My reflections in the last column on global crises led me to the oil crisis of the 1970s, which led me to organize the Energy Research Group in the 1980s. Hydrocarbons are depletable; what is not known is, when depletion will begin to raise their price; just the reverse happened in recent years when the US exploited trapped gas by means of fracking. This was published in the Telegraph of 26 August 2003.
The oil crisis –
a retrospect
The 1970s saw two oil crises. In the
first one of 1973, crude oil prices suddenly quadrupled. It threw most
countries into a payments crisis. The oil exporters got too rich too quickly;
they could not spend all the money. They gave much of it to banks in New York
and London to manage; that mitigated the payments problems of the US and UK. It
also baled out those developing countries that borrowed that money – only to
sink them into prolonged debt crises later on when the flow of petro-dollars
stopped and the time to repay arrived. Then there was a second oil crisis in
the late 1970s. Although the price rise was less drastic, countries that had
not fully overcome the first one found it difficult to cope.
It was in the
wake of those crises that International Development Research Centre in Canada
set up the Energy Research Group, consisting of energy experts from developing
countries, to work out energy-related solutions for those countries. As its
coordinator, I commissioned over 100 papers, published them in 15 volumes, and
drafted the final report of the Group. It is 20 years since the Group was
constituted; so I decided to look at how well our conclusions had stood the
test of time.
At that time,
the problem appeared to be one of an imminent absolute shortage of oil. The
ratio of oil reserves to annual production then was 27 years; so it was assumed
that in the absence of further discoveries, oil would run out in a generation.
That assumption was dubious. But countries that could not even then afford oil
were immediately facing problems that the world was expected to face
eventually. Immediate oil replacement seemed a good strategy for them.
Energy
specialists were even then divided between those who wanted to replace oil with
renewable energy sources and those who favoured existing conventional fuels –
principally coal and nuclear energy whose reserves were many times larger than
those of oil. The views were represented in the Group; I had to find a
formulation acceptable to all. Biomass energy – growing trees to burn them –
looked feasible in some places. Brazil was already using charcoal to make pig
iron in the place of coking coal, and compelling car owners to use ethanol in
cars, both on its own and in a blend with petrol. But on the evidence
available, no renewable energy source could compete with conventional energy
and replace it to a significant degree. So the Group did not tilt in favour of
renewable energy. It was divided over nuclear energy. It saw the most viable
substitute for oil in natural gas, which was then both little exploited and
insufficiently explored. Although coal was more expensive than natural gas, its
reserves were enormous, and it could be the backbone of world energy
consumption for centuries. Both coal and gas could be used to produce methanol,
a liquid that could serve as a vehicular fuel.
Carbon dioxide
concentrations in the air were being measured at a monitoring station atop the
Mauna Loa volcano in Hawaii from 1958; they showed an increase of about 5-6 per
cent by the early 1980s. Burning of fuels – principally coal and oil – was
recognized to be the major source of carbon dioxide. But the link between its
atmospheric concentration and global temperature – the greenhouse effect – was
still not accepted by all. Taken over centuries, temperatures showed cycles.
But assuming there was a greenhouse effect, chlorofluorocarbons (CFCs)
contributed much more to it per ton than carbon dioxide; they were used in
compressors employed in cooling devices. We proposed their replacement by more
benign substitutes; they have been largely replaced in the past 20 years.
Solar, water and
wind energy generate no carbon dioxide at all. Burning biomass does; but
growing biomass sequesters carbon dioxide, and a cycle involving its growing
and burning leaves atmospheric carbon dioxide unchanged. So renewable energy
does not contribute to global warming. But the Energy Research Group was
agnostic about global warming; this was another reason why it was neutral with
respect to renewable energy.
In 1998, UNDP,
UNDESA and World Energy Council funded another assessment of energy; it was
chaired by Jose Goldemberg, who earlier was a member of the Energy Research
Group. It came out last year; it updates what we did in the 1980s.
Since then, oil
scarcity has become an even less worrisome prospect. World reserves had risen
from 27 times annual production in 1980 to 41 times in 2000. Natural gas
reserves are at least as high. Reserves of oil shale are twice as large and cost
of production of oil from it has come down. Then there are heavy oil and tar
sands. So oil scarcity is no longer worth worrying about, at least in this
century
But 1998 was the
hottest year in a millennium. The 11 hottest years since 1860 have all occurred
since 1983. Glaciers are clearly in retreat, so is the Antarctic ice cap. So
global warming is much more credible today, and energy strategy must be
directed towards it.
In the
meanwhile, however, fuel-burning equipment has become both more energy-efficient
and versatile. Coal is nowadays used mainly for power generation. In the new
power plants, coal is first burnt with inadequate air to make carbon monoxide,
which then is burnt to generate heat. Plants that do this – integrated gas
combined cycle plants – generate only 2 per cent as much carbon dioxide per
unit of heat as old-generation coal-fired plants. If natural gas is used
instead of coal, the figure comes down to 1 per cent. Hence coal burning can
now be increased manifold without increasing carbon dioxide emissions if we
replace the equipment. And fluidized-bed combustion plants can use any fuel –
coal, wood, dung – with high efficiency.
Density of
vehicle use is high in cities; there the problem is not just of carbon dioxide
emissions but also of carbon monoxide, which is a poison, and nitrous oxides.
Substitutes for petrol and diesel must give out lower emissions of all three. A
number have already been tried out. Ethanol in Brazil has been on the border of
competitiveness – it has done well when oil prices were high, and made losses
otherwise. It is no longer worth using on its own; it may survive as an
additive. But it does not reduce total emissions much. Methanol is better, but
not much.
A derivative of
methanol, methyl tertiary butyl ether (MTBE), was tried out in the US and was
much lower on emissions. It is being used as an additive in large parts of the
US. But it seeps into water and gives it a smell, so it is on its way out.
Electric vehicles were tried out in California, but were given up – they needed
to be recharged too often. In the meanwhile, California has mandated that 10
per cent of vehicles sold this year must be zero-emission. Most manufacturers
will use fuel cells, which convert fuel into electricity without burning it.
The fuel cells will first use ethanol or petrol, but will eventually use
hydrogen. Hydrogen will probably be made by separation of natural gas into
nitrogen and hydrogen by Fischer-Tropsch process. In the meanwhile, the
simplest if not the cleanest course is the one adopted in Delhi – compressed
natural gas.
