Energy Efficiency and the Era of “Difficult” Hydrocarbons

How will the era of fossil fuels end?  Will we continue using fossil fuels until we burn the last drop of oil or carload of coal and then start using something different?

We are tempted to do this, ridiculous though it sounds, because of the massive investment in fossil-fuel infrastructure that we have already made.  Sometimes called “sunk costs,” the debt incurred to build much of it has been long ago paid off, generating huge economic benefits both for the private owners as well as society as a whole.

These “sunk costs” include oil and gas pipelines first built during WWII.  They include transcontinental rail networks that transport coal and the thousands of oil and gas wells drilled decades ago that continue producing, albeit at reduced rates.

The scale of this hydrocarbon infrastructure also gives us a sense of the dauntingly large budget that will be required to replace it.  One helpful possibility possibility is to find alternatives that make some use of the existing infrastructure, like bio-fuels that can be “dropped-in” to the petroleum system.  For the most part, though, we won’t be so lucky — very different plant and equipment will be needed to replace the bulk of the energy we now derive from hydrocarbons.

Another deterrent factor is uncertainty over the new direction of things.  Which technology will dominate in the future and which are dead ends?  Private investors hoping to make large bets on the future of energy want to know.  Without clear direction from markets or governments they remain on the sidelines, eager to go second.

In short, our society seems to be “locked-in” to its current fossil-fuel addiction.  A strong case for the “lock-in” theory can be made even without taking account of the self-interested behavior of those who own and benefit from fossil-fuel assets — and lobby furiously to protect their cash flows.  Reliance on fossil-fuel infrastructure makes some economic sense in the short term even while it increases the future costs of the delayed transition to a post-fossil-fuel economy.  Habitual behavior, on the part of consumers, businesses and politicians, is a potent force for societal inertia.

Those addictive hydrocarbons are getting more difficult, risky and expensive to produce.  Headlines from the Gulf of Mexico have highlighted the growing environmental cost of hydrocarbon lock-in.

Nonrenewable hydrocarbon fuels are all mined.  In the logic of mining, the best deposits are exploited first.  Conventional crude oil production has pretty much flat-lined after a century of growth.  We are well into the era of “difficult” oil, gas and coal reserves.  This means that feeding our fossil-fuel habit will require us to invest more upfront and take bigger risks — both environmental and financial. Examples of “difficult” are not hard to find: the Alberta tar sands, deepwater oil, mountaintop removal, and “tight” shale gas.

The era of “difficult” not only increases the costs of fossil fuels for us addicts but it also erects yet another barrier to the post-fossil-fuel transition.  Investment in difficult fossil fuels diverts yet more capital away from that expensive but inevitable transition.  The money spent to drill in the Gulf (not to mention the clean-up costs) is money that cannot be spent for low-carbon distributed generation like residential solar or for making our communities less auto-dependent or any of the other myriad things we need to do to thrive post-carbon.

Because they are under-girded by a century’s worth of infrastructure, investments in fossil fuels still offer better pay-back than alternatives, in most cases.  “Lock-in” and “difficult” pose frightful challenges for a humanity that is desperate to avoid the worst ravages of climate instability fueled by greenhouse gas emissions.

All of this puts the utility of energy efficiency in a different light.  Energy efficiency, by allowing us to provide the same or more services with less energy, requires no costly supply infrastructure.  We don’t need to invest in capital-intensive and environmentally risky new mining ventures.  We don’t need to build new pipelines or railroads.  It’s not surprising that energy-efficiency programs can be cost competitive with the major forms of energy supply.  And everyone within reach of a light switch can join in the fun.

Energy efficiency reduces pressure on our existing fossil-fuel infrastructure so that, at the very least, we can avoid the error of further investment in it.  One example is the Project Mountaineer coal-by wire transmission complex that would “lock-in” the East Coast to reliance on Ohio Valley coal-fired generation.  Setting aside questions about the planning process that declared these new power lines “needed,” that alleged “necessity” can be delayed, perhaps indefinitely, by inexpensive and quick-to-deploy energy-efficiency programs like EmPOWER Maryland.

In some cases, the financial gains from energy efficiency can be captured for reinvestment in low-carbon sources which helps with high, up-front costs.  One example of this is San Francisco’s Moscone Center.

For those who are concerned about energy security, energy efficiency is home grown.

Best of all, energy efficiency reduces the pressure for new supplies from environmental sacrifice zones like the Alberta tar sands, mountaintop removal strip mines in West Virginia or the Gulf of Mexico.

Energy efficiency is quicker, cheaper, safer, cleaner and more secure than hydrocarbons.  President Obama’s call for new efficiency standards for trucks only scratches the surface of what we can do.

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One response to “Energy Efficiency and the Era of “Difficult” Hydrocarbons

  1. Pingback: Is Petroleum A Barrier to U.S. Economic Growth? « Maryland Energy Report

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