President Obama should ban oil and coal sales to stimulate the low carbon energy transition, EU shale gas subsidies are a joke, and the bloc should stop importing bioenergy from non-Kyoto Protocol signatories, says Lester Brown.
Lester Brown is an author, analyst, winner of several major environmental prizes and the founder of the Earth Policy Institute. He has been called “one of the world’s most influential thinkers” by the Washington Post, while the ex-US president Bill Clinton believes that “we should all heed his advice.”
What is your view of the current EU debate about energy security and competitiveness?
I don’t follow the debate that closely but things are very fast moving in the US. So many rooftop solar cells are being installed that the market for local utilities is starting to shrink. As it shrinks, the utilities have to raise prices to sustain themselves and the more they do that, the more attractive it is for people to install solar cells on rooftops. This has become what is commonly referred to as the death spiral for utilities as once it gets going it’s very difficult to stop, and it is in large part now market-driven. It is not government trying to make things happen and because its market driven there are no controls. It’s very exciting thing to see how fast it is going. I think a similar situation has developed here in Germany. Again, the market for utilities like RWE has shrunk to the point that last year RWE lost $3.7 billion. This is a utility created 60 years ago that never had an unprofitable season until now. It is an indication of the disruption that is occurring. In the US, our coal and oil use have dropped 20% in the last seven years.
How much of that is to do with cheap exports due to the shale gas boom? And doesn’t it allow coal firms to continue exporting cheap coal to Europe and east Asia?
US coal exports are running into trouble for a curious set of reasons. Coal plants are closing rapidly, and the idea is to sell their [remaining] coal to China and Japan. The problem is that the port cities in Oregon and Washington in the north west where it would exit are opposing coal exports. Local people are organising and I don’t think those terminals will ever be built. A public distaste for coal is now very strong in the US. No-one would think of building a new coal plant there. It just wouldn’t be a viable idea from the beginning. I think this is also the case in European countries such as Germany, Denmark and probably the Nordic countries.
But in the Balkans, the Energy Community, an EU-centred organisation, has authorized a new wave of coal plants that may breach EU pollution limits, and Europe’s public banks have offered grants and loan guarantees to other coal stations.
At the same time we’re seeing Romania investing in 2500 MW of wind power, using wind off the Black Sea. I think in the end, a combination of low cost and local control will become a winning factor. It’s a new situation and one in which the utilities are beginning to suffer. It even calls into question whether utilities will be part of the energy system over the long term.
I was talking to someone from the International Energy Agency (IEA) who said that one of the problems we have…
One of the problems we have is that the IEA is a few miles behind the real world…
Well the IEA does advance a vision of decarbonisation and he said that that when reports were issued, the big energy utilities would just call governments and have a word in their ear, and the policy would change. Is that the way you see it too?
The vested interests are very much there and trying to hang on. We see it in the US with the Koch brothers trying to do everything they can to hold off this energy transformation. They want to put a tax – they support a tax if you can imagine – on rooftop solar cells, because they know that if this transition continues they’ll be up the creek without a paddle as their assets are so heavily committed to fossil fuels. But they’re not being very successful.
Senior Commission people say that another major problem is that so much money and so many jobs are invested in the fossil fuels industry that it can dictate the pace of the low carbon transition – because of fears that moving too fast could crash the global economy again.
They may say that. But oil for example is not a very labour-intensive energy source. In an oil refinery you see all these tanks and pumps and valves. You don’t see any people. It is a totally mechanised system. With coal there are jobs in mines but these are not the kind of jobs that we want to create. The maintenance of wind farms and installation of solar cells are fairly labour-intensive and they’re healthy jobs.
Has the green movement done enough to win over people who work in coal mines, steel smelters or aluminium factories, who fear that if they close, they won’t be given a job on a wind farm or insulating a house, they’ll be on the dole. What would you say to them?
The Sierra Club number we had at the beginning of 2010 was that of 530 coal plants, 140 have now closed or will do in the near future. The Sierra Club’s goal is to work with the local community to create jobs that offset the ones lost – in efficiency or wind farms. They try to attract companies that are manufacturing wind turbine components for example, so it is not as though this was a blind effort. It is anchored in the real world and with concern for those who will lose their jobs, and also to provide job training for coal miners to acquire other skills. One of the big job growth areas is in health care for the elderly because we have an aging population. A lot of the retraining is in this direction as it often cannot find enough qualified people.
Consumers may also lose out in the low carbon transition as big energy intensive sectors have been exempted from bearing many of its costs in the EU’s new state aid guidelines. Claude Turmes, the Green MEP, thinks that will allow industry to come back in a year or two and say: ‘We told you so. We can’t afford this transition,’ and rally people against their rising energy bills. What can be done about that?
Full cost accounting, for one thing. A recent study led by a Harvard professor found that while the direct cost of burning coal showed up in the market place, the indirect costs that didn’t were roughly the same – that is the health care costs of people suffering from asthma, heart disease, and respiratory illnesses. It is also consumers who pay the additional health care costs associated with breathing polluted air. This is one of the things that is starting to turn the tide in China against coal. Last year China announced that it would build seven wind mega-complexes – of at least 10,000 MW capacity each. The largest one, in inner Mongolia, would have 38,000 MW of generating capacity. That’s enough to satisfy the needs of a country like Poland. We’ve never seen scaling up in the energy sector like this before.
