Climate Agreement Will Only Hasten Transition Beyond Oil

6 MINS READDec 13, 2015 | 14:36 GMT
Delegates attend a plenary session at the U.N. climate change summit in Paris on Dec. 9.
Delegates attend a plenary session at the U.N. climate change summit in Paris on Dec. 9.

For almost two weeks, the representatives of nearly 200 different nations have been meeting in Paris to hammer out the language of a new global approach to climate change policies. On Dec. 12, the parties finally approved the Paris agreement, which aims to limit the extent of climate change in the coming decades.

But the climate summit in Paris is just one part of a much larger transition that is already taking place. Just as mankind's primary energy source has changed over the centuries, first from wood to coal and then from coal to oil, new resources are already on the rise to take oil's place. Whether the shift will be toward nuclear power, natural gas, renewables or some combination of the three, the shift away from oil is already well underway, and the Paris agreement will simply speed the process along.

The debate that took place during the Paris summit highlighted many of the same issues that have long held up international progress on climate change policy. One of the greatest points of contention is the gap between the goals of developed countries and the costs they would impose on their developing counterparts. Industrialized nations are often at the forefront of calls for global reductions in carbon emissions, but many countries that are still developing are not keen to sacrifice their own economic growth to implement such changes without some level of assistance. Given the needs and the technological capabilities that exist, it is unlikely that the international community will bridge this divide sufficiently to meet the Paris summit's lofty goals anytime soon.

Diversity has also made it difficult to reach any sort of binding global agreement that can be strictly enforced. For example, the success of the Kyoto Protocol, an example of a broad, legally binding international agreement on strategies to mitigate climate change, has been limited at best, in part because it did not stipulate any consequences for participants that failed to meet their targets. Similarly, the Paris agreement has no language indicating that any sort of punitive measures would be taken against countries that failed to comply with the agreement. Even with transparency measures and regular reviews, the chances are low that countries will reach the ambitious targets without some sort of enforcement mechanism.

A History of Replacing Resources

Still, that does not mean energy consumption patterns will remain unchanged. The most unique aspect of the Paris negotiations has been that individual countries are prepared to set their own targets that are theoretically feasible under their particular economic and technological constraints. The world appears to be ready for a change, regardless of whether it is codified in international law, and nations are taking their own first steps to bring about a new energy era.

Of course, this type of transition is not unprecedented. Throughout history, humans have gradually adopted new resources alongside the development and dispersion of new technologies. The process can take decades, however, as energy technology is introduced and slowly grows its share of the market. Only when it obtains a sizable presence, or at least 20 percent of the market, does the new technology — and the resource it relies on — become a dominant force in global energy.

For most of history, mankind used physical strength and wood to power society. But eventually resource scarcity, urbanization, development of large-scale mining and other factors enabled coal to supplant wood as the world's primary fuel source. Becoming popular first in the home and then in transportation and industry, coal fuelled the Industrial Revolution before eventually reaching its peak, where it accounted for about 70 percent of global energy consumption.

The rise of oil also began in the home, as finished petroleum products became preferable to animal products. However, it took more than 80 years after the first commercial production of oil for the transportation sector to fully transition to oil-based vehicles. By the 1960s, oil's share of the market had peaked at 43 percent, though in absolute terms consumption continues to hover at maximum levels today. Unlike coal, which enjoyed more than a century as the prevailing power source, oil has led the field for only a handful of decades. Now, not only has natural gas become a prevalent source of power, but several new competitors have also emerged on the energy scene, cutting into oil's marketplace predominance.

The Coming Energy Age

In the past, major evolutions in energy consumption have been driven by the search for greater fuel performance. For example, coal-based fuel produces more energy per kilogram than wood, just as oil-based fuel outperforms coal (not to mention it is easier to transport). If the next transition follows this pattern, nuclear power would be oil's most likely successor.

However, there are other factors to consider, too. Economic and social considerations, as well as the advancement of other technologies, will play an important role in shaping the speed and trajectory of the next transition. For example, energy storage options like batteries and fuel cells are improving, while wind and solar power have become much more cost-competitive relative to fossil fuels. As battery costs continue to drop, solar energy may become a popular way of powering homes, much like oil and coal did before it. Meanwhile, according to the International Energy Agency, nearly half of the new additions to global energy capacity in 2014 came from renewables. The coming transition may not even move toward a single energy source; instead, it will likely give rise to several alternative resources at once that compete among themselves for shares in the energy market.

Regardless of which resource (or resources) rises to the top, oil will not disappear entirely, just as coal did not vanish before it.

Part of the outcome will also depend on technology itself. Efficiency technologies, or those that enable populations to do more with less, are having a growing effect on the energy marketplace. By reducing the amount of energy needed to perform tasks, more energy-efficient technologies will make climate targets easier to meet without sacrificing as much economic growth. For example, new efficiency standards in vehicles — such as shifting from steel to aluminum in construction — cut down the amount of oil needed to drive each mile.

Regardless of which resource (or resources) rises to the top, oil will not disappear entirely, just as coal did not vanish before it. However, its importance will wane, as will the status of those that produce it, at least to some degree. Historically, regions that possess substantial reserves of the dominant resource rise to global prominence. The Middle East gained the international spotlight when the age of oil began, while the islands used as loading and unloading depots for coal faded out of sight. So, too, will other areas of the globe eventually attract attention away from the world's oil giants as the energy market shifts.

And so, while policy changes at the national or international level could accelerate the transition already underway, the world is headed away from oil. Technological developments driven by concerns about economics, energy security and the environment are already taking place, led by countries such as the United States, Europe and Japan. However, the developing world, which will be responsible for most of the growth in energy consumption that takes place in the coming decades, has not yet caught up. Thus, the pace of the coming transition will depend on how quickly new technologies reach the world's developing nations.

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