Life is often a matter of reconciling competing, even conflicting, goals. As we look broadly across the energy sector, we see two such imperatives. One is the compelling need for energy around the world, especially to lift nearly a third of the world’s population out of energy poverty. The other is an equally compelling need to do our best to limit the effects of that energy on the global environment. Achieving a balance between these two imperatives will be the fundamental question for this and the next generation of leaders in the global energy industry.
It is irrefutable that the modern energy industry forms the basis for all economic progress and creation of wealth. Whether viewed over time since the beginning of the industrial revolution 200 years ago, or over geography comparing countries in the present day, the correlation between GDP and energy usage is about as close as a statistical correlation can be. In the developed world, we are seeing for the first time a decoupling of energy intensity and GDP growth as improving efficiency begins to give us more work done per unit of energy produced. In the developing world, it’s a different story, though. More than two billion people lack access to modern energy in any form; billions more lack access to reliable energy that they can afford, which is true in the developed world as well. This raises both moral and pragmatic concerns: energy scarcity effectively prevents development, locking billions into poverty, poor health, and isolation; in turn, these conditions translate to instability, global migration, and even violence.
It is no accident that virtually all growth in energy demand over the next 25 years, as projected by organizations such as the International Energy Agency (IEA), will occur in the developing world, or that countries and people seeking to emerge from energy poverty will prioritize energy sources that they deem both reliable and affordable. Coal is a big part of that picture.
At the same time the science behind climate change is powerful, and greenhouse gas emissions must be lower than their current trajectory. Disagreements on the exact nature of the situation create debate on just how much lower they must be, how fast they must be lowered, and what mechanisms will be used, but it is unrealistic to assume that our business will proceed as usual.
Technology may alleviate these greenhouse gas concerns, as it has done for earlier kinds of emissions. Efficiency helps to mitigate demand growth and cleaner methods – whether renewable or fossil fuel – help mitigate emissions. Even under the strongest growth scenarios, most analysts see renewables’ share of world energy production in the 15-20% range by 2040. This means that, even by 2040, the predominant expectation is that 80% of our global energy will come from fossil fuels, including coal, and nuclear. “Leave it in the ground” is not a realistic option.