The future of energy

The future of energyJun 19th 2008From The Economist print edition


A fundamental change is coming sooner than you might think


SINCE the industrial revolution 200 years ago, mankind has depended on
fossil fuel. The notion that this might change is hard to contemplate.
Greens may hector. Consciences may nag. The central heating's
thermostat may turn down a notch or two. A less thirsty car may sit in
the drive. But actually stop using the stuff? Impossible to imagine:
surely there isn't a serious alternative?

Such a failure of imagination has been at the heart of the debate
about climate change. The green message-use less energy-is not going
to solve the problem unless economic growth stops at the same time. If
it does not (and it won't), any efficiency saving will soon be eaten
up by higher consumption per head. Even the hair-shirt option, then,
will bring only short-term relief. And when a dire prophecy from
environmentalism's jeremiad looks as if it is coming true, as the
price of petroleum rises through the roof and the idea that oil might
run out is no longer whispered in corners but openly discussed, there
is a temptation to believe that the end of the world is, indeed, nigh.

Not everyone, however, is so pessimistic. For, in the imaginations of
a coterie of physicists, biologists and engineers, an alternative
world is taking shape. As the special report in this issue describes,
plans for the end of the fossil-fuel economy are now being laid and
they do not involve much self-flagellation. Instead of bullying and
scaring people, the prophets of energy technology are attempting to
seduce them. They promise a world where, at one level, things will
have changed beyond recognition, but at another will have stayed
comfortably the same, and may even have got better.

This time it's serious

Alternative energy sounds like a cop-out. Windmills and solar cells
hardly seem like ways of producing enough electricity to power a busy,
self-interested world, as furnaces and steam-turbines now do.
Battery-powered cars, meanwhile, are slightly comic: more like
milk-floats than Maseratis. But the proponents of the new alternatives
are serious. Though many are interested in environmental benefits,
their main motive is money. They are investing their cash in ideas
that they think will make them large amounts more. And for the
alternatives to do that, they need to be both as cheap as (or cheaper
than) and as easy to use as (or easier than) what they are replacing.

For oil replacements, cheap suddenly looks less of a problem. The
biofuels or batteries that will power cars in the alternative future
should beat petrol at today's prices. Of course, today's prices are
not tomorrow's. The price of oil may fall; but so will the price of
biofuels, as innovation improves crops, manufacturing processes and
fuels.

Electrical energy, meanwhile, will remain cheaper than petrol energy
in almost any foreseeable future, and tomorrow's electric cars will be
as easy to fill with juice from a socket as today's are with petrol
from a pump. Unlike cars powered by hydrogen fuel cells, of the sort
launched by Honda this week, battery cars do not need new pipes to
deliver their energy. The existing grid, tweaked and smartened to make
better use of its power stations, should be infrastructure enough.
What matters is the nature of those power stations.

The price is right

They, too, are more and more likely to be alternative. Wind power is
taking on natural gas, which has risen in price in sympathy with oil.
Wind is closing in on the price of coal, as well. Solar energy is a
few years behind, but the most modern systems already promise
wind-like prices. Indeed, both industries are so successful that
manufacturers cannot keep up, and supply bottlenecks are forcing
prices higher than they otherwise would be. It would help if coal-the
cheapest fuel for making electricity-were taxed to pay for the
climate-changing effects of the carbon dioxide produced when it burns,
but even without such a tax, some ambitious entrepreneurs are already
talking of alternatives that are cheaper than coal.

Older, more cynical hands may find this disturbingly familiar. The
last time such alternatives were widely discussed was during the early
1970s. Then, too, a spike in the price of oil coincided with a fear
that natural limits to supply were close. The newspapers were full of
articles on solar power, fusion and converting the economy to run on
fuel cells and hydrogen.

Of course, there was no geological shortage of oil, just a politically
manipulated one. Nor is there a geological shortage this time round.
But that does not matter, for there are two differences between then
and now. The first is that this price rise is driven by demand. More
energy is needed all round. That gives alternatives a real opening.
The second is that 35 years have winnowed the technological wheat from
the chaff. Few believe in fusion now, though uranium-powered fission
reactors may be coming back into fashion. And, despite Honda's launch,
the idea of a hydrogen economy is also fading fast. Thirty-five years
of improvements have, however, made wind, solar power and high-tech
batteries attractive.

As these alternatives start to roll out in earnest, their rise,
optimists hope, will become inexorable. Economies of scale will
develop and armies of engineers will tweak them to make them better
and cheaper still. Some, indeed, think alternative energy will be the
basis of a boom bigger than information technology.

Whether that boom will happen quickly enough to stop the concentration
of carbon dioxide in the atmosphere reaching dangerous levels is moot.
But without alternative energy sources such a rise is certain. The
best thing that rich-world governments can do is to encourage the
alternatives by taxing carbon (even knowing that places like China and
India will not) and removing subsidies that favour fossil fuels.
Competition should do the rest-for the fledgling firms of the
alternative-energy industry are in competition with each other as much
as they are with the incumbent fossil-fuel companies. Let a hundred
flowers bloom. When they have, China, too, may find some it likes the
look of. Therein lies the best hope for the energy business, and the
planet.