The Fight Against Climate Change Has No Quick or Easy Answers.

But the next 30 years will be crucial to move from carbon-based fuels to renewable energy sources, says BRG’s Bradford Cornell

 

BRG Managing Director Bradford Cornell, who teaches and writes about energy and finance, is often asked about climate change solutions, and specifically whether the world can move completely to renewable energy in the near future.

 

His answer is always “no.”

 

But Cornell’s view is more realistic than pessimistic. He believes that while moving completely off carbon would be nearly impossible in the short term, business and governmental leaders can take smart and deliberate steps to set a course for a world much less reliant on fossil fuels by mid-century. That’s part of the reason why Cornell and others recently formed BRG’s Commerce and Climate Change practice group.

 

We spoke with Cornell about challenges and opportunities in moving away from carbon-based fuels.

 

You’ve written that reducing worldwide carbon emissions in the next 30 years will be extremely difficult. How would you respond to criticism that you’re overly pessimistic—even defeatist?

 

BC: I’d point first to the evidence and the science. Use of fossil fuels will remain largely constant through 2050, with a decline in the use of coal offset by a rise in the use on natural gas. A combination of population and economic growth will largely offset the rise in renewables. The transition to renewables will also be slowed by a lack of infrastructure, the high costs of the transition, of course, and political roadblocks to policies like a carbon tax.

That’s just reality. But I wouldn’t call my perspective pessimistic in the long run or defeatist at all. We can use the next 30 years to start down the path that gets us to a more sustainable future in the second half of the century and beyond.

 

Before we get into those steps, can you provide more detail on why a quicker transition would be difficult?

 

BC: The biggest problem in moving quickly from carbon-based fuels is that renewables haven’t yet reached anything approaching the scale we need. In 2018, primary worldwide energy consumption rose by 2.9 percent, almost double its 10-year average this decade. One might have hoped that the increase was due to the growing use of green energy, but fossil fuel use actually increased 2.8 percent last year. That was led by natural gas, but even coal, the dirtiest energy source, rose by 1.4 percent.

At the same time, many people are just unwilling to do things like curb air travel or move to places with better public transportation, so relying solely on conservation won’t be enough. Until carbon-free fuels can replace the current capacity of fossil fuels—and the remarkable energy density stored in their chemical bonds—the world will rely heavily on carbon.

 

What do you mean by the ‘remarkable energy density’ of fossil fuels?

 

BC: It’s basic chemistry—but it’s also a good question, as it explains how difficult it is to replace what we’re currently using. To store the energy equivalent of one 300-pound barrel of oil requires US$200,000 worth of Tesla-quality batteries weighing 20,000 pounds.

Storage is important in a renewable future, because the two main forms of renewable energy—solar and wind—have low energy capacity and issues with intermittency. Both sources produce energy about 30 percent of the time, compared with 95 percent for fossil fuels.

 

Is it possible to overcome the intermittency issues? What would it take?

 

BC: It will require, among other things, an updated national electricity grid, which is an enormous project. Such a grid would ensure electricity could move around. So, for example, residents in Dallas could receive energy from another part of the country to run their air conditioners on still days at the state’s windfarms.

That kind of grid would be very expensive and could take years to build. It’s also an example of how the challenge ahead of us likely can’t be handled entirely by private enterprise. Many people who put their faith in the free market might not like to hear that, but we need government and the private sector to work together, and our governments must put multifaceted policies in place to help finance the huge capital expenditures that will be needed.

 

What should governments do?

 

BC: I’d suggest a program that guarantees bonds related to energy investment, to help finance big projects. But it’s also time for a carbon tax—one that’s predictable. Predictability is for investors, as uncertainty in the tax would increase risk and make energy investments less attractive, increasing the cost of capital.

The tax could help pay for some of these big projects and discourage consumers from activities that consume excessive energy. I’m not suggesting a tax at a level that prevents consumers from living their lives, but rather a reasonable tax would encourage people to drive to a local vacation spot rather than fly halfway around the world.

 

Some critics would say that it doesn’t matter what the US does, because other countries won’t follow suit. How do you respond to that?

 

BC: The US needs to take a leadership role, in large part through its actions. Energy use—along with carbon emissions—in Africa and India will increase in the coming years as countries in those parts of the world develop. Policymakers there—noting that America’s growth has been fueled by carbon—might chafe if they’re asked to reduce carbon as they attempt to improve their living standards.

But it would be much worse if American leaders don’t take domestic steps to reduce carbon emissions going forward while simultaneously asking developing countries to do so. The other option—to not encourage reducing carbon at all—is the worst thing the US government could do.

 

To move past carbon and toward a better and more sustainable future, world leaders need to start taking actions in a smart and planful way. They must also educate their people that while such steps are necessary, they will be costly.