There is a modern misconception that a modern economy will become less reliant on energy. A word association test on the ‘industrial age’ would elicit ideas of satanic mills, steam turbines and automobiles. Big, loud things that emit a lot of, in some people’s views, dangerous pollutants.
The ‘information age’ elicits a less sensory, indeed in cases a virtual, industry of computers, mobile phones and Facebook.
It is incorrect, however, to draw such conclusions from such superficial evidence. A mobile phone takes about 1 gigajoule of energy to produce, and around 2 billion are sold every year, working out to about 2 exajoules of energy in total. Compare that to cars. The manufacture of an average car requires around 100 gigajoules of energy, with around 70 million cars sold globally every year, this works out at about 7 exajoules of energy. On a per unit basis, the production of a car requires 100 times more energy than a mobile phone, as you would expect, but because of the size of the mobile phone market, their production requires almost 30 per cent of the energy to produce cars, and it is a market that is still growing rapidly.
The combination of the need for energy to produce more products (like a smartphone) and the fact we still have more than 1 billion people with no access to electricity, means that energy production will still grow significantly in coming years. Things have not changed much since the British economist, Stanley Jevons, spotted this very phenomenon in 1865. Jevons noted that despite steam engines improving the efficiency with which they converted coal into energy, the demand for coal continued to increase rapidly. As energy prices fell this stimulated more demand for energy-consuming activities and products.
Where will all this energy come from? Well, about the only forecast you can count on in this space is that energy forecasts will almost certainly be incorrect.
Take coal use. At the beginning of this century, the International Energy Agency forecast that worldwide demand for thermal coal in the year 2020 would be 3.3 billion tonnes of oil equivalent. By 2015 thermal coal use had already reached 3.8 billion tonnes of oil equivalent,15 per cent higher than predicted in 2000, and five years earlier too.
There are as many predictions as people but there is only one version of the past. If you want to know what will happen tomorrow, you’re probably best starting with what happened yesterday.
In the first 15 years of this century the use of thermal coal increased by 73 per cent and gas increased by 42 per cent. In the 15 years prior to that, thermal coal use increased by only 25 per cent, and gas by 47 per cent. Yet some serious commentators argue that the market for fossil fuels is in structural decline.
The latest projections for future fossil fuel use do not foresee a market in structural decline but they do see growth slowing. But given the past growth in the use of coal, and the very large amount of it used now, just maintaining coal production at current levels is a huge challenge.
Based on the IEA projections, the world will need to produce as much coal for the first 40 years of the 21st century as we have in the whole of history. The numbers are astounding. According to data compiled by Vaclav Smil, the world had produced 5,700 exajoules of coal from 1800 through to the year 2000. In the first 40 years of this century, BP estimates that the world will need over 6,000 exajoules of coal; enough energy to fly on a Boeing 747 from New York to Los Angeles 2.5 billion times.
The world has abundant supplies of coal and gas and we should be able to produce these amounts. A failure to do so would increase energy costs, limit economic growth and prevent hundreds of millions of people from emerging from poverty. If the opponents of fossil fuels prevent their production, that would increase energy costs, limit economic growth and consign those hundreds of millions of people to continuing poverty.
In practice, fossil fuel opponents are only likely to stop production in developed countries, and this is likely to have the perverse outcome of potentially increasing carbon emissions and damaging the environment. Take the coordinated and ill-informed campaign against the Adani Carmichael coal mine.
The coal from the mine is set to supply power stations in India. India has plenty of coal but it is typically of low quality and has a high ash content. The coal at the Carmichael mine has an energy content more than 50 per cent higher than most Indian coals.
If activists successfully stop the mine, India will still use coal, just lower quality coal. That means higher carbon emissions for every tonne of coal burned and a poorer outcome for the environment.
Switching to gas-fired electricity offers even greater reduction in carbon emissions. But again, there is an ignorant campaign against unconventional gas techniques in Australia. The same techniques that are used here and in the United States are driving an energy revolution across the world.
There are vast reserves of shale gas in the Northern Territory. Geoscientists predict there could be enough gas there to meet Australia’s demands for 200 years and some suggest it could be as productive as the shales in the United States.
Yet, right now the Beetaloo Basin cannot be developed because of a moratorium imposed by the Northern Territory government as it conducts a review of shale gas production techniques. It is the fifth Northern Territory review in six years, and all of the previous ones concluded that a gas industry should be permitted with appropriate regulation. I hope that common sense prevails.
We need common sense on energy because the economic fate of billions of people relies on it.
The best health policy starts with a common sense energy policy. The best education policy starts with a common sense energy policy. And, the best environmental policy starts with a common sense energy policy.
Common sense suggests we must produce a lot more fossil fuels to provide economic opportunity for people. Increased fossil fuel production has helped improve lives for the better in the past, and will do so in the future – but only if we allow it to.
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