You probably won’t have missed the media coverage of late around the affordability of low-carbon energy. In the UK, Carbon Capture and Storage (CCS), solar PVC and wind have all been in the headlines due to their current (relatively) high cost. And the announcement in September 2011 by Cuadrilla of a potential indigenous fossil fuel resource in the form of shale gas has further divided opinion on which energy options we should be pursuing.
Advocates for shale gas exploitation – Christopher Booker and Lord Lawson to name two – have had a field day, asking why we are committing large amounts of taxpayers’ money to expensive technologies when there are cheaper alternatives, alternatives that lend themselves very well to existing industrial capability (eg in gas). Why, they ask, are we paying to establish new industries that will take decades to mature, when we can ill afford to do so?
From an economic perspective, the question might seem fair enough. After all, who would back the expensive option over the cheaper when the result – meeting energy demand – is the same?
But that’s a myopic view, thanks to one almighty elephant in the room: climate change. One of the largest and most well-known pieces of analysis into the global economic impacts of climate change is the 2006 Stern Review, where the author compares the economic costs of acting on climate change through investment in greenhouse gas abatement against GDP loss in an unmitigated climate change scenario. Stern concluded that to mitigate climate change would cost the world around 1% of GDP per year. He also concluded that to take no action would end up costing between 5% and 20% of GDP – and possibly even more – each and every year as climate change takes hold and its impacts affect global economic output. On current World Bank estimates, 1% of global GDP is in the region of $630billion. 20% is $12.6trillion. That’s some case for action.
What saddens me is how some commentators choose to stoke debate around whether the world can afford to act on climate change as if it’s a choice we have to make. It shouldn’t be a choice – mitigating climate change should be practically an unconscious reflex action befitting the most intelligent species on the planet. The argument that we cannot afford to reduce greenhouse gas emissions to the extent that is needed just makes no sense because ultimately, what’s more important – short-term economic interest, or the healthy functioning of the natural systems upon which seven billion people – including you and me – depend, entirely, for their existence?
To advocate, seriously, for continued unabated fossil fuel use over clean energy technology is, in my humble opinion, breathtakingly short-sighted. Economically and environmentally, a fossil fuelled future is about the most expensive energy choice we could make; and far from being unaffordable, if deployed at sufficient scale low-carbon energy technologies (CCS, wind and solar for example) offer a significant part of the solution to climate change and we should be ploughing ahead. In the coming decades as the effects of climate change bite, a maturing low-carbon global energy system offers a viable future both for the climate and in consequence the world’s economy. An obsolete fossil-fuel energy infrastructure does not.
The conclusion from Stern’s appraisal of the economics of climate change is crystal clear. The science of climate change defines the scale of the threat the world faces with similar clarity. So I agree entirely with Booker, Lawson et. al that we cannot afford to back the expensive energy option. Which is why I believe clean energy technology is the only energy option we have.