Do you think the low carbon transformation is happening quickly enough?
No, but there is a billionaires club – Warren Buffet, Ted Turner, Michael Bloomberg, Philip Anschluss and one or two others – and Buffet is putting $23 billion into renewable energy. He’s got many utility-scale solar plants under construction in the south west of the US. Ted Turner is building five solar plants in the south east of the US. When people like that are piling so much money in, it has to influence other investors because this is smart money. These guys make good investments, that’s why they’re multi-billionaires. In a good wind state like Kansas, private investors are now building transmission lines. The private sector has entered the south east of the US – not a wind-rich area – to sell cheap wind-generated electricity and they’re also investing in the industrial mid-west, because they have such a voracious appetite for electricity. There are still government incentives in places for some of these things but it’s now largely market driven and the big money is moving in.
But we may not even be moving fast enough to avoid four degrees of global warming. Half of the renewable energy we do have here comes from bioenergy and because we don’t have any effective sustainability criteria, we can import that from non-Kyoto Protocol countries, including the US, where there’s no guarantee that the wood chips haven’t come from chopping down forests. Do you ever get the feeling that we’re just rearranging deck chairs on the Titanic?
I’m sure were doing some of that, but there may not be that many deckchairs left on the Titanic. I mean we’re seeing the emergence of ‘stranded assets’ as a concept. If you look at an oil company’s report, their wealth includes the oil they have in their fields, proven oil reserves – but they suddenly may not be worth very much and the same is true for coal. Much of the coal in the ground today will never be mined, it will be there forever, so it doesn’t have the value it once did. When you take out these stranded assets, their books don’t look nearly so good.
Let me ask you directly, do you think the EU should continue to allow bioenergy from non-Kyoto Protocol countries to be counted towards it renewable energy targets?
I would not support that.
What about the gas-first strategy that Europe seems to be moving towards? The UK in particular has championed a strategy of tax breaks for shale gas as a way of meeting future emissions-cutting obligations. The Commission has produced an energy security strategy based around gas. How wise do you think that is?
Not very. First of all, gas is not carbon-free and it is a depletable resource – within maybe 20 years, in some places not that. Why build an infrastructure to support gas when it’s short term, when you could be building a long term infrastructure for energy resources that will last forever. And natural gas is not carbon free either.
The Commission defined recently shale gas as a ‘low carbon energy source’ and is making €113 million of subsidies available for it.
That sounds like a joke.
What percentage of renewables do you think we need in our energy mix by 2030 to cut emissions by 40%?
I’d need more numbers to do the arithmetic but I don’t see why with a little imagination and adaptation, we can’t run our countries entirely from renewable sources of energy. The great thing about wind or solar energy is that how much we use today does not reduce how much will be available tomorrow. Ever since the industrial revolution began, we have been building things on the basis of short term energy availabilities. The idea that we can now build an energy infrastructure that can last as long as the earth itself is an exciting possibility. With oil, 20 years later you need to find another oil field. And we’re now finding that none of those new oil fields are easy or fun – you’re going to an ocean floor, to tar sands or the Arctic.
But yet it’s being done and one of the arguments the people doing it use is that you’re still going to need a baseline of energy from somewhere for when the sun is not shining and the wind is not blowing and we don’t have the storage capacity to run our economy of renewables alone. How would you respond to that?
We’ve been managing energy flows for a long time. Consider the demand side of the electricity equation, what happens at 3am when no-one’s using electricity versus 6pm when everyone is using it? That’s not creating an insuperable barrier to relying on electricity for our energy needs. The same is true with renewables. They are all manageable. If you have one wind farm, it fluctuates quite a bit but with two, it fluctuates less. And if you have wind farms across the country connected by a national grid, then wind is baseload.
You’ve talked before about the civilizational challenge that climate change poses, how confident are you that the human race is up to meeting that challenge?
We don’t know and there is no guarantee that we will. But we do know that change can come very quickly. Look how quickly the US restructured its whole economy in 1942. At beginning of 1942, the automobile companies were producing automobiles. By the middle of 1942 they were all producing tanks and planes. It didn’t take decades or years, just a few months and they totally converted. If they could do that then, certainly we can restructure the world energy economy today. What Roosevelt did was ban the sale of cars. He didn’t say they couldn’t produce cars. He just banned the sale of cars.
Would you like to see President Obama do that?
I’d like to see him ban the sale of coal and oil. You couldn’t do that next month or this month but to make it clear that were going to move quickly to the new energy sources. It’s going to be a huge economic opportunity. New oil is coming online today at around $90-$92 a barrel. There will be consumer resistance to gasoline produced with that oil and if anything the price will go higher in future and people won’t tolerate it and things will shift quickly. The great thing about developing wind and solar is we can run our cars on clean energy as well. Electric motors are three times as energy efficient as internal combustion engines. Internal combustion engines produce mostly heat instead of traction. You can put your hand on an electric motor and it’s warm but not hot. You would never dare put your hand on a car engine. There is so much heat that you need to have a cooling system and a radiator, so many things to prevent it getting so hot that it literally couldn’t function.