Climate Change and Energy is an excellent report which helps to get the gist of the subject matter, of course what the oil and gas producers point of view is. I also find it very straight-forward and easy to read. The American Petroleum Institute points out that focusing too much on carbon dioxide emissions means that we fail to appreciate the repercussions of the economy and social well-being. In fact, the API also emphasizes that renewables at present actually contribute very little to the U.S.’s energy transformation. Environmental awareness is all well and good, nevertheless falls short of the immensity of the issue at hand.
1. Energy poverty
Energy poverty is a good reason why we should make oil and natural gas part of the U.S. energy mix in the future. According to the American Petroleum Institute, lack of access to oil and natural gas in sufficient amounts can lead to a nation’s energy poverty. Fuel poverty will almost certainly limit a nation’s GDP growth and it partly explains why the U.S. has continued to grow its economy with respect to consumer price inflation (CPI), whereas the European economy almost stagnated. As a rule of thumb, energy costs in Europe are twice that of the United States, as a consequence of this European manufacturers and heavy industry such as steel producers think twice about making investments in the European Union. Having abundant energy supplies has allowed the U.S. to maintain its high standard of living.
2. Oil is the basis of our industrial way of life
Of course, oil has many uses and is needed in the IT industry, agriculture, civil engineering, the medical sector and even in the renewable energy sector. The American Petroleum Institute forgot to mention in its paper that the energy requirements to set up and operate wind farms almost always exceed the energy production of the wind farm over its life span. So even renewables depend to varying degrees on fossil fuels.
3. Natural gas and carbon dioxide emissions
Natural gas is primarily composed of methane and that the United States has massively benefited from the shale gas boom. According to the American Petroleum Institute, using natural gas on an industrial scale releases less CO2 into the atmosphere then oil would by comparison. The United States was the only industrialized country, in fact it was the only country in the whole world able to increase GDP while at the same time lowering its emissions. The main contributor for natural gas, driven by the increase in shale gas production. It must be seen if it is viable strategy in the long-term to push shale gas production further, as the wells drilled have a more rapid falloff then conventional wells once peak production has been reached. This is a point of contention of course.
4. What stuck with me
The most convincing point that has presented in the paper by the American Petroleum Institute is that of fuel poverty. Germany currently experiences artificially-induced fuel poverty because renewable energy was subsidized for many years which incentivized local communities to invest in wind energy and photovoltaics, even though Germany is located at 51.1657° N, and is not well suited to build up photovoltaic systems on a large, industrial scale to fill Germany’s energy gap. Due to misguided incentives, Germany has curtailed the optimization of conventional gas power plants and construction of new ones. In order to maintain the base load for high voltage transmission, the regulator advices to fill the gap with electricity imports from France. But transnational imports and exports of electricity have to be balanced. So this leads to increased electricity costs, indirectly. Energy poverty is the result.
For more information, please refer to the American Petroleum Institute (2017):
Many thanks for the shared interest in the energy world!