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Issue 252
January/February 2009
Nature Crunch: Redesign, Rethink, Reimagine

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Exit Strategy
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Exit Strategy

EITHER WE LEAVE the great bulk of the world’s remaining fossil carbon in the ground, or our planet will get a lot hotter. “The stocks of hydrocarbons that are profitable to extract (under current policies) are more than enough to take the world to levels of greenhouse-gas concentrations well beyond 750ppm CO2e, with very dangerous consequences,” Nicholas Stern wrote in his Review on the Economics of Climate Change. “The shift to a low-carbon global economy will take place against the background of an abundant supply of fossil fuels.”

So we need an exit strategy for fossil fuels: that is, a way to stop burning them well before they actually run out. Jim Hansen, the NASA climatologist, has calculated that we can just about get away with burning all the world’s high-quality, accessible oil and gas. But the great bulk of our coal has to stay in the ground. As do unconventional oils: the Alberta tar sands, the Colorado oil shales, and the bituminous tars of Venezuela’s Orinoco Delta. The alternative is to produce such powerful warming as to trigger a sequence of uncontrollable feedbacks in the climate system, leading to catastrophic climate chaos.

Since I first proposed my Kyoto2 package of proposals for an alternative climate treaty to replace the failed Kyoto Protocol (‘Clarifying Climate Chaos’, Resurgence 241, March/April 2007), I have received a lot of feedback, most of it positive. But there have been criticisms. One persistent objection goes as follows: “This is all very well but how are you going to convince fossil-fuel producers that they are going to have to kiss their reserves goodbye? They will simply never agree to it!” But this is not merely a feature of Kyoto2: it has to be a feature of any system capable of preventing climate chaos. And as Hansen observes, “We have to figure out how to live without fossil fuels some day anyhow – so why not sooner?”

There is one potential get-out clause for coal producers: carbon capture and storage (CCS). This refers to the capture of carbon dioxide from power-station exhausts, its concentration, and its safe disposal in a secure geological reservoir – a disused gas field, for example, or a saline aquifer. The technology remains unproven but it is workable in principle. However, it will add considerably to the cost of coal-fired electricity, and this will favour renewables. CCS may allow us to carry on burning coal for a bit, but the long-term picture remains the same. We must eventually make the shift to a low-carbon future.

THE MECHANISM PROPOSED for this in Kyoto2 is a simple one: apply a carbon price on the extraction of fossil fuels anywhere in the world, levied at the point of production, by means of a global auction of permits up to an annual cap. And then use the funds so raised to address the causes and consequences of climate change. A substantial part of this spending – over 40% – would go into energy conservation and efficiency, research and development into renewable energy technologies, and the large-scale deployment of renewables and associated energy infrastructure.

The spending on deploying renewables would be aimed mainly at poor countries, to switch them to a clean energy development track – before they have committed to an energy infrastructure predicated on fossil fuels. Meanwhile energy companies and investors in rich countries would receive a secure long-term carbon price and policy signal that would tell them where to put their money. In this way the world would be progressively throwing ever less of its energy away, and sourcing ever more of it

renewably.

In order to stabilise the world’s climate, we ideally need to achieve global carbon neutrality by mid-century, followed by year-on-year reductions in the atmospheric concentration of greenhouse gases. To get there we need to project a trajectory of emissions reductions. I envisage that the cap would be loose for the first few years, but with the auction of permits subject to a reserve price of around US$30/tonne of CO2. In this way the system would initially operate as a carbon tax – worth about 2.5p on a litre of petrol, or 0.6p on a unit of electricity. It would provide only a weak price signal in the short term, but it would also avoid creating economic hardship, and raise around US$1 trillion per year to invest in solutions. This would also give coal producers a few more good years of profit before their resources become worthless.

After 2015 or so the cap would contract, and the permit price would rise, making fossil reserves increasingly uneconomic. But general economic pain would again be avoided as the world would – thanks to all those investments in clean energy and energy efficiency – be far less dependent on fossil fuels. In turn the cost of renewable electricity would fall rapidly as the technologies went into ever larger-scale mass production.

Experience suggests that the cost of solar PV drops 20% every time manufacturing capacity doubles, and under current production forecasts solar- and fossil-powered capacity should cost around the same between 2015 and 2020. Under Kyoto2, it could happen a lot sooner than that. The cost of wind power has already experienced similar declines and competes directly with coal on windy sites. Concentrated Solar Power (CSP) also has huge potential in sunny locations: the Mediterranean region could soon be supplying huge volumes of low-cost CSP electricity to European grids and across North Africa and the Middle East. CSP is already close to being directly competitive with coal, and with its wider deployment the cost will fall, and keep on falling.

As we progress along this clean energy track, it won’t be long before the renewables bandwagon acquires an unstoppable momentum. Power generation worldwide will shift almost entirely to renewables, for the simple reason that it is cheaper. Even places without significant renewable resources (wind, wave, sunshine, tides and mountain rivers) will be powered by renewables, thanks to efficient DC power lines. Oil will continue to be used in cars, trucks and aircraft for a longer time, because of its high energy density. But as the carbon price rises, vehicles will increasingly be powered by renewable electricity, whether stored in batteries or as hydrogen. Aviation will be the last sector to ditch oil, maybe by switching to biofuels. Or perhaps the whole industry will undergo a technology shift: to a new generation of hydrogen-powered dirigible balloons, for example. We shall see.

What is clear is that the shift to a clean and efficient energy can happen, and if our leaders do their job it will happen. Kyoto2 sets out one possible exit strategy for fossil fuels, and one that could produce quick results with minimal pain. In an earlier oil shock Saudi Arabia’s Oil Minister Sheikh Ahmed Zaki Yamani warned his OPEC colleagues: “The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.” We need to make sure his prediction comes true.

For further information visit www.kyoto2.org and www.trec-uk.org.uk

Oliver Tickell is the author of Kyoto2 (Zed Books, 2008, ISBN 9781848130258).

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