Three future energy megatrends, but where’s climate change?
The challenge of competing in a carbon constrained world barely registers with the oil and gas industry, despite warnings about the impacts of climate change. That was one conclusion from a meeting of energy academics and industry representatives which took place at Chatham House last week.
The world is moving into a new energy era, the meeting suggested. The experts said the pursuit of energy independence, a spate of new regulation, and increased public awareness have all fundamentally altered the way the oil and gas industry operates over the last decade. But climate regulation is notably absent as a driver of change. So what does the fossil fuel industry’s vision of the future look like?
Energy independence
One of the big energy stories of recent years has been the boom in unconventional oil and gas production in the United States. The ‘shale gas revolution’ really is proving to be “a game-changer”, argued University of Dundee energy academic, Wojciech Ostrowski.
The US’s unconventional fuel boom has sparked speculation that it could become a net energy exporter, encouraging other countries such as the UK to pursue shale gas.
Shale gas is likely to have an even more significant impact on poorer economies, Ostrowski said. Some weaker fossil fuel dependent economies, such as Poland, are seeking to move away from coal in the mid-term for health and economic reasons, he claimed – and shale gas could be just the ticket, despite well publicised problems with getting shale gas up and running in Europe.
As far as the fossil fuel industry is concerned, shale gas is the fuel of the new energy era.
Increased regulation
In the near future, energy production is going to be defined by a greater emphasis on governments trying to control major energy corporations, the experts agreed.
Giacomo Luciani, an energy academic from the Paris School of International Affairs, said the recent oil price fixing scandal had encouraged governments to regulate the energy market in a way they’ve never done before. He said the ongoing investigations “cast a shadow” under which the industry must learn to operate.
He argued that larger companies are currently suffering because their brands are so recognisable, meaning the public associates them with the scandals. New regulations could curb the influence of the major players, allowing smaller organisations to emerge as genuine competitors, he said.
While it’s unlikely that Exxon, Shell, BP and pals are going anywhere any time soon, a new energy era for fossil fuels could see the rise of new names. Cuadrilla are probably delighted.
Community rights
The public aren’t just having an effect on branding. People are starting to ask fundamental questions about the way the energy industry operates, social scientist and energy consultant, Evelyn Dietsche, said. We may see fresh conflicts over perhaps the most fundamental natural resource question of them all: who owns what?
Dietsche said local communities are becoming increasingly aware of the ins and outs of energy regulation, and are using this knowledge to take the fight to governments and corporations wanting access to resources.
We could see more litigious conflicts, as fossil fuel companies continue to explore regions with less well established regulatory systems but increasingly informed publics. In such cases, educated community groups could hold up negotiations in the courts. The next challenge is to turn informed public opinion into effective and durable planning regulation.
The one they missed: climate change
The discussion was mainly framed in terms of finding ways to ensure access to cheap energy, with climate change largely omitted from the conversation. That, Luciani explained, was because:
“Companies are waiting to be convinced that the world is serious about climate change. It doesn’t look like the world is serious about climate change. There is no significant cost of carbon emissions. There is a hodge-podge of different rules and incentives for this and that but it doesn’t amount to a coherent, properly established global policy for limiting carbon emissions”.
Until that exists, experts are convinced companies will continue to extract and burn fossil fuels, and future planning will continue to be dominated by the more traditional concerns of direct cost and profit.
Co-ordinating a coherent global response to bring climate change into such conversations is a tough task, and not one that’s likely to happen any time soon – at least if recent history is anything to go on.