World Energy Congress – Where’s the revolution in energy industry thinking?

October 16th, 2013

Continuing my series of blogs from the World Energy Congress in Korea, Tuseday’s theme at the confrenece was all about identifying business opportunities in the exploitation of resources and the development of energy technologies. Once again though truly revolutionary thinking to address climate change and energy poverty seemed to be strangely missing. Two examples illustrate this:

Firstly, there is a lot of talk at this conference about the ‘shale gas revolution’ in the United States and the possibility of it being replicated in other countries, including China. In chemical terms shale gas is similar to that produced from the North Sea. It is liberated from rock strata by a process known as ‘fracking’, where water is injected under high pressure through boreholes to fracture the rock and allow the gas to be released through the cracks formed. It’s a controversial technique that can involve real environmental challenges as it needs vast amounts of water which, once flushed through the well, is itself an environmental hazard that needs careful disposal. Depending on who you talk to here, shale gas is either a revolution that will make the US energy independent in a couple of years and provide it with cheap energy for a century or it’s just another bubble that is about to burst (at the moment shale gas comes with some shale oil attached which keeps costs artificially low; the shale oil production will finish quite quickly though and once that happens the cost of extracting the gas alone will rise dramatically).

A second example would be the session I attended on Tuesday morning called ‘New frontiers: what is the next game changer?’ I was hoping to hear something about renewables, off grid solutions or new applications of smart grid technology. Instead I got a lot of information about ‘unconventional oil’ – shale gas, shale oil, oil exploration in the artic and something called methane hydrates (for more information on the latter see here). Apparently there is 4 times more oil locked in shales alone than there are left in conventional sources, which leads to the frightening (if you are worried about climate change) claim that the idea we might be reaching Peak Oil (the point at which consumption exceeds the rate of new discoveries and oil prices start to spiral) no longer applies. According to many speakers here, Peak Oil no longer an issue as there is at least 100 years left for coal oil and gas when you include unconventional sources.

The problem with all of these ‘solutions’ to the looming global energy crisis is that, apart from the obvious environmental issues associated with each of the extraction and production processes themselves, they are all about extending the life of hydrocarbons and our dependency on fossil fuels. Discussion of renewables is not entirely absent here, but the level of enthusiasm for innovation in renewables doesn’t seem to be anywhere near  the level of enthusiasm for innovation in unconventional fossil fuels. The mantra repeated over and over again here is that the world will still be heavily dependent on fossil fuels in 2050, however much we invest in renewables. I can’t help wondering how much this mantra is dependent on the current subsidy regime. As someone pointed out during a session, at the moment the world provides around $500 billion a year in subsidies to fossil fuels and only about one tenth as much ($60 billion) on subsidising renewables. What if we reversed this and made subsidies for renewables 10 times greater than those for fossile fuels? Would we still be heavily dependent on oil and gas in 2050 then?

Maybe I’m just not selecting the right sessions but from what I’ve seen in the first two days I do not detect the sort of revolution in energy industry thinking that’s going to be necessary to address climate change or achieve universal access to energy.

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