia, but its situation is exponentially more complex. While China is similar to the United States in that it can meet its energy needs with coal for more than a century, it cannot afford the pollution and other structural costs that have come with its constellation of coal-fired power plants. Meanwhile, for those concerned about climate change, China is a looming problem, set to pass the United States in greenhouse gas emissions in 2008.

China is desperate for new forms of energy, and the industrialized countries are desperate for China to find them. Unlike Europe, which until recently had been satisfied to tinker with inefficient but well-meaning attempts to change the fundamentals of energy production, China has not embraced less-efficient options like wind or solar power. It is far behind being able to satisfy demand, and it cannot afford to waste resources on concepts that feel good but do little.

As a result, China is emerging as a testing ground for the large-scale modern energy systems. Beijing is working out an agreement with Westinghouse to build advanced-technology nuclear reactors as a part of its drive to build as many as three new reactors a year for the next decade. Meanwhile, Western companies are investing heavily in developing coal-to-liquids technologies for China that would reduce the air pollution from using coal as a power source. Although environmentalists oppose both reactors and this latest coal technology, they are effective ways to solve energy problems.

What Comes Next

As is almost always the case, things have not worked out perfectly for the idealists (and, as they are idealists, this is to say things have not worked out at all). So where do they go from here? Having led the public to care about climate change only to be co-opted by industry, those dedicated to the attainment of the ideal energy system are regrouping around the issue of "sustainable consumption." The term, grown out of international environmental conferences, is defined by the Sierra Club as "the use of goods and services that satisfy basic needs and improve quality of life while minimizing the use of irreplaceable natural resources and the byproducts of toxic materials, waste and pollution."

The key elements of sustainable consumption are taxing consumption, taking a life-cycle view of a product's costs and increasing individual consumers' attention to these issues. The issue is a natural follow-on to the 10-year focus on energy generation, and can build on many of the same concepts.

The entry of industry into energy issues due to climate change policy and the pressure in Europe created by Russia's aggressiveness has driven the global energy policy past the inflection point -- and things are beginning to change. People everywhere are looking at energy and energy policy very differently than they did five years ago, and most nations are acting urgently to make fundamental changes. Because these changes have come quickly due to public pressure (rather than due to market forces, which tend to be slower), they have focused on what is available now to help move economies away from reliance on Russian natural gas and the creation of greenhouse gases. The result has been to make changes where it is easiest for governments to force action and for corporations to find market advantages.

Outside of automobile fuel-efficiency standards and moves by individual corporations and institutions to save energy, conservation has been looked at as a second-tier issue compared to generation. That is now going to change.

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