POWER June 2012 - 88

Commentary
Climate and Energy Policies:
Two Sides of the Same Coin?
By Peter Hartley, PhD
n a 2006 statement, former UK Prime Minister Tony Blair said,
" We must treat energy security and climate security as two sides
of the same coin. " Are energy security and climate change best
addressed by reducing fossil fuel combustion, as he suggested?
I
Enhancing Energy Security
Diversifying energy sources and suppliers and, especially, increasing
supply from more stable countries are the most reliable paths to
long-term global energy security. Increased substitutability among
energy sources also increases resilience to supply disruptions.
National energy security is also enhanced by a greater variety
of domestic energy sources. The U.S. and Canada in particular
could substantially increase their energy security by exploiting
their huge remaining endowments of coal, conventional and unconventional
oil and natural gas, oil shale, and methane hydrates.
Absent concern about carbon dioxide (CO2
) emissions,
they could produce, at costs comparable to the current price
of crude oil, all the petroleum products they will consume until
alternative energy technologies become competitive.
Trying to Limit Climate Change
Burning fossil fuels, however, adds CO2
to the atmosphere, and
since CO2 is a greenhouse gas, this should raise global surface
temperatures and may trigger other harmful changes in our climate.
The main proposal for dealing with threatened climate
change thus has been to force an immediate shift to non-fossil
energy sources. Without a doubt, curtailing fossil fuel use will
reduce economic growth by raising the cost of energy. Fortunately,
there are other options.
Emissions could be offset by sequestering CO2
. Already CO2
is
used for enhanced oil recovery, but the sequestration is partial.
Since more permanently burying CO2
does not produce anything
worthwhile in exchange, however, it is expensive and unlikely to
be extensively used without further technological innovations.
Since CO2
until the fuels are burned, at which time the CO2
is " food for plants " it also is sequestered via plant
growth. Increasing forest cover sequesters some CO2 until the wood
decays. Burying charcoal sequesters carbon for longer and can improve
soil quality, but it would be expensive on a large scale. Biofuels
sequester CO2
is
recycled. But biofuels currently are expensive, compete with food
production, and have their own environmental costs.
Geo-engineering projects aimed at increasing the reflection of
incoming solar radiation have also been proposed. Once again,
however, these are unproven and expensive.
A Better Alternative
Instead of trying to limit climate change, policies could instead
reduce harmful consequences from climate change. For example,
levees and/or dikes, or depopulating low-lying areas, can reduce
flood damage. Improved building materials and building codes
88
can lessen damage from strong winds. Better weather forecasts
can reduce the costs of extreme weather.
Alternatively, measures could be taken to cope better with damaging
weather events, and other events such as earthquakes or terrorist
attacks, after they occur. Examples include faster evacuations, provision
of temporary housing, and stockpiling emergency supplies.
When many policies could address an issue, we should implement
first those policies with the lowest expected costs per unit
of expected net benefits.
In this regard, reducing fossil energy use would both reduce
energy security and be enormously expensive. Investments in
the current system for producing, delivering, and using energy
would have to be replaced, reducing the funds available for
other worthwhile investments. Alternative energy sources also
are currently much more costly, especially when one takes into
account their frequent unavailability and short-term variability,
the inability to schedule their time of supply, their remoteness
from markets, their low energy density, and their non-CO2
-related
environmental costs. Funding basic research into these problems
could be justified, but solving them will take time.
Meanwhile, technological developments in producing natural
gas from shale have substantially increased economically recoverable
reserves. Since natural gas is the least carbon-intensive
fossil fuel, its increased use will reduce growth in CO2
emissions
without raising energy costs and reducing economic growth.
Eventually, scarcity will make fossil fuels more expensive than
the alternatives; at that time, forcing their reduced use will be
unnecessary. In the meantime, CO2
emissions would have some
beneficial effects to offset costs from climate change.
For example, abnormal cold snaps cause more deaths than abnormal
heat waves. As another example, experiments and observations
around natural CO2
seeps have shown that increased CO2
increases plant growth and yields, plants' resistance to drought
and disease, low-light conditions, and pollutants like ozone. In
addition, the effects of CO2
on climates will vary geographically,
and not all changes will be harmful. In particular, Canada, Russia,
and northern Europe could benefit considerably from lesssevere
winter cold and longer growing seasons.
Finally, climate is always changing from many natural influences
and other anthropogenic actions such as land-clearing, large-scale irrigation,
and urbanization. Limiting CO2
emissions at best treats just
one source of climate change. The climate will still change regardless
of what happens to CO2
CO2 by reducing the certainty of their benefits. It also strengthens
the case for taking measures to limit harmful consequences from
climate change and improve recovery from damaging weather events
while simultaneously retaining any benefits from increased CO2
. ■
-Peter Hartley, PhD (hartley@rice.edu) is a professor of
economics at Rice University. He is also a Rice scholar of energy
economics for the James A. Baker III Institute for Public Policy.
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. This reduces the value of measures to control
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