A call for realism
In a speech yesterday (Tuesday, January 13) at the National Press Club, ConocoPhillips Chairman and CEO Jim Mulva made an interesting observation on the issue of reducing the environmental footprint of energy production. He said:
We agree with the concept of reducing the environmental footprint of energy production and consumption. But we must be realistic about the cost of green energy, its true potential, and how long it will take for commercial-scale supply contributions.
Well said! We have already started to take a look at the impact of putting a price on carbon and will continue to do so. But even a cursory examination of the options makes it very clear that there are no easy solutions – and any realistic solutions will not be cheap.
The truth is, any alternative to current sources of electric power will be more expensive – and, in some cases, much more expensive. The IEA estimated the cost of different sources of electricity in different parts of the world in the World Energy Outlook from 2008 (see below).
- Electricity generating costs — from the IEA’s 2008 WEO
Note that coal is cheaper than every other profiled source of power in every region except the EU (and it appears that is only because of the $30 per tonne of CO2 that they’ve added into the price). Significantly, while the cost of coal is close to that of wind in the US, coal is substantially cheaper than its closest competitor in both India and China.
The cost issue is huge and needs real attention. While the US and other developed nations may be able to absorb the extra cost of switching away from carbon based energy, it will be substantially harder to make the case for India and China, in particular, to switch to higher cost energy technologies given their imperative for economic growth. In short, in order to be successful, any serious attempt to deal with climate change on a global basis (and it’s important to remember that this must be solved globally) must clearly and transparently address the issue of cost. We’ll continue to look at these issues and potential solutions in upcoming blog posts.
