The Future of Fossil Fuels in an Anti-Carbon World

Steve Welch recently gave an outstanding presentation to Reno’s Hayek Group on the future of fossil fuels in an anti-carbon world.

Steve’s a real expert, with 40 years of global experience in the energy business, primarily with Amoco Corp., BP plc and Reliance Industries of India.  He has led such businesses as global power generation (including wind and solar); North American natural gas sales, marketing and transport; North American and international refining and marketing; and global petrochemicals and China operations.  He’s been responsible for businesses with up to $95-billion annual revenues.

Let’s start with the most fundamental point: there have been mild global temperature increases for some time, some apparently from increasing carbon-dioxide (CO2) levels in our atmosphere, much of it human-caused.  However, I note: the earth has had much higher CO2 levels in the past.  And within recorded human history, we’ve seen significant warming and cooling cycles.

Projecting temperatures into the future is based on complex computer models involving feedback loops, guestimates of many parameters and major temperature measurement problems, all supplemented by large doses of judgment.  These exercises do not have a great track record in forecasting and back-casting.  Beyond the fact there has been mild global warming and some of it anthropomorphic (caused by human activity) from fossil fuels (oil, coal and natural gas), much else is speculation.

Back to Welch’s points.  Fossil fuels still supply 85 percent of the world’s energy, with wind and solar renewables less than four percent but growing rapidly the last decade.  And China, India and the rest of the Asia Pacific world account for three-quarters of the world’s coal use and three-eighths of oil use, but also more than 40 percent of hydroelectric generation and other renewables.

World oil use has declined significantly the last three decades.  Coal has remained more or less constant due to increases in China and India, with cuts in America and Europe.  And natural gas has risen due especially to its replacement of coal for electricity generation in North America where it’s inexpensive and plentiful.  Nuclear energy has held at four percent.

China now dwarfs all other areas in electric cars, and plans to grow that lead rapidly in the future.  But those vehicles are now just two percent of the world fleet.

CO2 emissions?  America and Europe have made continuous and significant cuts in this century, and Russia and Japan have held constant.  But the huge increases in China, India and other countries have completely swamped all that.  If China and India’s plans for the future are realized, which is not certain, world CO2 emissions will continue to sky-rocket, regardless of North America and Europe’s reductions and everyone’s increases in renewables.

The International Panel on Climate Change says limiting warming to 1.5 degrees-Centigrade is not impossible, but would require unprecedented transitions in all aspects of society.  The value of doing so is uncertain at best, due to the points I made above about forecasting future temperatures and to major disagreements about the beneficial and harmful aspects of warming.

Projections by the consultancy McKinsey are that renewables and hydroelectric will increase greatly by 2050 from 27 percent of current power generation to 73 percent, even as total generation nearly doubles.  They see coal use declining greatly in 30 years, which would hugely mitigate CO2 increases.

There are a very wide range of competent forecasts, but no serious analyses support the projections underlying the Green New Deal and similar nonsense.

Here’s what Welch expects: 1) oil demand peaks around 2030; 2) natural gas continues slow share growth into the 2030s; 3) integrated oil companies have diminishing shareholder value; 4) coal market share falls 50 percent by early 2040s; 5) greenhouse gas emissions growth slows to near zero by the early 2030s, then begins to decline; and 6) renewables reach 50 percent of electricity generation by the early 2030s.

All this seems sensible to me as a former energy research engineer and energy economics and policy expert.  Progressives, statist liberals and other leftists like Al Gore, Alexandria Ocasio-Cortez and Greta Thunberg work themselves and their followers into a froth with mindless slogans and rants.  The adults make plans based on sensible analyses like those Welch has offered.